1991 (4) TMI 409 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether 'beaters' qualify as machinery under entry 53 of the Government notification issued under section 49 of the Gujarat Sales Tax Act, 1969.
2. Whether the use of sand manufactured at Pali factory as a raw material for manufacturing glass at Vallabh Vidyanagar constitutes a breach of the declaration in form 'Z'.
3. Whether the Tribunal's conclusion about the absence of bona fide belief and reasonable cause on the part of the applicant-company was justified.

Detailed Analysis:

Issue 1: Qualification of 'Beaters' as Machinery

The Tribunal had to determine if 'beaters' used by the applicant in the manufacture of sand qualify as machinery under entry 53 of the Government notification issued under section 49 of the Gujarat Sales Tax Act, 1969. The applicant argued that beaters, which convert quartz stones into sand, should be considered machinery. The court referenced the Division Bench's decision in the case of State of Gujarat v. Minu Chemical Pvt. Ltd., which defined machinery as a combination of parts that interact to produce a specific result. The court concluded that beaters, being essential parts of the crusher machine, qualify as machinery. Thus, the Tribunal was incorrect in holding that beaters are not machinery. The court answered this issue in the negative, in favor of the assessee and against the department.

Issue 2: Breach of Declaration in Form 'Z'

The Tribunal examined whether the use of sand manufactured at Pali factory as a raw material for manufacturing glass at Vallabh Vidyanagar constituted a breach of the declaration in form 'Z'. The applicant was required to use the goods purchased against form 'Z' within the State and for the manufacture of goods for sale. However, the sand produced was transported to the parent company at Vallabh Vidyanagar for further manufacturing, not for sale. Since the parent unit was not a certified manufacturer, this constituted a breach of the declaration in form 'Z', making the applicant liable for purchase tax under section 50 of the Act. The court answered this issue in the affirmative, in favor of the department and against the assessee.

Issue 3: Bona Fide Belief and Reasonable Cause

The Tribunal's conclusion about the absence of bona fide belief and reasonable cause on the part of the applicant-company was based on factual findings. The court noted that this issue required a reappreciation of facts, which is not a question of law but a question of fact. All three authorities had reached a concurrent finding on this matter. Therefore, the court refused to answer this question, and the applicant's counsel did not dispute this position.

Conclusion:

The court answered the first question in the negative, favoring the assessee, and the second question in the affirmative, favoring the department. The third question was not answered as it was a question of fact. No order as to costs was made.