9911796707
TMI Blog1995 (12) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are used in the manufacture of an intermediate or finished product, or in the processing, improvement or repairs of goods,- (i) when brought into local areas by an industrial unit, or (ii) when brought into local area by any dealer who, after having so brought, sells or supplies the same to an industrial unit located either within the same local area or outside it. Explanation I.-The words 'industrial unit' mean, a manufacturing unit which falls within the definition of a 'factory' under the Factories Act, 1948 (Central Act No. LXIII of 1948), but excludes,-(i) handicrafts manufacturing units, (ii) handloom weaving units, and (iii) any other group or class of industries which may with reference to their nature, competitiveness, employment potential or such other factors, be notified by the State Government. Explanation II.-The words 'raw materials, component parts and inputs' do not include agricultural produce, horticultural produce, timber or wood of any species, silk cocoons, raw, thrown or twisted silk, tobacco (whether raw or cured), cement, paper, electrical goods, ................... or, such other inputs as may be notified by the State Government for purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing unit or an industrial unit should be disallowed. The controversy had arisen because the assessing officer took the view, as far as the appellants are concerned that they do not qualify for payment of tax whereas the Commissioner of Commercial Taxes exercising his revisional powers under section 15 of the Act, after hearing the appellants passed orders in respect of two assessment years, holding that the exemption was wrongly granted and that the appellants are liable to be assessed. It is against these orders that the present appeals have been directed. 4. The real and substantial challenge that is presented by the appellants' learned advocate is on the basis of a relatively long line of judicial decisions in all of which similar activities have been construed by the courts has not to come within the broad umbrella of the definition of a manufacturing unit or an industrial unit. The appellants' learned advocate has essentially relied on a Division Bench decision of this Court reported in [1993] 201 ITR 1002; (1993) KLJ 140 in the case of Commissioner of Income-tax v. Hotel Ayodya. The court in that instance was dealing with a plea canvassed by a hotel which had installe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasion to rely on an earlier decision of the Karnataka High Court reported in [1985] 154 ITR 53 in the case of Koshy's Private Limited v. Commissioner of Income-tax, Karnataka. The distinction which the court was required to make in that case was that since the assessee was running several units including a department store, a bakery, etc., that it was not permissible as far as one of those units were concerned, namely the restaurant, to permit it to come within the definition of manufacturing unit. In a slightly different context, the Supreme Court had occasion to consider the position in relation to cold storage units with an entirely different process in Delhi Cold Storage P. Ltd. v. Commissioner of Income-tax [1991] 191 ITR 656 (SC) having regard to the fact that the processing done by a cold storage unit bringing about some change or alteration of the goods or materials, the court held that it could only answer the definition of a processing unit and not a manufacturing unit. 6.. The appellants' learned advocate placed reliance on a decision of the Supreme Court in the case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386, wherein, the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity carried out on a very large scale, which in his submission would bring the enterprise within the definition of a manufacturing unit or an industrial unit for purposes of entry No. 16-B. What the learned advocate submits basically is that having regard to this volume, it ceases to be a restaurant simpliciter and that consequently, the provisions of the Act are attracted. In this regard, he further submits that even as far as the facts are concerned, that in order to cater to this volume of turnover that the processes themselves would have to be on a scale that is equitable to an industry. As an example, the learned advocate quoted situations whereby even handicrafts or edible items are produced on an extremely large scale and commercially marketed and one instance that he put forward to the court was in respect of the production of biscuits, which may not be produced by a large company or industrial house which would come within the conventional definition of an industry or a manufacturing unit. He also submitted that it is really the volume and the scale on which the activity is carried out, which is the distinguishing and outstanding factor. As far as the views expressed by b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alify immediately for exemption. Similarly, while considering the process, the learned advocate for the appellants has advanced a very strong plea that this is only a magnification of what goes on in any domestic kitchen in a household but we are unable to accept that contention because admittedly, processing of food items is also an established industry, the glaring examples being of items such as biscuits, chocolates, etc. It is in this background therefore that we are unable to accept the submission that merely because there may be a common source of supply to the restaurant as also to the rest of the production which is commercially marketed, that the appellants will ipso facto qualify for being exempted from the provisions of entry No. 16-B. In our view, the views expressed by the various courts while considering parallel provisions under the Income-tax Act and Sales Tax Act will not hold good as far as the present enactment is concerned, for the reason that entry No. 16-B does encompass a very comprehensive and omnibus entry which is very clearly lays down that it is only the financial parameters that are to be taken into account by the authorities for the purpose of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
