2010 (1) TMI 1133 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the impugned notice issued by the Assistant Commissioner of Sales Tax.
2. Entitlement of exemption from sales tax on metal scraps obtained during the manufacturing process.
3. Interpretation of the eligibility certificate under section 39 of the West Bengal Sales Tax Act, 1994.

Issue-Wise Detailed Analysis:

1. Legality of the Impugned Notice:
The petitioner challenged the notice issued by the Assistant Commissioner of Sales Tax, arguing that it was issued without the officer reaching a prima facie satisfaction. The petitioner's contention was that the language of the proposed order reflected a closed mind, similar to a previous notice that had been quashed by the Tribunal on August 28, 2008. The Tribunal had previously set aside the notices on the grounds that the revisional authority should apply his independent mind and record his own prima facie satisfaction before initiating such proceedings. The Assistant Commissioner issued a fresh notice dated October 29, 2008, proposing to revise the assessment order for the period 2002-03 on the basis that the eligibility certificate did not entitle the petitioner to exemption on sales of scraps.

2. Entitlement of Exemption from Sales Tax on Metal Scraps:
The petitioner claimed that metal scraps obtained during the manufacturing process should be treated as products of the industrial unit and thus exempt from sales tax. The petitioner referenced several legal precedents, including the Supreme Court's decision in ITC Bhadrachalam Paper Boards Ltd. v. State of A.P., which held that by-products obtained during manufacturing qualify as products of the industrial unit and are entitled to exemption. The Tribunal noted that the definition of "product" includes by-products that are distinct commercial goods capable of being marketed separately. The Tribunal concluded that scraps generated during the manufacturing process undergo transformation and acquire a new identity, making them marketable commodities different from the original raw material.

3. Interpretation of the Eligibility Certificate under Section 39:
The Tribunal examined the eligibility certificate issued to the petitioner, which specifically mentioned exemption for sales of metal liner and fish plate manufactured in the industrial unit. The Tribunal emphasized that the eligibility certificate determines the extent of the benefit, and the petitioner cannot claim anything beyond what is specified in the certificate. The Tribunal noted that the petitioner had not sought any amendment to the certificate to include a general description of all manufactured products. The Tribunal referenced the Supreme Court's decision in ITC Bhadrachalam, which granted exemption based on a general description in the exemption order. However, in the present case, the eligibility certificate explicitly mentioned only two products, and the petitioner accepted this without protest.

Conclusion:
The Tribunal held that scraps generated during the manufacturing process qualify as products manufactured in the industrial unit. However, the Tribunal declined to interfere with the impugned notice of suo motu revision because the eligibility certificate allowed exemption only for two specified products. The petitioner was directed to respond to the notice and present its case in writing by January 31, 2010. The application was disposed of with no order as to costs. The Technical Member concurred with the judgment.