2002 (7) TMI 771 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the rejection of the petitioner's application for declaration forms in Form 12 for the purchase of chemicals and dyes.
2. Whether the petitioner is entitled to the benefit of concessional tax rates for raw materials and consumable items used in manufacturing.
3. Compliance with the Full Bench's previous order regarding the issuance of declaration forms.

Issue-wise Detailed Analysis:

1. Legality of the rejection of the petitioner's application for declaration forms in Form 12 for the purchase of chemicals and dyes:
The petitioner, a registered dealer and manufacturer, challenged the order dated July 10, 2000, by the Assistant Commissioner, Commercial Taxes, which rejected their application for declaration forms in Form 12 for the purchase of chemicals and dyes used in manufacturing. The petitioner argued that the Assistant Commissioner failed to distinguish between "raw material" and "consumable item" (chemicals and dyes), leading to an erroneous decision. The petitioner contended that the chemicals and dyes were used solely in the manufacture of paper, not exercise books, and thus should be eligible for concessional tax rates.

2. Whether the petitioner is entitled to the benefit of concessional tax rates for raw materials and consumable items used in manufacturing:
The respondent argued that the petitioner used a portion of the purchased raw materials and consumable items for manufacturing non-taxable exercise books, thereby disqualifying them from concessional tax rates for that portion. The petitioner countered that the manufacturing activity ends with the production of paper, and only defective paper is converted into exercise books through a minor process, which does not constitute manufacturing. The petitioner claimed that the benefit extends to inputs purchased with the intention to use in the manufacture of taxable goods for sale, as per section 17(2)(b)(ii) of the Act of 1994 and rule 52 of the Rules, 1995.

3. Compliance with the Full Bench's previous order regarding the issuance of declaration forms:
The Full Bench of the Tribunal had previously directed the respondent to issue declaration forms for raw materials used in manufacturing taxable goods, excluding those used for non-taxable goods (exercise books). The respondent's order dated July 10, 2000, rejected the petitioner's application for declaration forms for chemicals and dyes, stating that 40% of the chemicals and dyes purchased were used in manufacturing exercise books. The petitioner argued that this rejection was based on a misunderstanding of the law and the Tribunal's previous order.

Tribunal's Decision:
The Tribunal examined the statutory provisions and previous orders and concluded that the petitioner is not entitled to concessional tax rates for the portion of chemicals and dyes used in manufacturing non-taxable exercise books. The Tribunal found no illegality in the respondent's order dated July 10, 2000, which was based on a proper understanding of the law and compliance with the Full Bench's directive. The Tribunal dismissed the petitioner's application, upholding the respondent's decision to reject the issuance of declaration forms for the balance amount of chemicals and dyes.

Conclusion:
The Tribunal dismissed the application, ruling against the petitioner and affirming that the petitioner is not entitled to concessional tax rates for chemicals and dyes used in manufacturing non-taxable goods. The Tribunal emphasized the statutory duty of the revenue authorities to ensure that goods purchased at concessional rates are used directly in the manufacture of taxable goods for sale in West Bengal.