1997 (12) TMI 603 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption eligibility under S.R.O. No. 968 of 1980 for a small-scale industrial unit.
2. Taxability of rubber cess paid by the assessee.

Analysis:
The case involved a tax revision against the Sales Tax Appellate Tribunal's order. The petitioner, the Deputy Commissioner of Sales Tax, challenged the disallowance of exemption for a small-scale industrial unit under S.R.O. No. 968 of 1980. The assessing authority initially denied the exemption, but the Tribunal later ruled in favor of the assessee, directing the assessing authority to grant the exemption based on the exemption certificate. Additionally, the issue of whether the rubber cess paid by the appellant should be included in the taxable turnover was raised by the Revenue.

In addressing the second issue regarding the taxability of the rubber cess, the Court relied on a previous decision and concluded that the rubber cess paid by the assessee to the Rubber Board should not be included in the purchase turnover. This decision was based on the precedent set in a specific case, thereby rejecting the Revenue's contention in this regard.

Regarding the first issue of exemption eligibility, the Court examined whether the goods were "produced" by the assessee, a key requirement under S.R.O. No. 968 of 1980. The Court referred to a relevant notification and previous case law to determine the criteria for claiming exemption. The assessing authority had disallowed the exemption, arguing that a part of the manufacturing process was conducted outside the unit's premises. However, the Court held that the mixing of carbon black with rubber outside the unit did not disqualify the assessee from claiming exemption, as it was deemed a minor part of the manufacturing process. The Court emphasized that the assessee had fulfilled the conditions for exemption as per the notification, and concurred with the Tribunal's findings that the goods were indeed "produced" by the eligible unit.

Furthermore, the Court addressed a reference to a previous Division Bench decision, highlighting the authority of the assessing authority to verify the production of goods. However, in the present case, there was no dispute over the genuineness of the certificate, leading to the rejection of the contentions raised by the counsel. Ultimately, the Court dismissed the tax revision case, upholding the Tribunal's decision to grant exemption to the assessee.

In conclusion, the judgment affirmed the eligibility of the small-scale industrial unit for exemption under S.R.O. No. 968 of 1980 and clarified the non-taxability of the rubber cess paid by the assessee, based on established legal principles and precedents.