ICI INDIA LTD. AND ANR. versus STATE OF ORISSA AND ORS.

Citation: [2007] 10 S.C.R. 433 · Decided: 28-09-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT

Judgment (excerpt)

/ 
f 
/ 
ICI INDIA LTD. AND ANR. 
A 
v. 
STATE OF ORISSA AND ORS. 
SEPTEMBER 28., 2007 
(DR. ARIJIT P ASA YAT AND TAR UN CHATTERJEE, JJ.] 
B 
,,_ 
--
Orissa Sales Tax Act, 1947-s. 5(1), proviso 5-Differential tax, 
payment of-When attracted-Manufacturer purchasing raw materials 
for manufacture/processing of 'Bulk Premix' for sa/e.,..-Furnishing C 
declaration to the effect in Form No. IV by paying concessional rate 
of tax @ 40/o-However, 'Bulk Premix' transferred to its other units 
in State of Orissa and outside the State for manufacture of 'Bulk 
Explosive '-Held: Proviso 5 to s. 5(1) attracted-There was violation 
of the terms of declaration in Form IV since goods manufactured were D 
~ 
not sold-Thus, manufacturer liable to pay differential tax payable on 
.. 
raw materials purchased at concessional rate by furnishing Form JV-
Order of Sales Tax Authorities as upheld by High Court calls.for no 
interference-Orissa Sales Tax Rules, 194 7. 
Appellant, manufacture and sale of 'Bulk Explosives', set up its 
bulk emulsion premix manufacture unit at Rourkela. It was granted 
certificate of registration which indicated that the appellant required 
E 
.~ 
amon~t others, Ammonium Nitrate to be used for manufacture/process 
of'BulkPremix' for sale. Appellant purchased the principal raw material F 
"Ammonium Nitrate Liquor" for manufacture/process of Bulk Premix 
at its Rourkela unit for sale and gave declaration in Form No.IV to avail 
the concessional rate of tax@4%. The 'Bulk Premix' so manufactured 
is used for manufacture of 'Bulk Explosive' which is not manufactured 
in the appellant's plant Appellant transferred the 'Bulk Premix' to its G 
other branches in the State of Orissa and also outside the State for 
manufacture of 'Bulk Explosive'. The Sales Tax Officer passed 
Assessment Order for assessment year 1997-98 and 1998-99. It held 
that the appellants had contravened the declaration given in Form IV 
433 
H 
434 
SUPREME COURT REPORTS 
[2007] 10 S.C.R. 
A while pure.basing the raw material to avail concessional rate as provided 
>-
in the Orissa Sales Tax Act, 1947 and the Orissa Sales Tax Rules, 1947 
and demanded differential tax as provided in the 5th Proviso to Section 
5(1) of the Act on the raw material purchased. Assistant Commissioner 
of Sales Tax upheld the order. Aggrieved, appellant filed writ petitions 
B which were dismissed. Hence the present appeal. 
Dismissing the appeals, the Court 
HELD: 1.1. In the instant case, the raw material-' Ammonium 
Nitrate Liquor' has been used within the State of Orissa by the appellant 
C in the manufacture of goods namely 'Bulk Premix'. But the 'Bulk 
Premix' so manufactured gets further processed for the manufacture 
of the final product i.e. 'Bulk Explosives' which undisputedlywas for 
sale and is actually sold. [Para 7] [438-E, G] 
D 
1.2. The 5th proviso to s. 5(1) of the Orissa Sales Tax Act, 1947 
indicates the purpose for which the goods are intended to be used i.e. 
for manufacture/processing of goods for sale. The use of the expression 
'within the State ofOrissa' in 5th proviso makes the position clearthat 
the raw materials purchased must be used for manufacture of goods in 
E the State of Orissa for sale. In the instant case, the raw material 
purchased for manufacture of 'Bulk Premix', has not been used for any 
other purpose. Butthe manufactured product i.e. 'Bulk Premix' has not 
been sold but has been transferred to other branches of the appellant 
situated inside as well as outside the State of Orissa. The Certificate of 
F Registration indicates that the raw materials purchased would be utilized 
in the manufacture of'Bulk Premix'. There is also a mention about 
'machinery for explosive'. Though appellant contended that the same 
is the mistake of fact and the only thing which is intended to be produced 
at the. Unit is 'Bulk Premix', and instead of selling the manufactured 
G goods, it is transferred to other places for further manufacture of'Bulk 
Explosive'. The transfer clearly fell within the expression 'any other 
purpose' mentioned iI1the5th proviso to Section 5(1) of the Act.As the 
goods manufactured havenot been sold but have been transferred, there 
is a violation of the terms of the declaration and the assessee has been 
H rightly held to be liable for payment of the differential tax payable on 
I ,_ 
I 
'>-
~ 
..__ .. 
~-
·~ 
ICI INDIA LTD. v. STATE OF ORISSA [PASAYAT, J.] 
435 
the raw materials purchased at concessional rate of ta

Excerpt shown. Read the full judgment & AI analysis in Lexace.