2003 (6) TMI 450 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Claim of concessional rate for purchase of raw material by the SSI unit for use in works contract.
2. Justification of the rejection of the claim of works contract.
3. Eligibility for purchasing raw materials by issuing form 18 declaration under section 5(3) of the Act.

Analysis:

1. The assessee opted for payment of tax at the compounded rate under section 7(7), (7A) of the Act and claimed a concessional rate for raw material purchase under section 5(3). The assessing authority initially proposed to disallow the claim but later accepted it. The Tribunal allowed the claim based on works contract at a 5% tax rate. The questions raised were related to the rejection of the concessional rate for raw material purchase. The Tribunal, without jurisdiction, disallowed the claim granted by the assessing authority, leading to the need for further examination.

2. The main issue revolved around the rejection of the claim of works contract by the assessing authority. The first appellate authority upheld this rejection, but the Tribunal ruled in favor of the assessee, allowing the works contract claim. The Tribunal's decision was based on the assessment years being before the amendment introducing section 5(3)(ii), making the rejection improper. The High Court vacated the Tribunal's finding on section 5(3)(ii) liability, leaving the works contract claim unchallenged.

3. The Tribunal's consideration of the eligibility for purchasing raw materials under section 5(3) raised concerns about the application of section 5(3)(ii) introduced in 1993. Since the assessment years were 1989-90, 1990-91, and 1991-92, the new provision did not apply. The Tribunal's decision on the original pre-assessment notice proposing a differential tax rate was deemed unnecessary due to the retrospective nature of the amendment. The High Court allowed the revisions, focusing on vacating the Tribunal's finding on section 5(3)(ii) liability without challenging the works contract claim decision.

In conclusion, the High Court allowed the revisions, emphasizing the inapplicability of section 5(3)(ii) to the assessment years in question and leaving the works contract claim decision untouched.