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2004 DIGILAW 466 (MP)

Sanjay Corporation v. Commissioner of Sales Tax

2004-05-12

A.M.SAPRE, ASHOK KUMAR TIWARI

body2004
Judgment ( 1. ) THIS is a sale tax reference made at the instance of a dealer hereinafter called "the assessee" Under Section 44 (1) of the Madhya Pradesh General Sales Tax Act, 1958 (for short called "the Act") to answer the following two questions referred by the Board: 1. Whether, under the facts and circumstances of the case, the Tribunal was justified in rejecting the claim of concessional rate of purchase tax Under Section 7 (2) of the M. P. General Sales Tax Act, 1958 on the raw material used in galvanising nuts and bolts as job-work for another dealer on the ground that such manufactured goods were not sold by the registered dealer manufacturing the goods ? ( 2. ) WHETHER, under the facts and circumstances of the case, the Tribunal was justified in rejecting the claim of concessional rate of entry tax at half per cent on the ground that the material was not used as raw material by the assessee as it was only job-work and not manufacture ? 2. The assessee deals in galvanising the nuts and bolts, etc. The period involved in the case relates to November 8, 1980 to October 27, 1981 and it pertains to sales tax and entry tax. It is not in dispute being the case referred to in the statement of case that during this period, the assessee had entered into a contract with one M/s. Raj Enterprises for galvanising their nuts and bolts. To execute these orders the assessee had purchased material worth Rs. 9,40,601. 92. After deducting a tax paid material amounting to Rs. 1,20,310. 25, the taxable amount was adjudged as Rs. 8,20,291. 67. Accordingly, entry tax was assessed at 1 per cent being Rs. 8,202. 91 whereas for sales tax, the turnover was fixed as Rs. 11,32,431. 35. In the opinion of taxing authorities, i. e. , assessing officer and Appellate Tribunal the transactions in question were considered as job-work and not manufacture in the hands of the assessee. It is for this reason, the sale amount was taken to be nil. ( 3. ) IN appeal filed by the assessee it was contended that raw material purchased by the assessee should be assessed at the concessional rate of 0. 5 per cent. It is for this reason, the sale amount was taken to be nil. ( 3. ) IN appeal filed by the assessee it was contended that raw material purchased by the assessee should be assessed at the concessional rate of 0. 5 per cent. It was held that since the work done by the assessee was in the nature of a job-work and was not a manufacture, the assessee is not entitled to the benefit of concessional rate of tax. It was held that concessional rate is available only on the raw material which is entered in the registration certificate as raw material or as incidental goods. It was further held that since no evidence was tendered by the assessee on any of the aforementioned points and hence, they are not entitled to get the benefit of any concessional rate of tax. So far as payment of purchase tax was concerned, the case of assessee was that it should be charged at the rate of 3. 5 per cent. However, this was also not accepted on the ground that the transaction in question is not a manufacture. This finding was again assailed by the assessee before the Tribunal in second appeal by contending that the job-work done by them amounts to manufacture for the purpose of getting the benefit of concessional rate of tax. However, even the Board while repelling this contention and upholding the finding of assessing officer and appellate authority held that from mere reading of the wordings of Section 7 (2) of the Act read with Rule 20-B (iii) it is clear that the concessional rate of purchase tax is applicable only if the goods manufactured by using the raw material are sold by the registered dealers who have actually manufactured the said goods. It was held that since in this case the alleged goods were not sold by the assessee as a registered dealer and hence, the case in hand would not come within the mischief of Section 7 (2) read with rule 20-B of the Rules. As a consequence, the assessee was not held entitled to get the benefit of concessional rate of purchase tax, as also entry tax. The assessee thereupon prayed for the reference to be made to this Court. As a consequence, the assessee was not held entitled to get the benefit of concessional rate of purchase tax, as also entry tax. The assessee thereupon prayed for the reference to be made to this Court. However, it was in the first instance declined but later at the direction of this Court, the aforementioned two questions were referred by the Board for answer. This is how, this reference has come to this Court. ( 4. ) HEARD Shri S. R. Kochatta, learned Counsel for the applicant. None for the non-applicant. ( 5. ) IN order to answer the reference, Section 7 (2) and rule 20-Bneed to be taken note of. They read as under: 7 (2 ). Notwithstanding anything contained in Sub-section (1) but subject to such restrictions and conditions as may be prescribed, the tax under Sub-section (1) payable by a registered dealer on the goods, (other than tendu leaves, opium including raw opium and whole pulses), purchased by him for consumption or use in the manufacture or processing of goods for sale or in the mining of goods or in the generation or distribution of electricity or any other form of power shall be charged at the concessional rate of 31/2 per cent in respect of raw material and 41/2 per cent in respect of incidental goods. 20-B. Levy of concessional rate of tax under Sub-section (2) of A Section 7 The tax at the concessional rate under Sub-section (2) of Section 7 on the purchases of material or incidental goods for use in the manufacture of other goods for sale shall be levied subject to the following restrictions and conditions, namely:. . . (iii) The goods manufactured by using raw material or incidental goods shall be sold by the registered dealer manufacturing such goods, 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. ( 6. ) MERE perusal of the aforequoted provisions would indicate that the benefit of the concessional rate of tax be that a purchase tax payable Under Section 7 (2) or entry tax, it is necessary for the assessee to not only manufacture the said goods but also to sell as a registered dealer. ( 6. ) MERE perusal of the aforequoted provisions would indicate that the benefit of the concessional rate of tax be that a purchase tax payable Under Section 7 (2) or entry tax, it is necessary for the assessee to not only manufacture the said goods but also to sell as a registered dealer. The use of the words "for sale" in Section 7 (2) and "shall be sold by the registered dealer" in rule 20-B (iii) makes the legislative intent very clear. ( 7. ) IT is not the case of the assessee that they not only manufactured but sold the said nuts/bolts as a registered dealer so as to get the benefit of concessional rate of tax 3. 5 per cent as also tax and entry tax. Indeed, the case of the assessee was that they did the job-work for one other person and returned to them. It is thus, not a sale of manufactured goods by the assessee in his capacity as a registered dealer in course of his business either in State as intra-State sale or outside the State as inter- State trade or commerce or even in the course of export outside the territory of India. ( 8. ) WE are inclined to accept the view taken by the Board when the learned Member of the Board distinguished the decision of the Supreme Court in the case of Assessing Authority-cum-Excise and Taxation Officer v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239. It was rightly held that the said decision turned on the language employed in Section 8 (3) (b) of the Act that fell for consideration. When the language of two Acts are different, then the law laid down in that case will have no bearing. It is then of little help for interpreting the other section. It is only when the wording of both the Acts/ section/rules are in pari materia the help can be taken to interpret the concerned sections at par. Such is not the case here when we look to the phraseology of Section 8 (3) (b) of the Act that fell for consideration before the Supreme Court and the one that has fallen for interpretation in this case. ( 9. ) IN our opinion, the provision relating to conferring benefit in payment of tax at a concessional rate calls for strict interpretation. ( 9. ) IN our opinion, the provision relating to conferring benefit in payment of tax at a concessional rate calls for strict interpretation. In other words, it is necessary for the assessee to satisfy each and every condition required to claim the benefit of concessional rate of tax. ( 10. ) IN view of aforesaid discussion, we answer the reference in affirmative and against the assessee and in favour of Revenue. No costs.