Case: ICI India Ltd.  Vs. State Of Orissa

it is admitted that the appellant manufactures only "Bulk Premix" in this unit. In the Certificate of Registration it is mentioned that raw materials purchased would be used in the manufacture of "Bulk Premix". Though certificate also mentioned about "machineries for explosives" before the High Court it was conceded that it is a mistake and assessee does not manufacture "Bulk Explosives" in the Rourkela Unit. Thus the appellant purchases raw materials mainly from SAIL in Orissa and other raw materials in Bihar and had manufactured "Bulk Premix" in their Rourkela Unit. Undisputedly, appellant gave declaration in Form IV for concessional rate of tax i.e. 4%. Admittedly, the appellant did not sell "Bulk Premix" manufactured by it and the same is used after stock transfer for manufacture of "Bulk Explosive" in other units in Orissa and places outside the State. 9. It is submitted by the revenue that the stress is on use of the goods purchased in the manufacture/process of "goods for sale". By not selling "Bulk Premix" and instead effecting stock transfer for manufacturing of "Bulk Explosives" for sale, there is clear violation of the first limb of the 5th proviso to Section 5(1) and therefore second limb of the proviso is attracted making the assessee liable to pay the differential tax on goods. 10. The First proviso to Section 5(1) is conceptually different from Section 8(3) of the Central Act. While the Act used the expression "within the State of Orissa" the Central Act does not have any such restriction. This is inevitable because in respect of the Central Act, the sale has to be outside the State. The use of the expression "within the State of Orissa" in 5th proviso makes the position clear that the raw materials purchased must be used for manufacture of goods in the State of Orissa for sale. 11. Entry serial No. 48 of List-C, is quoted below:- "Goods of the class or classes specified in the certificates of registration of the registered dealer purchasing the goods as being intended for use by him in the manufacture or processing or packing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power subject to the production of true declaration by the purchasing registered dealer or his authorized agent in Form IV." 12. The 5th proviso to section 5(1) of the Act reads as under:- "5. Rate of tax - (1) The tax payable by a dealer under this Act shall be levied on his taxable turnover at such rate, not exceeding twenty five percent, and subject to such conditions as the State Government may, from time to time, by notification specify:xx xx xxProvided further that where a registered dealer purchases goods of the class or classes specified in his Certificate of Registration as being intended for use within the State of Orissa by him in the manufacture or processing of goods for sale or in mining or in generation or distribution of electricity or any other form of power at concessional rate of tax or free of tax after furnishing a declaration in the prescribed form, but utilizes the same for any other purpose or outside the State of Orissa, he shall pay the difference in tax or the tax, as the case may be, payable had he not furnished the declaration." 13. Form IV, which is appended to the list of taxable goods, is in the following language:- "I/we - hereby declare that the goods purchased by me/us in ash Memo/Bill No.---dated the ?from? shall be used in the manufacture/processing or packing of goods for sale in mining/generation or distribution of electricity or any other form of power.Dealer/Auhorised Agent." 14. The 5th proviso to Section 5(1) indicates the purpose for which the goods are intended to be used i.e. for manufacture/processing of goods for sale. In the instant case the raw material purchased for manufacture of "Bulk Premix", has not been used for any other purpose. But the manufactured product i.e. "Bulk Premix" has not been sold but has been transferred to other branches of the appellant situated inside as well as outside the State of Orissa. 15. As noted above the Certificate of Registration indicates that the raw materials purchased would be utilized in the manufacture of "Bulk Premix". There is also a mention about "machinery for explosive". Though it was contended by the appellant that the same is the mistake of fact and the only thing which is intended to be produced at Rourkela is "Bulk Premix", it is conceded that the "Bulk Premix" manufactured had not been sold but has been sent to different places for manufacture of other goods i.e. "Bulk Explosive". The position is factually different from that under consideration in Indian Aluminums case (supra) as the appellants instead of selling the manufactured goods transferred it to other places for further manufacture of "Bulk Explosive". The transfer clearly falls within the expression "any other purpose" mentioned in the 5th proviso to Section 5(1) of the Act. As the goods manufactured have not been sold but have been transferred, there is a violation of the terms of the declaration and the assessee has been rightly held to be liable for payment of the differential tax payable on the raw materials purchased at concessional rate of tax by 4% paid by furnishing Form IV. High Courts impugned judgment, therefore, does not warrant any interference. It may be noted that the High Court made some observation about what would have been the consequence had there been mention of final product in the Certificate of Registration of the appellant. 16. Learned counsel for the respondent-State submitted that the observations of High Court are erroneous. Though learned counsel for the appellants also referred to the observation to support their stand, we make it clear, that we have not expressed any opinion about the correctness of the said view as that does not really fall for determination in the present case. 17.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]appellants instead of selling the manufactured goods transferred it to other places for further manufacture of "Bulk Explosive". The transfer clearly falls within the expression "any other purpose" mentioned in the 5th proviso to Section 5(1) of the Act. As the goods manufactured have not been sold but have been transferred, there is a violation of the terms of the declaration and the assessee has been rightly held to be liable for payment of the differential tax payable on the raw materials purchased at concessional rate of tax by 4% paid by furnishing Form IV. High Courts impugned judgment, therefore, does not warrant any interference