2001 (12) TMI 859 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment deals with the classification of cotton waste as a product for the purpose of sales tax deferral incentives under G.O.P. No. 92 dated February 22, 1991, for new industries established in specific backward taluks.

Details of the judgment:

1. The Tribunal found that cotton waste, a by-product in spinning mills, qualifies as a product under G.O.P. No. 92 for sales tax deferral incentives.

2. Cotton waste is generated at various stages of the spinning mill process, with different types of waste produced such as "yellow cotton," "droppings," "flat and lickerin," "noil," and "fan and sweeping waste."

3. The first respondent categorized cotton waste into spinnable and non-spinnable waste, with non-spinnable waste capable of being used for other purposes and considered a finished product.

4. State Sales Tax Act treats cotton waste as a distinct commercial commodity subject to tax at the point of first sale in the State.

5. The term "product" in G.O.P. No. 92 is not defined, but the order recognizes that units may manufacture multiple products, including by-products, which are distinct commercial goods subject to taxation.

6. The scheme of incentives aims to promote new industries by deferring sales tax liability on all products manufactured, including by-products, to enhance financial viability and encourage entrepreneurship in backward taluks.

7. The judgment upholds the Tribunal's decision that the assessee is eligible for sales tax deferral on the sale of waste cotton, considering it as a product under the incentive scheme.

Conclusion:
The High Court dismissed the writ petition, affirming the eligibility of the assessee for sales tax deferral on the sale of cotton waste as a product under the relevant incentive scheme.