2004 (9) TMI 609 - HC - VAT and Sales Tax

Summary

Issues:
1. Exemption from sales tax for a small-scale industrial unit manufacturing ready-made garments.
2. Interpretation of Notification S.R.O. No. 1727/1993 under Schedule V, item No. 4 regarding turnover limits for exemption.
3. Reassessment orders denying exemption and challenging them in a writ petition.

Analysis:
1. The petitioner, a small-scale industrial unit manufacturing ready-made garments, was granted exemption from sales tax for certain years. However, the assessments were later reopened, and the exemption was taken away. The petitioner challenged these reassessment orders in a writ petition.

2. The petitioner claimed entitlement to exemption based on Notification S.R.O. No. 1727/1993 under Schedule V, item No. 4, which provides exemption up to a turnover of Rs. 10 lakhs. The assessing authority argued that the exemption is only available if the total turnover does not exceed Rs. 10 lakhs in a year, and the benefit is limited to the first year of crossing the limit. The court analyzed the conditions specified in the notification and the interpretation of turnover limits for exemption.

3. The court examined the conditions laid out in Notification S.R.O. No. 1727/1993, particularly focusing on the definition of "total turnover" and the application of tax on turnover exceeding Rs. 10 lakhs. The judgment highlighted the inconsistency between the two parts of the conditions and clarified that the turnover mentioned refers to the total turnover for exemption purposes. Additionally, the court discussed the availability of exemption in subsequent years if the total turnover exceeded Rs. 10 lakhs in the first year of exemption, emphasizing the limited applicability of the basic exemption.

4. Ultimately, the court set aside the reassessment orders and directed the assessing authority to pass fresh orders in accordance with the legal interpretation provided in the judgment. The petitioner was granted relief, and the assessing authority was instructed to adhere to the legal position explained in the court's decision within a specified timeframe. The writ petition was disposed of accordingly, bringing clarity to the issues raised regarding the exemption from sales tax for the small-scale industrial unit.