2001 (4) TMI 895 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of the term "the other manufacturers in the State in the relevant industry during the accounting year 1984-85" in the context of a tax exemption notification.
2. Determination of whether "white cement" should be treated distinctly from other types of cement for the purpose of tax exemption calculations.

Issue-Wise Detailed Analysis:

1. Interpretation of the Term "the other manufacturers in the State in the relevant industry during the accounting year 1984-85"
The core issue revolves around the interpretation of the term "the other manufacturers in the State in the relevant industry during the accounting year 1984-85" as found in the notification issued by the State of Rajasthan under section 8(5) of the Central Sales Tax Act, 1956. The petitioner, a manufacturer of white cement, argued that the term "relevant industry" should be confined to manufacturers of white cement specifically, rather than including all types of cement manufacturers in Rajasthan. The respondents contended that the term should encompass all cement manufacturers regardless of the type of cement produced.

2. Determination of Whether "White Cement" Should Be Treated Distinctly from Other Types of Cement
The petitioner argued that "white cement" is a distinct commodity from other types of cement, such as grey portland cement, and should be treated separately for the purpose of calculating the base year's percentage figures for tax exemption. The petitioner presented evidence showing that J.K. White Cement was the only other manufacturer of white cement in Rajasthan during the base year 1984-85. The respondents, however, applied the base year's percentage figures for the entire cement industry, including all types of cement.

Detailed Analysis:

Interpretation of the Term "the other manufacturers in the State in the relevant industry during the accounting year 1984-85"
The court examined the notification and concluded that the term "relevant industry" must be interpreted in the context of the specific goods manufactured by the dealer claiming the exemption. The notification's preamble and clauses make it clear that the partial exemption is related to "such goods" manufactured by the dealer. Therefore, the term "relevant industry" should be limited to manufacturers producing the same type of goods as the claimant dealer, in this case, white cement.

Determination of Whether "White Cement" Should Be Treated Distinctly from Other Types of Cement
The court agreed with the petitioner that white cement is a distinct commodity in commercial parlance, different from other types of cement. This distinction is supported by precedents such as the decision in M/s. Purbachal International (1985) 21 ELT 673 (Cal), which was approved by the Supreme Court in Kajaria Exports Ltd. v. Union of India (1995) 3 Supp SCC 61. The court noted that in commercial parlance, white cement is treated as a different commodity from ordinary portland cement, and this distinction should be applied when interpreting the notification for tax exemption purposes.

The court also considered the decisions cited by the respondents, such as those from the M.P. High Court, Orissa High Court, and Allahabad High Court, but found them unpersuasive in the context of the present controversy. These decisions dealt with the classification of cement for tax rate purposes and did not address the specific issue of identifying relevant manufacturers for the purpose of calculating tax exemptions.

Conclusion:
The court allowed the writ petition, quashed the impugned communication dated April 25, 1998, and directed the respondents to redetermine the relevant values of the percentage of quantum of total sales within the State and sales in inter-State trade or commerce or despatches outside the State for the accounting period 1984-85 with reference to the manufacture of white cement within the State of Rajasthan. This determination should be made in terms of the notification for computing the increase in eligible turnover for partial exemption under the said notification. There was no order as to costs.

Writ petition allowed.

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