2004 (5) TMI 551 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of concessional rate of purchase tax under section 7(2) of the M.P. General Sales Tax Act, 1958 on raw material used in jobwork.
2. Interpretation of concessional rate of entry tax on material used in jobwork and not manufacture.

Issue 1:
The High Court addressed the first issue regarding the interpretation of the concessional rate of purchase tax under section 7(2) of the M.P. General Sales Tax Act, 1958 on raw material used in jobwork. The assessee contended that the raw material purchased should be assessed at the concessional rate of 0.5 per cent. However, the taxing authorities considered the work done by the assessee as job-work and not manufacture, thus denying the benefit of the concessional rate of tax. The Court emphasized that the concessional rate is applicable only if the goods manufactured using the raw material are sold by the registered dealers who actually manufactured the goods. Since the alleged goods were not sold by the assessee as a registered dealer, the Court held that the assessee was not entitled to the benefit of the concessional rate of purchase tax.

Issue 2:
The second issue involved the interpretation of the concessional rate of entry tax on material used in jobwork and not manufacture. The assessee argued for the benefit of the concessional rate of entry tax, contending that the job-work done by them amounts to manufacture for the purpose of obtaining the benefit of the concessional rate of tax. However, the Board upheld the findings of the assessing officer and appellate authority, stating that the goods manufactured using raw material should be sold by the registered dealer manufacturing such goods to qualify for the concessional rate of tax. The Court noted that the legislative intent, as reflected in the relevant provisions, required the assessee not only to manufacture the goods but also to sell them as a registered dealer to avail the concessional rate of tax. As the assessee did not sell the manufactured goods as a registered dealer, the Court ruled against the assessee, affirming the decision in favor of the Revenue.

In conclusion, the High Court answered the reference in the affirmative, ruling against the assessee and in favor of the Revenue on both issues. The Court stressed the importance of strict interpretation in claiming the benefit of concessional rates of tax, emphasizing the need to satisfy all conditions to qualify for such benefits.