2001 (9) TMI 1086 - HC - VAT and Sales Tax

Summary

Issues:
- Entitlement to eligibility certificate under the Rajasthan Sales Tax New Incentive Scheme for Industries, 1989.
- Interpretation of the definition of "manufacture" under section 2(f) of the Rajasthan Sales Tax Act.

Analysis:

Issue 1: Entitlement to eligibility certificate under the Rajasthan Sales Tax New Incentive Scheme for Industries, 1989:
The case involved a revision petition by the department challenging the Rajasthan Tax Board's decision to grant an eligibility certificate to a respondent under the Rajasthan Sales Tax New Incentive Scheme for Industries, 1989. The respondent-unit applied for the certificate as an expansion unit, which was initially rejected by the District Level Screening Committee (D.L.S.C.). However, the State Level Screening Committee directed the grant of the certificate based on a similar case. The Tax Board, on appeal, found that the unit qualified as an expansion unit and directed the D.L.S.C. to issue the certificate. The High Court analyzed the provisions of the Sales Tax Act and the Incentive Scheme to determine the eligibility criteria for the certificate.

Issue 2: Interpretation of the definition of "manufacture" under section 2(f) of the Rajasthan Sales Tax Act:
The core question was whether the respondent-unit's activities fell within the definition of "manufacture" under section 2(f) of the Rajasthan Sales Tax Act to be eligible for the sales tax exemption under the Incentive Scheme of 1989. The High Court examined the definition of "manufacture" and relevant provisions of the Act to determine if the processing activities of the respondent constituted manufacturing. The Court referred to precedents and legal interpretations to establish that the processing of goods must result in the creation of a new commodity for market purposes to qualify as manufacturing. The Court emphasized the need for strict interpretation of exemption provisions and upheld the decision of the D.L.S.C. that the respondent did not qualify for the incentive scheme as a manufacturing unit.

In conclusion, the High Court allowed the revision petition, quashed the Tax Board's order, and reinstated the decision of the D.L.S.C. regarding the eligibility certificate. The judgment highlighted the importance of meeting the statutory requirements for tax exemptions and the strict interpretation of legal provisions in taxation matters.