Research › Browse › Judgment

Madhya Pradesh High Court · body

1988 DIGILAW 255 (MP)

Kalpana Industries v. Commissioner of Sales Tax

1988-10-06

K.M.AGARWAL, R.K.VERMA

body1988
JUDGMENT : ( 1. ) BY this reference under Section 44 (1) of the M. P. General Sales Tax Act, 1958 (for short, the "act"), at the instance of the assessee, the Tribunal has referred the following question of law to this Court for its decision : Whether, under the facts and circumstances of the case, the Board of Revenue was justified in holding that all intermediate processes involved in the manufacture of goods must take place in Madhya Pradesh for claiming concession under sub- Section (1) of Section 8 of the M. P. General Sales Tax Act, 1958 ? ( 2. ) THE assessee is engaged in the business of manufacturing tungsten filaments and lead in wires in its registration certificate (sic ). Wires, copper and brass in all forms were mentioned as raw materials for the manufacture of electrodes and filaments. During the assessment period 7th November, 1972 to 25th October, 1973 the assessee purchased copper rivets from the registered dealers on declaration in form XII-A and sent them to Bombay for conversion thereof into wires, on job basis. On these facts, the assessing authority came to the conclusion that the assessee was not entitled to the concessional rate of tax under Section 8 (1) of the Act and accordingly imposed penalty on it under Section 8 (2) of the Act. The assessment order was upheld in the first appeal by the Additional Appellate Deputy Commissioner of Sales Tax. The second appeal filed by the assessee was dismissed by the Tribunal by holding that the entire process of manufacturing was not undergone in the State of M. P. and, therefore, the assessee was not entitled to the concessional rate of tax under Section 8 (1) of the Act. Being aggrieved, the assessee applied for a reference and accordingly the said reference was made to this Court by the Tribunal. ( 3. ) SECTION 8 (1) of the Act provides as follows: 8. Being aggrieved, the assessee applied for a reference and accordingly the said reference was made to this Court by the Tribunal. ( 3. ) SECTION 8 (1) of the Act provides as follows: 8. (1) Notwithstanding anything contained in Section 6 but subject to such restrictions and conditions as may be prescribed, the tax payable under Section 6 on the sale by a registered dealer of any raw material other than tendu leaves and whole pulses, or incidental goods for the manufacture of other goods for sale in the State of Madhya Pradesh or in the course of inter-State trade or commerce or in the course of export out of the territory of India shall be levied at the rate of 3. 5 per cent in respect of raw material and 4. 5 per cent in respect of incidental goods of the sale price thereof : Provided that when the tax on the sale of such raw material or incidental goods under Section 6 is payable at a rate lower than 3. 5 per cent or 4. 5 per cent respectively, the tax payable under this Sub- section shall be calculated at such lower rate or at such other lower rate as may be notified by the State Government. A fair reading of the words "for the manufacture of other goods for sale in the State of Madhya Pradesh or in the course of inter-State trade or commerce" would show that Section 8 (1) of the Act does not require raw materials to be used for the manufacture of other goods in the State of M. P. Section 8 (1) speaks of sale of manufactured goods in the State of M. P. From the Tribunals order, it does not appear that the manufactured goods were not sold in the State of M. P. or in the course of inter-State trade or commerce or in the course of export out of the territory of India. It appears that one of the processes in the manufacture of electrodes and filaments was undergone at Bombay and the end-product was finished at Indore within the State of M. P. On these facts, we are of the view that the Tribunal was not justified in holding that all intermediate processes involved in the manufacture of goods must take place in the State of Madhya Pradesh for claiming concession under Sub-section (1) of Section 8 of the M. P. General Sales Tax Act, 1958. We are supported in our view by a Division Bench decision of this Court in Sushil Kumar Sharad Kumar v. Commissioner of Sales Tax [1985] 60 STC 184. We accordingly answer the question referred to us in favour of the assessee and against the department. ( 4. ) IN the circumstances of the case, we make no order as to costs of this reference.