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2020 (1) TMI 887 - HC - VAT and Sales TaxBenefit extended to the petitioner under an agreement of deferral of sales tax liability - manufacture for Parle on job work/contract basis - Department was of the view that the shift from commercial production for its purposes to job work for a third party, constituted a breach of the terms of the deferral - meaning of the expression "for use by him in the manufacture or processing of goods for sale". Whether this phrase limited/restricted the application of the provision to those goods manufactured and sold by the registered dealer using goods purchased against his certificate of registration or whether it also included those goods manufactured by the dealer using materials supplied by a third party under job work, where the goods finally manufactured were sold by such third party? - HELD THAT:- The Revenue argues that the use of the word "normal" in relation to production means that such production has to be only by the assessee availing the deferral. I do not agree. The term "normal production" has to be read qua the "production capacity" and not qua "the entity" - Thus, a proper understanding of clause 9, in my view, is that production qua installed capacity in the factory should not stand interrupted for a period exceeding six months failing which, the entire tax deferred would become recoverable in one lump sum. Admittedly, in this case production has not stopped at all, but has continued consistently over the tenure of the deferral. This is a case were the benefit of deferral has itself been availed by the petitioner only for the period till production for Parle commenced. Thereafter there is no question of deferral, since there is no sale by the assessee and thus no liability to tax. The only consequence of the job work undertaken in the present case is that the tenure of deferral has been reduced from six to two years. Thus, applying the ratio of the judgments of the Full Bench of the Supreme Court in ASSESSING AUTHORITY-CUM-EXCISE AND TAXATION OFFICER, GURGAON AND ANOTHER VERSUS EAST INDIA COTTON MFG. CO. LTD. [1981 (7) TMI 205 - SUPREME COURT], Division Bench in COMMERCIAL TAXES OFFICER, JODHPUR VERSUS VISHNU METALS [2006 (11) TMI 200 - SUPREME COURT] as well as the circular issued by the State setting out the spirit and intendment of the Sales tax deferral Scheme in context, these writ petitions are allowed. Petition allowed.
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