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2012 DIGILAW 732 (MP)

Surya Roshni Ltd. , Gwalior v. State of M. P.

2012-07-18

BRIJ KISHORE DUBE, S.K.GANGELE

body2012
Judgment Shri Pawan Dwivedi, Advocate for the petitioner. Shri Praveen Niwaskar, Government Advocate for the respondents/State. 2. The petitioners has filed this petition against the order dated 29-11-2010 (Annexure P/1) passed by respondent No. 2 Divisional Deputy Commissioner, Commercial Tax, Gwalior Division-1. 3. By the aforesaid order, the petitioner was directed to deposit an amount of Rs. 11,08,037/- as a tax. The authority has specifically held that the petitioner has purchased plant and machinery for the purpose of expansion of unit, however, it did not pay the entry tax on the aforesaid unit because the petitioner purchased the following materials (Annexure P/2) details of which, are as under:- Total Purchases Rs. 1,17,49,44,192.00 Raw Material, Stores and Spares, Packing Material, Capital Stores, Fuel etc. 1,17,49,44,192.00 Total Deductions:- (1) Tax paid Machinery 6,12,05,646.00 Spare Parts 4,71,727.00 Chemical 43,48,450.00 Lubricant 4,89,578,00 Paint 9,799.00 H. S. D. 49,73,358.00 Natural Gas 5.09.12.734.00 6.12.05.646.00 (2) Local Goods 24,91,49,386.00 Raw Material and Packing Material 24,91,49,386.00 Less:- Job work 24,93,64,989.00 Exp. 2,15.603.00 24,91,49,386.00 (3) Purchase not during the course of business hence not liable to entry tax 10,13,52,943.00 (i) Civil Store (Building Material) 26,53,088.00 (ii) Building Material, Wall Clock Safety Tank etc. 31,23,969.00 (iii) Purchase of Plant and Machinery and spares for expansion of C. F. L. Plant, R.F. 12 production in expansion commenced on dated 1-8-2009, therefore purchase of above-said plant and machinery is before commencement of production, therefore, not during the course of business hence not liable to entry tax 9,55,75,886.00 10.13.52.943.00 (4) Labour Job expanses 2.15.603.00 Rs. 41,19,23,578.00 Taxable 76,30,20,614.00 E. T. @ 1% 76,30,206.00 Deposit 77,23,304.00 Through Challan 73,44,912,00 Through R.A.O. 3.78.392.00 Excess 77.23.304.00 4. The petitioner is liable to pay tax @ 1%. The authority further held that there is a distinction between expansion capacity and establishment of new unit because the petitioner was in the activity of expansion, hence, it is liable to pay entry tax. 5. The aforesaid point has already been decided by Division Bench of this Court in the case of Perfect Pottery Co. Ltd. Ratlam vs. Commissioner of Sales Tax, Madhya Pradesh, 1989 MPLJ 793 = (1989) 22 VKN 451 , wherein the Division Bench of this Court has held that the purchase of building materials for the purpose of repairs, renewal and maintenance, cannot be said to be an activity in the course of business and it is not liable to purchase tax. 6. 6. The findings of Division Bench are as under :- "For determining the question of liability to purchase tax, it would make no difference whether the activity of construction is under token to make the building available for starting the business or for expansion of business or for maintenance or-continuance of business. The activity of construction is a condition precedent not only for starting business of manufacture or its expansion but also for continuance of the business of manufacture and such activity of construction cannot be said to be the business of assessee so as to make him liable to pay tax on the purchase of building material used in such building activity." 7. Similar principle has been reiterated by Division Bench of this Court in the case of Commissioner of Sales Tax, Madhya Pradesh vs. Satna Cement Works. Satna, (1984) 17 VKN 260 wherein the Division Bench of this Court has held as under :- "That the building is expanded, it would only mean the building activity precedes the expansion of the business for which purpose the building is required. Therefore, the building materials, which were purchased for the construction of the building, cannot be said to be in the course of business of the assessee and the levy of purchase-tax on the purchase of building materials was not justified." 8. Hence, on the basis of aforesaid principle laid down by Division Bench of this Court, the petitioner is not liable to purchase tax and certainly it is not liable for entry tax because purchase of materials for expansion of business could not be said to be an activity in the course of business. Hence, the order passed by the authority is contrary to law. 9. Learned Government Advocate for the respondents-State also raised an objection in regard to maintainability of the petition on the ground that there is an alternative remedy available to the petitioner. 10. In our opinion, there is no adjudication on the facts in this petition. On the admitted facts, the authority has misconstrued the provisions of law. Hence, the writ petition could not be dismissed at this stage, when the return has already been filed by the respondents-State. Hence, the petition of the petitioner is allowed. The impugned order dated 29-11-2010 (Annexure P/1) passed by respondent No. 2 Divisional Deputy Commissioner, Commercial Tax, Gwalior Division-1, is hereby quashed. No order as to costs. Hence, the writ petition could not be dismissed at this stage, when the return has already been filed by the respondents-State. Hence, the petition of the petitioner is allowed. The impugned order dated 29-11-2010 (Annexure P/1) passed by respondent No. 2 Divisional Deputy Commissioner, Commercial Tax, Gwalior Division-1, is hereby quashed. No order as to costs. Petition allowed.