2022 (12) TMI 597 - HC - VAT and Sales Tax

Purchase of gold for manufacturing of jewellery and ornaments - Claim of exemption from tax under Rule 33A of the West Bengal Value Added Tax Rules, 2005 (the Rules) - The assessing authority of the said bank disallowed the claim for exemption on the sole ground that the purchasing dealer namely the writ petitioner did not manufacture the jewellery in the State of West Bengal but had manufactured the same at Coimbatore in Tamil Nadu state. HELD THAT - As mentioned above, if we read the scheme of the WBVAT and the rules, it is clear that the Rule 33A was intended to give a special benefit to dealers registered in the State of West Bengal that is both the selling and purchasing dealer who deal with gold and who sells gold purchased by another registered dealer in the state who manufactures jewellery for export. Therefore, the arguments that by preventing the petitioner from carrying out job work outside the State of West Bengal would violate Article 301 and 304 of the Constitution is an argument which is stated to be outrightly rejected. The intention, the object and the purpose of such exemption cannot be interpreted by referring to Rule 26A which operates in entirely different field. There is absolutely no inconsistency nor the form is contrary to the Rule 33A rather the form is part of the rule itself. The order passed by the learned tribunal rejecting the revision petition filed by the fourth respondent to be just and proper and does not call for any interference. Writ petition dismissed.

Summary

Issues Involved:
1. Validity of the form of certificate under Rule 33A of the West Bengal Value Added Tax Rules, 2005.
2. Interpretation of Rule 33A regarding the situs of manufacturing.
3. Compliance with Article 301 and 304 of the Constitution of India.
4. Validity of the tribunal's decision and the locus standi of the petitioner.

Comprehensive, Issue-wise Detailed Analysis:

1. Validity of the form of certificate under Rule 33A of the West Bengal Value Added Tax Rules, 2005:
The petitioner argued that the form of certificate appended to Rule 33A is inconsistent with the rule itself. Rule 33A does not explicitly state that the gold purchased must be used for manufacturing jewelry within West Bengal, whereas the form of certificate requires such a condition. The court held that the form of certificate is an integral part of Rule 33A and must be read in conjunction with the rule. The form is not merely a procedural requirement but embodies the substantive conditions of the rule. Therefore, the form is valid and consistent with Rule 33A.

2. Interpretation of Rule 33A regarding the situs of manufacturing:
The petitioner contended that Rule 33A does not mandate that the manufacturing of jewelry must occur within West Bengal. The court, however, interpreted Rule 33A in its entirety and concluded that the rule requires both the selling and purchasing dealers to be registered in West Bengal and that the gold purchased must be used for manufacturing jewelry within the state. The court emphasized that the rule aims to promote manufacturing within West Bengal, and the form of certificate reflects this legislative intent.

3. Compliance with Article 301 and 304 of the Constitution of India:
The petitioner argued that imposing a condition that manufacturing must occur within West Bengal violates Articles 301 and 304 of the Constitution, which guarantee freedom of trade and commerce across states. The court rejected this argument, stating that Rule 33A is designed to provide a specific benefit to dealers registered in West Bengal and does not impose an unreasonable restriction on inter-state trade. The court held that the rule does not violate the constitutional provisions.

4. Validity of the tribunal's decision and the locus standi of the petitioner:
The court examined the tribunal's decision, which upheld the disallowance of the tax exemption claimed by the Bank of Nova Scotia on the grounds that the jewelry was not manufactured in West Bengal. The court found the tribunal's decision to be just and proper, as it correctly interpreted Rule 33A and the form of certificate. Additionally, the court questioned the locus standi of the petitioner, noting that the petitioner was not directly affected by the tribunal's decision, which pertained to the bank's tax assessment.

Conclusion:
The court dismissed the writ petition, upholding the validity of the form of certificate under Rule 33A and affirming the tribunal's decision. The court emphasized that Rule 33A and its appended form must be read together to reflect the legislative intent of promoting manufacturing within West Bengal. The court also rejected the constitutional challenge under Articles 301 and 304, finding no violation of inter-state trade freedoms.