Industrial exemption certificates control tax treatment of transformer repair and assembly under the Orissa sales tax scheme.

The note explains that the expression of manufacture under the Orissa Sales Tax Act was treated broadly enough to include processing activities, and works contract was not excluded from that scope. It further states that where the District Industries Centre issues permanent registration and eligibility certificates specifically covering repairing and assembling of transformers, the sales tax authorities should read the industrial policy exemption in line with those certificates and not disregard them by taking a different view of the activity. On that basis, denial of exemption under Entry 30-FFF was described as unsustainable.

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Issues: Whether repairing and assembling of transformers was eligible for sales tax exemption under Entry 30-FFF of the tax free schedule, and whether the sales tax authorities could disregard the certificates issued by the District Industries Centre.

Analysis: The expression of manufacture under the Orissa Sales Tax Act was wide enough to include processing activities, and works contract was not excluded from its scope. The permanent registration certificate and the eligibility certificate issued by the District Industries Centre specifically referred to repairing and assembling of transformers, and the exemption granted under the industrial policy had to be read on the basis of those certificates. In view of the constitutional treatment of works contract as a deemed sale and the settled position that the assessing authority could not ignore a valid certificate issued by the competent industrial authority, the denial of exemption was unsustainable.

Conclusion: The question was answered in favour of the assessee. The Tribunal was not justified in holding that repairing and assembling of transformers was not eligible for sales tax exemption under Entry 30-FFF, and the contrary orders were set aside.

Ratio Decidendi: Where the competent industrial authority has issued an eligibility certificate covering the activity in question, the sales tax authority cannot deny the corresponding exemption by taking a different view on the nature of that activity.

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