2015 (10) TMI 217 - HC - VAT and Sales Tax

Denial of benefit of notification dated March 6, 1991 - Held that - Tax Board has rightly held that goods of which the dominant and essential component was copper were products of copper . Hence the manufacture of electrical wires, PVC power electrical cables and electrical cables with 85 per cent. component of copper satisfied the condition of the notification dated March 6, 1991 that the copper purchased at a concessional rate was to be utilised for the manufacture of copper products. There is no illegality or perversity in the impugned order dated November 4, 2003 passed by the Tax Board. Further the OIC has not been able to establish that the view of the Tax Board on the question in issue as enumerated in the case of Jai Ambe Copper Industries was challenged or set aside. - Decided against Revenue.

Summary

Issues:
1. Interpretation of a notification dated March 6, 1991 regarding exemption from tax on copper.
2. Eligibility of electrical wires, PVC power electrical cables, and electrical cables as products of copper.
3. Assessment of additional tax and interest by the assessing authority.
4. Appeal process and decisions by Deputy Commissioner (Appeals) and Tax Board.

Interpretation of Notification:
The case involved the interpretation of a notification dated March 6, 1991, which exempted registered dealers from tax on copper purchases exceeding 1.5 per cent. The notification required the copper to be used as raw material in manufacturing products of copper within the State of Rajasthan, sold within the state or in inter-State trade, and accompanied by a declaration. The dispute arose when the assessing officer denied the exemption to an assessee using copper for manufacturing electrical cables. The Deputy Commissioner (Appeals) later ruled in favor of the assessee, stating that the products in question, with 85% copper composition, qualified as products of copper under the notification.

Eligibility of Products as Copper:
The key issue was whether electrical wires, PVC power electrical cables, and electrical cables could be considered products of copper under the notification. The Tax Board, relying on a prior judgment, determined that since these products had an 85% copper composition, they fell within the definition of "products of copper." Consequently, the assessee was found eligible for the exemption, overturning the assessing authority's decision to impose additional tax and interest.

Assessment of Additional Tax:
The assessing authority had imposed additional tax and interest on the assessee for allegedly not meeting the conditions of the notification. However, the Deputy Commissioner (Appeals) and the Tax Board both ruled in favor of the assessee, stating that the products in question satisfied the notification's requirements. The High Court upheld the Tax Board's decision, emphasizing that the dominant component of the products being copper justified the exemption from additional tax.

Appeal Process and Decisions:
The case involved multiple levels of appeal, starting from the assessing officer's decision to the Deputy Commissioner (Appeals) and finally the Tax Board. Each level of appeal scrutinized the interpretation of the notification and the eligibility of the products in question. Ultimately, the High Court dismissed the revision petition, upholding the Tax Board's decision that the products qualified as products of copper under the notification, thus exonerating the assessee from the additional tax and interest imposed.