2003 (1) TMI 674 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the exemption certificate issued by the Deputy Commissioner, Commercial Taxes.
2. Interpretation of the term "manufacture" under Section 2(n) of the Bihar Finance Act, 1981.
3. Legality of the suo motu revision by the Joint Commissioner, Commercial Taxes.
4. Judicial pronouncements and their binding nature on the case.

Detailed Analysis:

1. Validity of the Exemption Certificate:
The Deputy Commissioner, Commercial Taxes, had granted an exemption certificate to the petitioner for the purchase of raw materials without paying sales tax, based on Notification No. S.O. 95 dated April 4, 1994. However, the Joint Commissioner, exercising suo motu power of revision under section 46(4) of the Bihar Finance Act, 1981, issued a notice to the petitioner to show cause why the exemption should not be set aside. The Joint Commissioner concluded that the petitioner was not entitled to tax-free purchase of raw materials as the petitioner was not engaged in the manufacture of a new or different commodity. Consequently, the exemption certificate issued by the Deputy Commissioner was set aside.

2. Interpretation of the Term "Manufacture":
The crux of the case hinged on whether the petitioner was engaged in a manufacturing process as defined under Section 2(n) of the Bihar Finance Act, 1981. The court noted that "manufacture" means producing, making, extracting, altering, ornamenting, finishing, or otherwise processing, treating, or adopting any goods but does not include such manufacture or manufacturing process as may be prescribed. The court agreed with the Joint Commissioner's finding that the petitioner's activities of cutting and processing iron and steel materials did not result in the emergence of a new or distinct commercial commodity. Hence, the petitioner was not engaged in manufacturing as per the statutory definition.

3. Legality of the Suo Motu Revision:
The Joint Commissioner exercised suo motu revisional powers to set aside the exemption granted by the Deputy Commissioner. The court upheld this action, noting that the Joint Commissioner had the authority to review and revise orders to ensure compliance with the law. The petitioner's subsequent writ petition challenging this revision was dismissed, with the court directing the petitioner to file a show cause before the Joint Commissioner, who then passed a detailed order on April 15, 1998.

4. Judicial Pronouncements and Binding Nature:
The petitioner's attempts to challenge the Joint Commissioner's order through multiple writ petitions and a special leave petition to the Supreme Court were unsuccessful. The Division Bench of the High Court and the Supreme Court both upheld the view that the petitioner was not engaged in a manufacturing process. The court emphasized that these judicial pronouncements were binding and precluded the petitioner from re-litigating the same issues. The court also referenced the Supreme Court judgment in Ashirwad Ispat Udyog v. State Level Committee, which clarified that the definition of "manufacture" must be interpreted within the context of the specific statute.

Conclusion:
The court dismissed the writ petition, affirming that the petitioner was not entitled to the tax exemption as the activities did not constitute "manufacture" under the Bihar Finance Act, 1981. The court also upheld the legality of the suo motu revision by the Joint Commissioner and reiterated the binding nature of previous judicial pronouncements on the matter.