2022 (7) TMI 189 - HC - VAT and Sales Tax

Court overturns Tribunal decision on Form IV in works contracts, deems transformer repair as manufacturing.

The Court set aside the Orissa Sales Tax Tribunal's decision, emphasizing the need for consistency in interpreting the law regarding the acceptance of ... Purchase of goods at a concessional rate exclusively for the manufacturing purposes - Acceptance of Form IV - Whether the Petitioner is entitled to purchase goods for use in processing/manufacturing of transformers against declaration Form No.IV? - HELD THAT:- Once it is clear that the Department’s notification i.e. S.R.O. No.149 of 2001 was merely clarificatory, the Tribunal erred in holding that this is prospective in nature. The Court is satisfied therefore that the Tribunal has erred in proceeding to dismiss the appeal filed by the Petitioner. The question framed is accordingly answered in favour of the Assessee and against the Department. The impugned orders of the Tribunal and the corresponding orders of the ACST and the STO are hereby set aside - revision petition allowed. Issues:1. Interpretation of the Orissa Sales Tax Act, 1947 regarding the acceptance of Form IV for transfer of goods in a works contract.2. Determining whether repairing of transformers constitutes manufacturing under the definition of 'manufacture' in the OST Act.3. Clarification on the applicability of the Department's notification S.R.O. No.149 of 2001 in relation to the acceptance of Form IV.Issue 1: Interpretation of the Orissa Sales Tax Act, 1947 regarding Form IV acceptance in works contract:The revision petition challenged the Orissa Sales Tax Tribunal's order dismissing the appeal and affirming the assessment order raising a demand under Section 12(8) of the OST Act. The Tribunal held that utilizing Form IV for repairing work, which was originally meant for concessional rate purchases exclusively for manufacturing, was impermissible before April 1, 2001. The Court noted discrepancies in the Tribunal's decisions for different periods and emphasized the need for consistency in interpreting the law. The Court concluded that the Tribunal erred in its interpretation and set aside the orders dismissing the appeal.Issue 2: Determining whether repairing of transformers constitutes manufacturing:The definition of 'manufacture' under Section 2(ddd) of the OST Act was crucial in this case, as it includes repairing within its scope. The Industries Department of Odisha recognized repairing transformers as a manufacturing activity. Citing precedent, the Court highlighted that the dealer issuing Form IV should be held accountable for any declaration violations. Additionally, a previous Full Bench decision established that works contractors are entitled to the same benefits of using declaration forms for concessions or exemptions as other traders. These interpretations supported the argument that repairing transformers falls under the ambit of manufacturing, thereby justifying the Assessee's claim.Issue 3: Clarification on the applicability of Department's notification S.R.O. No.149 of 2001:The Court addressed the Department's notification, S.R.O. No.149 of 2001, which was considered clarificatory rather than prospective. The Tribunal's misinterpretation of the notification as prospective led to the erroneous dismissal of the appeal. By clarifying the retrospective nature of the notification, the Court ruled in favor of the Assessee, setting aside the Tribunal's orders and those of the ACST and STO. The revision petition was allowed with no costs imposed in the circumstances.This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved, the arguments presented, and the Court's reasoning leading to the final decision.