Strict construction of tax incentive schemes bars new claims and marble job work was not treated as manufacture.

The Rajasthan High Court treated manufacture under section 2(27) of the Rajasthan Sales Tax Act, 1994 as processing that brings into existence a commercially different and distinct commodity. On the facts, marble job work did not amount to manufacture for the incentive scheme, and the claimant failed to establish entitlement to an eligibility certificate within the strict scheme conditions. The Court also held that, having claimed the benefit before the screening committee as an expansion unit, the respondent could not raise a fresh claim as a new industrial unit for the first time before the Tax Board. The department's challenge therefore succeeded.

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Issues: Whether the respondent-unit was entitled to an eligibility certificate under the Rajasthan Sales Tax New Incentive Scheme for Industries, 1989 on the footing that its marble processing activity amounted to manufacture, and whether a new claim as a new industrial unit could be raised for the first time before the Tax Board.

Analysis: The definition of manufacture under section 2(27) of the Rajasthan Sales Tax Act, 1994 was treated as requiring processing that brings into existence a commercially different and distinct commodity. On the facts, the unit was engaged in job work in relation to marble and did not carry out processing amounting to manufacture for purposes of the incentive scheme. The exemption scheme was also treated as requiring strict construction, with the burden on the claimant to establish entitlement within the statutory conditions. Since the respondent had sought the benefit before the screening committee only as an expansion unit, it was held impermissible to introduce a fresh claim as a new industrial unit for the first time before the Tax Board.

Conclusion: The respondent was not entitled to the eligibility certificate, and the department's challenge succeeded.

Ratio Decidendi: A claim for tax exemption or incentive must be strictly proved within the precise statutory or scheme conditions invoked, and job work that does not create a commercially distinct commodity does not amount to manufacture for the purpose of such exemption.

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