1990 (2) TMI 292 - HC - VAT and Sales Tax

Summary

Issues:
Determination of the date from which the petitioner is entitled to exemption from sales tax on purchase or sale of raw materials.

Analysis:
The petitioner, a company registered under the Companies Act, 1956, sought exemption from sales tax on raw materials under the Industrial Policy, 1980. The dispute arose regarding whether the exemption period starts from the date of issue of the provisional certificate or the date of commencement of commercial production. The petitioner claimed entitlement to exemption till 10th August 1988, while the opposite parties contended that the period began from the date of the provisional certificate issued in 1982.

The Court analyzed the relevant provision, item 26-A of the list of goods exempted from sales tax, which mentioned "five years from the date of certification of the unit by the Director of Industries, Orissa." The Court examined the intent and purpose of the provision, emphasizing that the exemption aims to incentivize industrial growth. The Court noted that the purchase of raw materials is crucial when the industrial unit is ready for production, not before. Therefore, it construed the phrase to mean five years from the date of certification of the unit commencing commercial production, in line with the policy's objective.

Consequently, the Court held that the petitioner is entitled to exemption from sales tax on raw materials for five years from the date of commencement of commercial production, i.e., 10th August 1983. The Court directed the opposite parties to refund the sum of Rs. 18,000 collected towards sales tax for specific months in 1988 within a month from the judgment date.

In a concurring opinion, Justice A. Pasayat agreed with the decision to allow the writ petition, directing the refund of the sales tax amount to the petitioner. The judgment concluded with the allowance of the writ petition and no order for costs in the proceeding.