1999 (3) TMI 642 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the crushing of stone boulders constitutes a manufacturing process.
2. Whether the Petitioner is liable to pay sales tax under the Himachal Pradesh General Sales Tax Act, 1968.
3. Whether the Petitioner is required to register under the Himachal Pradesh General Sales Tax Act, 1968.
4. Whether the assessment order and the penalties imposed are valid.
5. Whether the Petitioner had an alternative remedy available under the Act.

Detailed Analysis:

1. Whether the crushing of stone boulders constitutes a manufacturing process:

The Petitioner argued that stone crushing is a processing industry and not a manufacturing industry, contending that no new substance is manufactured as the bigger boulders are merely sized into smaller stones. The Respondents countered that the conversion of boulders into metal, commonly known as 'bajri' or 'gitti', results in a new commercial commodity with a distinct nomenclature, character, market, and use. The Court examined various precedents and concluded that the process of crushing boulders into 'bajri' or 'gitti' results in a new commercial product with different uses and purposes from the original boulders. Therefore, it constitutes a manufacturing process.

2. Whether the Petitioner is liable to pay sales tax under the Himachal Pradesh General Sales Tax Act, 1968:

The Petitioner claimed that since the items had been taxed at the first stage of sale within the State, no further tax could be levied on the sale of crushed stone. The Respondents argued that the levy under Section 6 of the Act is legal and valid, and the first stage of sale for the commodity manufactured by the Petitioner is when he sells the commodity for the first time after manufacture. The Court upheld the Respondents' view, stating that the sale of 'bajri' or 'gitti' by the Petitioner is a taxable event under the Act.

3. Whether the Petitioner is required to register under the Himachal Pradesh General Sales Tax Act, 1968:

The Petitioner argued that he was not required to register as he had already paid tax on the royalty for the extraction of stones. The Respondents contended that the Petitioner is a manufacturing concern and is required to register under the Act. The Court agreed with the Respondents, stating that the Petitioner is engaged in a manufacturing process and is therefore required to register and comply with the provisions of the Act.

4. Whether the assessment order and the penalties imposed are valid:

The Petitioner challenged the validity of the assessment order and the penalties imposed, arguing that the assessment was bad in law. The Respondents maintained that the assessment order was in accordance with the law and within the competency of the authority. The Court found that the assessment order and penalties were valid, as the Petitioner failed to provide sufficient evidence to substantiate his claims and did not comply with the procedural requirements under the Act.

5. Whether the Petitioner had an alternative remedy available under the Act:

The Respondents argued that the Petitioner had an alternative remedy of appeal and revision under Sections 30 and 31 of the Act, which he did not exhaust. The Court acknowledged this but chose to decide the legal issue due to its recurring nature and the importance of the question of law involved. The Court ultimately dismissed the writ petition, finding no merit in the Petitioner's claims.

Conclusion:

The Court dismissed the writ petition, holding that the process of crushing stone boulders into 'bajri' or 'gitti' constitutes a manufacturing process, making the Petitioner liable to pay sales tax and register under the Himachal Pradesh General Sales Tax Act, 1968. The assessment order and penalties imposed were found to be valid, and the Petitioner failed to exhaust the alternative remedies available under the Act.

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