2022 (4) TMI 7 - HC - VAT and Sales Tax

Adjustment of eligible exemption amount as against the certified exemption limit - raw material purchased by the Petitioner - exemption limit to be calculated at the rate of 16% as held by the Tribunal as against the rate of 4% claimed by the Assessee? - Entry- 43 (a) of the Finance Department Notification No.41261-CTA-106/92-F dated 23.09.1992 - HELD THAT - While it is true that the legal position became clear after the decision of this Court in Luis Packaging Pvt. Ltd. (supra) where the Court categorically holding that the benefits available to the dealers under the IPR would be over and above what was provided in the OST Act, the fact remains that in the present case the Petitioner had already availed, for AY 1997-98, benefit under the IPR-92 to the extent of ₹ 10,79,821/- leaving a balance of ₹ 87,107/-. It would not have been possible therefore for the Petitioner to have filed a Form I-D (92) for the entire sum of purchase of manganese ore as was done by the Petitioner. The Court therefore is unable to find any error committed in the AA requiring the Petitioner to pay sales tax @ 16% on the balance purchase of manganese ore of the value of ₹ 6,13,404.87/-. At the highest, a sum of ₹ 87,107/- can be adjusted against tax liability so determined. The revision petition is disposed of.

Summary

Issues:
1. Calculation of sales tax exemption on raw material purchase.
2. Interpretation of Industrial Policy Resolution (IPR) of 1992.
3. Validity of availing sales tax benefits under Form I-D (92) and Form-IV.
4. Applicability of sales tax rate on raw material purchase.

Analysis:
1. The petitioner, a small scale industrial unit, sought sales tax exemption under Entry 43(a) of the tax free schedule in accordance with the Industrial Policy Resolution (IPR) of 1992. The issue revolved around the calculation of raw material purchase for adjusting the eligible exemption amount. The petitioner claimed a 4% rate, while the Assessing Authority (AA) applied a 16% rate, leading to a tax demand of ?1,06,593 for the assessment year 1997-98.

2. The petitioner contended that based on the fixed capital investment of ?15,55,904, the sales tax exemption ceiling was ?11,66,928. However, the AA limited the exemption to ?87,107 due to previous availed benefits. The petitioner argued for the applicability of benefits under IPR-92 and the need to remand the matter to determine the concession available.

3. The petitioner's appeal to the Assistant Commissioner of Sales Tax and subsequently to the Orissa Sales Tax Tribunal was unsuccessful. The petitioner's reliance on previous court decisions emphasizing benefits under IPR over the Orissa Sales Tax Act was highlighted. The petitioner sought permission to produce Form-IV for a concessional tax rate, which was contested by the Department.

4. The court acknowledged the legal clarity post the Luis Packaging Pvt. Ltd. case, distinguishing benefits under IPR from the OST Act. However, considering the petitioner's prior availed benefits and failure to produce Form-IV timely, the court upheld the AA's decision to levy tax at 16% on the balance purchase of manganese ore. The court ruled in favor of the Department, denying the petitioner's request for a lower tax rate and allowing adjustment of ?87,107 against the tax liability.

In conclusion, the revision petition was disposed of, with the court upholding the sales tax calculation at 16% on the raw material purchase balance while permitting adjustment of a limited amount against the tax liability.