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<h1>Court affirms tax benefit for small-scale industries on raw materials despite exemption</h1> The court held that small-scale industrial units entitled to exemption from sales tax are also entitled to a concessional rate of tax on industrial raw ... - Issues:1. Whether small-scale industrial units entitled to exemption from sales tax are also entitled to a concessional rate of tax on the sale of industrial raw materials and component parts.2. Whether the proviso to section 5(3) of the Sales Tax Act applies to exclude the benefit of a lower tax rate for new industrial units entitled to limited exemption from sales tax.Analysis:1. The judgment dealt with the issue of whether small-scale industrial units entitled to exemption from sales tax are also entitled to a concessional rate of tax on the sale of industrial raw materials and component parts. The court noted that the assessees, who were small-scale industrial units set up after a specified date, were granted exemption from sales tax for a period of five years under a government order. The court held that these units are indeed entitled to the concessional rate of tax on the sale of industrial raw materials and component parts under section 5(3) of the Sales Tax Act.2. The second issue revolved around the application of the proviso to section 5(3) of the Sales Tax Act to exclude the benefit of a lower tax rate for new industrial units entitled to limited exemption from sales tax. The court analyzed the language of the proviso, which stated that the concessional rate is not available if the finished products are not liable to tax under the relevant Acts or are exported. The court interpreted that the proviso would only apply if there was 'no liability' to tax under the Act. Since the small-scale industrial units were exempted from sales tax for a limited period but were still liable to tax under the Act, the proviso did not exclude them from the benefit of the lower tax rate under section 5(3).3. The court rejected the argument to reinterpret the proviso to section 5(3) and upheld the judgment of the single judge. It concluded that the small-scale industrial units were entitled to purchase industrial raw materials at a concessional rate and dismissed the writ appeal filed by the Revenue. The court found no grounds to interfere with the lower court's decision and agreed with its reasoning and conclusion.In summary, the judgment clarified that small-scale industrial units entitled to exemption from sales tax are also entitled to a concessional rate of tax on industrial raw materials. Additionally, the proviso to section 5(3) does not exclude these units from the benefit of the lower tax rate if they are still liable to tax under the Act despite the exemption.
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