COMMERCIAL TAXES OFFICER, JODHPUR versus M/S. VISHNU METALS

Citation: [2006] SUPP. 8 S.C.R. 653 · Decided: 07-11-2006 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

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COMMERCIAL TAXES OFFICER, JODHPUR 
v. 
MIS. VISHNU METALS 
NOVEMBER 7, 2006 
[ASHOK BHAN, AL TAMAS KABIR AND DAL VEER BHANDARI, JJ.] 
Rajasthan Sales Tax Act, 1954; Section 4(2)/Sales Tax New Incentive 
Scheme for Industries, 1989; Clause 26: 
A 
B 
Assessee manufacture steel sheets-Claiming exemption from payment C 
of sales tax in terms of Sales Tax Incentive Scheme on ground of increase in 
production-Taking into account job-work undertaken-Job work-Nature 
of-Eligibility for the purpose of claiming exemption -Held: Tax exemption 
as provided under the Incentive Scheme requires actual production of the 
unit/goods in question-Both the Rajasthan Tax Board and the High Court D 
erred in proceeding on the basis of presumption, that the job work undertaken 
by the assessee is similar in nature to the production of goods by the 
assessee, while allowing the exemption to assessee-Hence, orders passed by 
the Rajasthan Tax Board and the High Court set aside. 
I 
Respondent-company manufactures stainless steel sheets. Its original E 
installed capacity was 1300 M.T. per annum, which was subsequently 
expanded to 1600 M.T. per annum. It utilized more than 85% of its installed 
capacity during certain period. Taking into account the goods manufactured 
and the job work undertaken by it for others, total increase in the production 
was 25% during certain period. The assessee claimed exemption of sales F 
tax in terms of Sales Tax New Scheme for Industrial Unit, 1989 on ground of 
increase in production. The District Level Screening Committee did not grant 
Eligibility Certificate for claiming exemption under the provisions of the 
Incentive Scheme. Aggrieved, the assessee filed an appeal before the 
Rajasthan Tax Board. Allowing the appeal. the Tax Board held that the 
assessee was entitled to add the job work performed in the production to qualify G 
for the Eligibility Certificate under the 1989 Incentive Scheme. The same 
view was reiterated by the High Court in the Revision petition preferred by 
· the Revenue. Hence the present appeal and the connected appeals. 
653 
H 
654 
SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R. 
A 
Allowing the appeal and the connected appeals, the Court 
HELD: Both the Rajasthan Tax Board and the High Court laboured under 
the presumption that the job work performed by the respondent-assessee 
involved manufacture of goods which were similar in nature to its own goods 
for sale. Such an approach was erroneous, since the very nature of the 
B incentive given under the 1989 Incentive Scheme involves calculation of the 
actual production of the unit in question. In the absence of any material to 
indicate the nature of job work undertaken, it w~mld be improper to proceed 
only on the basis of presumption. [656-G-H; 657-A) 
c 
D 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4944 of2001. 
From the Judgment and Final Order dated 18.1.2000 of the High Court 
of Judicature for Rajasthan at Jodhp4r in S.B. Sales Tax Revision No. 1165/ 
1999. 
Sushi! Kr. Jain, Puneet Jain and Sarad Singhania for the Appellant. 
Dr. Manish Singhvi (for K.K. Gupta) and P.V. Yogeswaran for the 
Respondent. 
The Judgment of the Court was delivered by 
E 
AL TAMAS KABIR, J. Civil Appeal No. 4944 of200 I 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 I assessee and setting aside 
F 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, 
G 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 artd 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. 
H 
COMMERCIAL TAXES OFFICER, JODHPUR '" VISHNU METALS [AL TAMAS KABIR, J.] 655 
and during the yea

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