1990 (11) TMI 375 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 5CC of the Rajasthan Sales Tax Act, 1954 for claiming benefits.
Requirement of performing all manufacturing processes by the assessee to qualify for concessional rate under section 5CC.

Analysis:
The judgment revolves around the interpretation of section 5CC of the Rajasthan Sales Tax Act, 1954. The case involved a dispute regarding whether the assessee qualified for the benefits under section 5CC, specifically related to the purchase of raw materials for the manufacture of goods for sale. The Tribunal considered the different processes undertaken by the assessee, including weaving, dyeing, and sizing cloth, to determine eligibility for the concessional rate of tax under section 5CC.

The key contention in the case was whether the assessee needed to complete all manufacturing processes to claim benefits under section 5CC. The department argued that since the essential function of weaving was not performed by the assessee, they did not qualify for the benefits. However, the Tribunal highlighted that the assessee had invested significantly in new machinery and performed substantial processes in manufacturing dyed and printed cloth, even though weaving was outsourced for a lower cost.

The court analyzed the language of section 5CC, emphasizing that the raw material must be purchased for the manufacture of goods for sale, without explicitly requiring all manufacturing processes to be completed by the assessee. The court agreed with the Tribunal's view that specialization in particular processes by different units could be more economical and did not negate the right of the assessee to claim benefits under section 5CC. The court concluded that the department's argument that the entire manufacturing process should be completed by the assessee was unfounded, as the legislation only mandated purchasing raw materials for manufacturing goods for sale.

Ultimately, the court dismissed the revision petition, upholding the Tribunal's decision that the assessee was eligible for the concessional rate under section 5CC. The judgment clarified that the legislative intent behind section 5CC was to incentivize the purchase of raw materials for manufacturing goods for sale, rather than mandating the completion of all manufacturing processes by the assessee.