Commercial Taxes Officer, Jodhpur vs M/S Vishnu Metals

Civil Appeal No. 4944 of 2001 is directed against the judgment of the Rajasthan High Court at Jodhpur dated 18th January, 2000, in S.B. Sales Tax Revision No. 1165 of 1999 under Section 86(2) of the Rajasthan Sales Tax Act, 1994. The said revision was directed against the judgment dated 9th February, 1999, passed by the Rajasthan Tax Board, Ajmer, allowing the appeal preferred by the respondent/assessee and setting aside the decision of the District Level Screening Committee taken on 19th March, 1998, rejecting the assessee's application for Eligibility Certificate under the Sales Tax New Incentive Scheme for Industries, 1989. The assessee, which is the respondent in the present appeal, manufactures stainless steel sheets. Its original installed capacity was 1300 M.T. per annum prior to 16th February, 1995. Subsequently, the assessee expanded its production capacity to 1600 M.T. per annum and achieved the production of more than 85% of the installed capacity between 16th February, 1995 and 16th June, 1996. According to the materials on record, the production of the assessee between April, 1994 to 15th February, 1995 was 1292.913 M.T. and during the year following the date of expansion, the assessee manufactured its own goods to the extent of 1447.489 M.T. It is the case of the assessee that apart from manufacturing its own goods, the assessee had also manufactured goods by doing job work for others and the entire production, taking into account the goods manufactured for its own purposes and the job work, would amount to a total of 2193.76 M.T. In other words, if the job work undertaken by the assessee for others is also taken into consideration, along with the production for its own purposes, such production would constitute an increase in the production to more than 25% of the original installed capacity.

The assessee applied to the District Level Screening Committee for grant of Eligibility Certificate under the provisions of the said 1989 Incentive Scheme on account of expansion of its installed capacity. The said Committee came to the conclusion that since the production by the assessee had been raised during the period in question from 1292.913 M.T. to 1447.489 M.T., it had utilized more than 85% capacity, but the production had not increased to the extent of 25% of the licensed/registered capacity and accordingly rejected the claim of the assessee. Against the said decision of the District Level Screening Committee, the assessee went before the Rajasthan Tax Board by way of Appeal No. 798/98/S.T./Jodhpur, wherein it was contended that apart from the production for its own purposes, the assessee had also undertaken "job work" and that the two taken together would far exceed the required increase in the production to the extent of at least 25% of the licensed/registered capacity. Accepting the submissions made on behalf of the assessee that since the definition of the expression "expansion" did not stipulate that the production had to be for its own purposes, the Tax Board held that the assessee was entitled to add the job work performed to its own production for its own purposes to qualify for the Eligibility Certificate under the 1989 Incentive Scheme.

The Department's appeal must, therefore, succeed and is allowed and the judgment of both the Rajasthan Tax Board and the High Court dated 18th January, 2000 and 9th February, 1999, respectively, are set aside. There will, however, be no order as to costs.

(Arising out of SLP ) No.2165/2003) Leave granted.

As the issue involved is the same in both these appeals, the decision in Civil Appeal No. 4944 of 2001 will govern this appeal as well. Consequently, the Department's appeal succeeds and the judgment of both the Rajasthan Tax Board and the High Court dated 14th August, 2002, and 3rd October, 2001, respectively, are set aside.

There will be no order as to costs.