Rubber purchase tax concession extended to tread rubber where raw rubber is used as manufacturing input.

A tax concession on the purchase of raw rubber used in manufacturing tread rubber was interpreted by its plain language to include small-scale rubber industrial units using raw rubber as an input for finished rubber products within the State. Tread rubber was treated as a rubber product for the notification, so its possible description as a synthetic rubber product did not defeat eligibility. A later clarificatory notification was also read as removing ambiguity by expressly including tread rubber. On that basis, the 5% levy was held unsustainable and the concessional 3% rate applied.

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Issues: Whether the assessee was entitled to the concessional rate of tax of 3% on the purchase of raw rubber used in the manufacture of tread rubber under the relevant Government notifications.

Analysis: The notifications granting reduction in tax were construed according to their plain language. Under S.R.O. No. 585 of 1980, the concession applied to purchase of rubber by small-scale rubber industrial units for use in manufacturing rubber products within the State, and the explanation showed that raw rubber used as a raw material in the industrial unit was sufficient. Tread rubber was treated as a rubber product within the meaning of the notification, so the fact that it may also be described as a synthetic rubber product did not defeat the concession. Alternatively, under S.R.O. No. 641 of 1981 as clarified by S.R.O. No. 1516 of 1990, the concession extended to manufacturers of finished rubber products within the State, and the later explanation removed ambiguity by expressly including tread rubber.

Conclusion: The assessee was entitled to the concessional rate of 3% on the purchase turnover of rubber used for manufacturing tread rubber.

Final Conclusion: The levy at 5% was unsustainable, the Tribunal's view was set aside, and the revision succeeded to the extent of granting the concessional rate.

Ratio Decidendi: A tax concession for purchase of rubber used in manufacturing rubber products extends to tread rubber where the raw rubber is used as a raw material in the manufacture of the finished product, and a subsequent clarificatory amendment may be relied on to remove ambiguity in the original notification.

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