Purchase turnover exclusion and tax rate relief followed binding precedent and unsupported findings on synthetic rubber use.

Rubber cess paid to the Rubber Board was held not to form part of the assessee-manufacturer's purchase turnover, because binding Full Bench precedent had already excluded it. The Tribunal therefore accepted the assessee's claim on turnover. On the tax-rate issue, the Revenue failed to produce material showing that synthetic rubber was used in manufacturing tread rubber, so the factual basis for applying 12 per cent was not established. The assessee was accordingly liable only at 10 per cent. The Tribunal's common order disclosed no error of law, and the revisions failed.

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Issues: (i) whether rubber cess paid by the assessee-manufacturer to the Rubber Board was includible in its purchase turnover; and (ii) whether the assessee was liable to tax at 12 per cent on the footing that synthetic rubber was used in the manufacture of tread rubber, or only at 10 per cent.

Issue (i): whether rubber cess paid by the assessee-manufacturer to the Rubber Board was includible in its purchase turnover.

Analysis: The existing Full Bench decision had already settled that rubber cess paid to the Rubber Board does not form part of the assessee's purchase turnover. The Tribunal followed that binding decision and accepted the assessee's plea.

Conclusion: The cess was not includible in the purchase turnover, in favour of the assessee.

Issue (ii): whether the assessee was liable to tax at 12 per cent on the footing that synthetic rubber was used in the manufacture of tread rubber, or only at 10 per cent.

Analysis: The Tribunal found that the Revenue had not produced material to establish use of synthetic rubber in the manufacture of tread rubber. The finding of the assessing authority was held to be unsupported by material, and the assessee's explanation was accepted.

Conclusion: The higher rate of 12 per cent was not attracted, and the assessee was liable only at 10 per cent, in favour of the assessee.

Final Conclusion: No error of law was shown in the Tribunal's common order, and the revisions failed.

Ratio Decidendi: A turnover addition or enhanced tax rate cannot be sustained where the binding precedent excludes the item from turnover and the factual finding supporting the higher levy is unsupported by material.

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