TaxTMI 
TaxTMI 
2004 (6) TMI 595
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.... of the powers vested in it under section 9(4) thereof, framed a Scheme named "Assam Industries (Sales Tax Concessions) Scheme, 1995" (hereinafter referred to as "the Scheme of 1995") granting relief of exemption of sales tax, both Central as well as State, for a period of 7 years, to the new industrial units, established on or after April 1, 1991, on fulfilment of the criteria of eligibility prescribed therein. In response to the Scheme of 1995, so announced, the petitioner-company undertook steps to establish a new industrial unit at Beltola, Guwahati, and prepared a project report (annexure II to the writ petition) for manufacture of washed clean coal by processing and washing of raw coal, lump coal and medium coal so as to bring down the ash contents thereof from as much as 25 per cent to 5 per cent there being heavy demand for washed coal in the local market as well as in the other States of the country and also in Bangladesh. The petitioner-company purchased a plot of land at Beltola and established a new industrial unit, which was granted a permanent registration certificate, dated June 18, 1996 by the Director of Industries, Government of Assam, as a tiny unit. The petition....
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....lowed, on April 28, 2000 with direction to the assessing authority to complete the assessment, preferably, within a period of 6 months. Instead of refunding the amount of sales tax already paid at the check gates by the petitioner-company, the petitioner-company was served with a notice, dated December 28, 2000 (annexure IX to the writ petition) by the respondent No. 2, namely, General Manager, District Industries and Commerce Centre, Guwahati, directing the petitioner-company to show cause as to why the eligibility certificate, dated March 31, 1998 aforementioned, issued in favour of the petitioner-company, be not cancelled on the ground that the petitioner's industrial unit is not an industrial unit eligible to receive eligibility certificate for the purpose of exemption of sales tax inasmuch as in producing washed coal, no manufacturing process was allegedly involved and the petitioner-company had not installed any plant and machinery in conformity with its project. It was also pointed out in the said notice, that the ordinary coal, even after washing, remains as ordinary raw coal without being, in any way, distinct from its raw material. To the notice of show cause, so issued, ....
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....der the Central Sales Tax Act, 1956, the business of this proprietary concern was shown as resale of coal and the clause of manufacture of processing did not exist therein. On change of status of the business from proprietorship to a limited company, the certificate of registration was amended to incorporate the name of M/s. Megha Assam Coal Mines (India) Pvt. Ltd. The petitioner-company never applied for amendment of registration certificate for inclusion of manufacture of processing at any stage. No change of the object clause was ever made to enable the petitioner-company to carry on the business of coal washing. (ii) The petitioner-company's industrial unit was registered with the Directorate of Industries and Commerce, Assam, as a SSI unit. Under a notification, dated August 26, 1993 issued by the Government of India, Ministry of Industry, a SSI unit shall not be granted registration until the end-product has a distinct name, character or use having change of form. The end-product of the petitionercompany's industrial unit is same as the raw material and there being, thus, no new product produced by the petitioner-company's industrial unit, the petitioner-company does not c....
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....ion under the Scheme of 1995 and, on review, the eligibility certificate was cancelled. The certificate, in question, was issued by an authority, who had no jurisdiction to issue the said certificate and, as such, the same is void ab initio. (vii) The petitioner-company has charged 4 per cent tax under the Assam General Sales Tax Act, 1993, during the period 1996-97, 1997-98 and 1998-99 from its customers, but has not deposited the same. (viii) The petitioner-company, in its application for eligibility certificate, recorded that the commercial production of its unit had commenced on February 5, 1996, whereas as per its trading, profit and loss and balance-sheet audited by the chartered accountants and submitted to the Income-tax Department and Registrar of Companies, there was no manufacture or processing of coal at all by the petitionercompany's industrial unit during 1995-96. The petitioner-company took the resolution to take over existing business of M/s. B.R. Gupta and Company on June 1, 1996, and filed a petition with the Superintendent of Taxes, Jalukbari, for necessary amendment of its registration certificate on June 4, 1996. The petitioner-company obtained "certifica....
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....formation. The eligibility certificate, having been obtained by furnishing false information, is void ab initio. The eligibility certificate itself being void ab initio, it conferred no right upon the petitioner-company. 3.. I have heard Dr. A.K. Saraf, learned senior counsel for the petitioners, and Mr. H.N. Sharma, learned senior counsel, appearing on behalf of the respondents. Whether a writ petition jointly filed by a company, registered under the Companies Act, its director and shareholder alleging violation of the provisions of article 19(1)(g) and/or article 14 of the Constitution of India is maintainable and if so, when? 4.. Resisting, at the very threshold, the maintainability of the present writ petition, Mr. H.N. Sarma, learned counsel for the respondents, has submitted that the petitioner No. 1 is a limited company and a limited company, not being a citizen, is not guaranteed the fundamental rights to carry on business in terms of article 19(1)(g) of the Constitution of India and, hence, the writ petition is not maintainable, for, the alleged denial to the petitioner-company of its right to receive exemption from payment of sales tax is, even if true, no....
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....on the case of State Trading Corporation of India Ltd. AIR 1963 SC 1811 is not misplaced. However, if the denial by the respondents to allow the petitioner-company to enjoy exemption from payment of sales tax is found to be arbitrary, then, such action will fall within the ambit of article 14 and/or article 21 and in such a situation, the petitioner-company will, being a person within the meaning of articles 14 and 21, be entitled to the protections guaranteed therein [see AIR 1951 SC 41 (Charanjit Lal Chowdhury v. Union of India) and AIR 1964 SC 1140 (Indo-china Steam Navigation Co. Ltd. v. Jasjit Singh, Additional Collector of Customs)]. 6.. While considering the question as to whether the petitioner No. 2 can maintain a writ petition for violation of article 19(1)(g), it needs to be noted that the question whether a person is or is not a citizen of India is really a mixed question of fact and law. In the present writ petition, the petitioner No. 2 has described himself as a resident of Guwahati (Assam) and this fact has not been disputed by the respondent No. 3 in his affidavit. It has also been contended by the respondent No. 3, in his affidavit, that the petitioner No. 2 is....
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....erence by this Court under article 226 is possible. 9.. What is, now, of utmost importance to note is that the writ petitioner' case, if put in a narrow compass, is that the writ petitioners have been guaranteed exemption in respect of their industrial unit; but by the impugned orders, the exemption so guaranteed has been arbitrarily, illegally and mala fide denied to them. If this Court forms the view that the petitioners are entitled to the exemptions claimed by them and that the impugned orders are arbitrary and contrary to law, then, it will logically follow that the exemption guaranteed to the writ petitioners by the State have been arbitrarily denied to them. In such a situation, the action of the State respondents will tantamount to denial of the fundamental rights guaranteed to the petitioners as "persons" under articles 14 and 21. Hence, if the conclusion of this Court be that the petitioners have been arbitrarily denied the exemption from sales tax by the impugned orders, the writ petition will be maintainable. Is cancellation of the eligibility certificate in the present case is sustainable? 10.. Bearing in mind the position of law with regard to the maintainabi....
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..... The grant of eligibility certificate, thus, being void ab initio, no right to claim exemption from sales tax, contend the respondents, accrued in favour of the petitioners. 13.. For strengthening their above submission, the respondents, referring to the Scheme, in question, have contended, inter alia, that the Scheme of 1995 grants exemption not only in respect of sales, which take place within the State of Assam, but also the sales, which take place in the course of inter-State trade or commerce. Though in the case of sale made, within the State of Assam, the provisions of the A.G.S.T. Act, 1993, may be applicable and the meaning of the word "manufacture", as defined in section 2(22) of the Assam General Sales Tax Act, 1993 (hereinafter referred to as "the A.G.S.T. Act, 1993"), may be resorted to, yet when the sale takes place, in the course of inter-State trade or commerce, such a sale is covered by the Central Sales Tax Act, 1956, and since the word "manufacture" has not been defined either in the Scheme of 1995 or in the Central Sales Tax, 1956, the definition of manufacture, for the purpose of exemption of Central sales tax, shall be determined on the basis of the judicia....
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.... out Mr. Sharma, was as to whether the process undertaken by the respondent for obtaining cotton from waste cotton can be called manufacturing activity. In this context, the apex Court observed, " 'Manufacture', in its ordinary connotation, signifies emergence of new and different goods as understood in the relevant commercial circles. The incentives provided in the Industrial Policy Resolution of the Orissa Government, dated May 13, 1986, are meant only for those industrial units, which are engaged in the manufacture or production of goods. The use of the expression 'purchase of raw materials' in the Resolution itself shows that what are ultimately produced are goods different from the raw materials used. Similarly, the repeated use of the expression 'finished products' and the grant of exemption in the case of small-scale industries both in respect of raw materials as well as finished products indicates that the concessions at substantial cost to the public exchequer were being provided with a view to encouraging units engaged in the manufacture or production of goods and not to help those units which merely engaged themselves in some sort of processing whereunder the goods remai....
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.... contents of Part II, it will appear that the following are the conditions for grant of exemption from payment of sales tax under the Central Sales Tax Act: (i) The dealer must have an eligible industrial unit falling under any of the three categories, namely, categories A, B or C described in Part I of the Scheme of 1995. (ii) The dealer must be registered under the Central Sales Tax Act; (iii) Certificate of authorisation under the Scheme of 1995 must have been issued to the industrial unit; and (iv) The exemption shall be available in respect of the goods manufactured in the eligible unit in the State of Assam and sold in course of inter-State trade and commerce during the period of validity of the certificate of authorisation. 18.. From the above, it is also very clear, contends Dr. Saraf, that the notification in Part II as regards the exemption from payment of the Central Sales Tax Act is relatable to the notification in Part I of the Scheme of 1995. For the purpose of grant of exemption under the Central Sales Tax Act also, the eligible industrial unit shall remain the same as in Part I of the notification; so contends Dr. Saraf. All the conditions of the elig....
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....t me, first, ascertain if the eligibility certificate issued to the petitioner-company was without jurisdiction and void ab initio, for, if the respondent No. 2 had no jurisdiction to grant such a certificate, it matters little as to what the powers of cancellation of the respondents are. The arguments on this aspect have been advanced, principally, on the basis of the interpretation of the word "manufacture" and this Court is required to determine if any manufacturing activity, within the meaning of the Scheme of 1995, is being carried on by the petitioner-company, while processing raw coal into washed clean coal. 21.. For the purpose of ascertaining the correctness of the rival submissions made before me, on behalf of the parties, on the above aspects, let me quote hereinbelow the relevant portions of Part I and Part II of the Scheme of 1995, which read as follows: "Part-I No. FTX.78/91/235: In exercise of the powers conferred by subsection (4) of section 9, read with clause (f) of sub-section (3) of section 74 of the Assam General Sales Tax Act, 1993 (Assam Act XII of 1993) hereinafter called the Act, the Governor of Assam is pleased to frame a Scheme as d....
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.... by resorting to exercise of powers under the A.G.S.T. Act, 1993, exemption from payment of sales tax in respect of purchase of raw materials by eligible industrial units and also on sale of finished products within the State of Assam, Part II of the said Scheme extends benefit of the Scheme to "the goods manufactured in such eligible units" and sold in the course of inter-State trade or commerce. The words used, "the goods manufactured in such eligible units", are of immense significance, for, these words mean and convey, concedes grudgingly even Mr. H.N. Sharma, that the goods manufactured in eligible units, covered by categories, A, B or C, will be entitled to exemption from payment of not only the State, but the Central sales tax too if the same are sold in the course of inter-State trade or commerce. 23.. The Scheme of 1995, thus, has three parts. Part I of the Scheme contains, inter alia, the criteria for eligibility certificate in respect of three categories of industrial units as described under A, B and C of paragraph 2 of the said Scheme and also contains provisions for exemption from payment of the Assam general sales tax on the purchase of raw materials within the St....
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....der the A.G.S.T. Act, 1993, qualified to receive eligibility certificate in respect of the payment of the Assam General Sales Tax Act, 1993, is equally entitled to receive exemption from payment of the Central sales tax in respect of the sales made in the course of inter-State trade or commerce. It will, therefore, be illogical to construe that an industrial unit, which satisfies the criteria for eligibility certificate under any of the said three categories, namely, A, B or C for the purpose of exemption from payment of the Assam general sales tax shall not be qualified to receive exemption from payment of the Central sales tax if it sells its same very product in the course of inter-State trade or commerce. Moreover, such an interpretation, if attributed to the Scheme, will make the use of the word "such eligible units", occurring in Part I of the Scheme, otiose defeating thereby the very intent and purpose of the Scheme, for, the idea behind the Scheme cannot be to sell manufactured products of the eligible units within the State and not outside the State. The giving of the incentive under the Scheme is, admittedly, aimed at augmenting the sales of the manufactured product withi....
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.... or finished product? 29.. While dealing the above question, it is of immense importance to note that the Central Sales Tax Act does not define as to what "manufacture" means. It is only section 2(22) of the A.G.S.T. Act, 1993, which contains the definition of the term "manufacture". Because of the fact that Part I of the Scheme of 1995 grants exemption from payment of Assam general sales tax in respect of products "manufactured" in an eligible industrial unit, as conceived by the said Scheme, it could not be, on a pointed query made by this Court, be disputed by Mr. H.N. Sharma that for the purpose of availing exemption from the State sales tax, the industrial unit concerned must produce a product, which can be held to have been manufactured within the meaning of section 2(22) of the A.G.S.T. Act, 1993. What, however, Mr. Sharma insists is that so far as the exemption from payment of the Central sales tax is concerned, the end-product manufactured by an eligible industrial unit must be, as is understood in common parlance, substantially different from the raw material used for manufacturing such product. It is, therefore, according to Mr. Sharma, not the definition of "manuf....
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....transparent that "manufacture" will mean producing, making, extracting, altering, ornamenting, blending, finishing or otherwise processing, treating or adapting any goods except such manufacture or manufacturing process, which is prescribed by the appropriate authority as not a manufacture or manufacturing process. The manufacture does not also include the works contract. In other words, except the works contract or such manufacture or manufacturing process, which is notified by an appropriate authority as not a manufacture or manufacturing process, "manufacture" will mean producing, making, extracting, altering, ornamenting, blending, finishing or otherwise processing, treating or adapting any goods. 33.. It is category C of paragraph 2 of Part I of the Scheme of 1995, which provides the criteria for the industries, which was not to be eligible for any benefit under the said Scheme. It is of great significance to note that the coal industry was not a category of industry ineligible for benefit under the Scheme. It is, in fact, by a Notification, dated November 5, 1999, that the Finance (Tax department), Government of Assam, amended the said Scheme by introducing a fresh list of....
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....d machinery a condition precedent for a process to be regarded as a manufacturing process or for a product to be treated as a manufactured product. The word "manufacture" is derived from Latin words "manus" and "factura", literally meaning, putting together by hand. That is, the process of making products by hand or machinery. A division Bench of this Court in Modern Candle Works v. Commissioner of Taxes, reported in [1988] 71 STC 362, while defining the word "manufacture", held as follows: " 'Manufacture' may, therefore, be defined as the making of goods or wares by manual labour or by machinery. As scale of production has expanded and workmanship and art have advanced, now nearly all artificial products of human industry, nearly all such materials as have acquired changed conditions or new and specific combinations, whether from the direct action of human hand, from chemical and mechanical processes devised by human skill, or by the employment of machinery, are commonly called manufactured products. Any material produced by hand, by machinery or by other agency; anything made from raw materials by the hand, by machinery, or by any other device is manufactured article. The prod....
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....machine or human agency." 39.. In State of Kerala v. V.M. Patel (1961) 1 LLJ 549 (SC), the Supreme Court held that the work of garbling pepper by winnowing, cleaning and drying it on concrete floor and a similar process of curing ginger dipped in lime and laid out to dry in a warehouse were manufacturing processes. 40.. From what have been pointed out above, it is clear that manufacturing process can be manual as well as mechanical. Existence of plant and machinery is, therefore, not a condition precedent for a process to be regarded as a manufacturing process. Bricks are, undoubtedly, produced by bare hands out of clay; but that would not prevent the bricks from being regarded as a manufactured product. The word "manufacture" means the process of making products by hand or machinery. "Manufacture" may, therefore, be defined as the making of goods or wares by manual labour or by machinery. Any material produced by hand or by machinery or by other agency, anything made from raw materials, by the hand, by machinery or by any other device may become a manufactured article. The production of articles for use from raw or prepared materials by giving such materials new fo....
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....is the result of treatment, labour and manipulation. But something more is necessary.......There must be a transformation; a new and different article must emerge, having a distinctive name, character or use". 46.. The respondents rely on the legal proposition, which emerges from the various decisions summed up in Commissioner of Sales Tax v. Ruby Surgical and Allied Products Private Limited [1997] 106 STC 26 (Bom) in the following words: "(i) Manufacture implies a change but every change is not manufacture. Something more is necessary. There must be transformation and a new and different article must emerge having a distinctive name, character or use. (ii) The true test for determining whether manufacture can be said to have taken place is whether the commodity, which is subjected to the process of manufacture, can no longer be regarded as the original commodity, but is recognised in the trade as a new and distinct commodity. (iii) Where the commodity retains a continuing substantial identity through the processing stage, it cannot be said that it has been manufactured." 47.. In a taxing statute, an item has to be interpreted in its popular sense meaning, however, by the ....
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....es, which is pertinent for discussion, is the case of State of Gujarat v. Sukhram Jagannath, reported in [1982] 50 STC 76 (Guj). In this decision, the court was concerned with the question as to whether the Tribunal was right in law in holding that mixture of supari, variyali, dhana-dal, sweet flavoured powder, etc., and sold under the popular name of pan-mashala, did not amount to "manufacture". The court considered the meaning of the term "manufacture", which has been defined in section 2(16) of the Gujarat Sales Tax Act, 1969, as under: "2(16) 'manufacture' with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing or otherwise processing, treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." 52.. Referring to the above definition of the term "manufacture", the court observed, "it is no doubt true that the Legislature has defined the term 'manufacture' in the widest term by taking in besides the activities of producing, making, extracting, collecting, altering, ornamenting or finishing, the activities of processing, treatin....
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....the words used in the definition of 'manufacture' are very wide should not lead the court to so widely interpret them so as to render the provision practically meaningless and so as to treat the goods sold as different merely because some slight additions or changes are made in the goods which are purchased before they are sold. It is true that under the section it is not necessary that there should be 'manufacture' in the sense that a new commodity has been brought into existence as would have been required if that word is interpreted in its literal sense. But at the same time the section should be so interpreted to mean only such of the various processes referred to in the definition and applied to the goods as are of such a character as to have an impact on the nature of the goods". 55.. From the observations made in Shiv Datt & Sons [1992] 84 STC 497 (SC); (1993) Supp 1 SCC 222, it is clear, as contended by the respondents, that the apex Court, while dealing with a very spacious definition of the term "manufacture" used in the statute, held in Shiv Datt & Sons [1992] 84 STC 497 (SC); (1993) Supp 1 SCC 222, though it is true that according to the definition of the term "manuf....
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.... by a dealer on the goods to make them fit for the market or improving their marketability does not amount to a process of 'manufacture'. 'Manufacture' implies a change but every change is not manufacture. Something more is necessary. There must be a transformation as a result of the process undertaken on the product and a new and different article, having a distinctive name or character, must emerge. The true test for determining whether manufacture has taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity but is recognised in the trade as a new and distinct commodity. The difference between 'processing' and 'manufacture' is by now well understood and well recognised. 'Processing' means subjecting a commodity to a process or treatment so as to develop it or make it fit for market. With each process, the original commodity undergoes a change. But it is only when the change takes the commodity to a point, where it can be no longer regarded as the original commodity but is recognised in the trade as a new and distinct commodity that a manufacture can be said to take place. Where the commodity retains ....
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....ir industrial unit should be regarded as a manufacturing process. 61.. In Ashirwad Ispat Udyog [1999] 112 STC 207 (SC); (1998) 8 SCC 85, the Government of Madhya Pradesh issued notification on October 16, 1986 under section 12 of the M.P. General Sales Tax Act granting exemption to dealers, who were registered under the said Act and had established eligible industrial units in any district in the State and possessed provisional or permanent eligibility certificate issued by an officer authorised for the purpose, from payment of tax to the extent stated therein. The exemption was available only in respect of the sales of the goods, which the dealer was licensed to manufacture and which were manufactured by him. Under the terms of the said notification, the appellant obtained eligibility certificate from the District Level Committees, but subsequently the eligibility certificate were cancelled by the State Level Committees on the ground that the processing of scraps by the appellants did not result in the manufacture of any new item. The High Court upheld the decision of the State Level Committees. Relying on the decisions pertaining to the meaning of the word "manufacture", parti....
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....ng or making any goods, the apex Court held that though there can be no doubt whatsoever that "collecting" goods, as occur in section 2(j) does not result in the production of a new article, the very fact that even "collecting" has been defined as "manufacture" in section 2(j), it implies that the narrow meaning of the word "manufacture", which is usually attributable to the word "manufacture", was not intended to be applied in the said Act. The clear words of the definition of the term "manufacture" appearing in section 2(j), therefore, according to the apex Court, must be given due weight and must not be overlooked merely because in other contexts, the word "manufacture" has been judicially held to refer to the process of manufacture of new articles. 63.. In the case at hand, the definition of the term "manufacture", as given in the A.G.S.T. Act, 1993, is very wide and includes, besides all types of processings, ornamenting, treating or adapting any goods, even the process of "extraction " as a "manufacture". Thus, the process of extraction of ash contents thereof from the raw coal, lump coal, etc., and bringing down thereby the ash contents from 25 per cent to 5 per cent is, ....
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....h process suffered, the commodity would experience a change. This Court further observed that whatever be the means employed for carrying out the processing operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitute processing. Viewed in the context of the above meaning given to the word 'processing' by this Court there cannot be any manner of doubt that the nature and extent of the process to which the crude oil is subjected to to make it refined oil brings the latter within the meaning of the expression 'goods manufactured' in section 3(3)(b)(iii) of the Act so as to make the appellant liable to pay tax on its sale. ................................ In Shiv Datt & Sons [1992] 84 STC 497 (SC); (1993) Supp 1 SCC 222, the question was whether the dealer was entitled to the concession provided in section 8 of the Bombay Sales Tax Act, 1959, of such part of their turnover as represented the resale of batteries purchased by them from a registered dealer. Interpreting the meaning of the word 'resale' under section 2(26), and the word 'manufacture' in that Act and the nature of process applied by ....
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.... light of the definition given in the relevant statute and if, in the light of such definition, a processing is done making the same a manufacturing process, then, it cannot be said that the "manufacture" has not taken place, because a new article has not come into existence. In other words, applying the ratio of the decision of the apex Court in Ashirwad Ispat Udyog Ltd. [1999] 112 STC 207 (SC); (1998) 8 SCC 85 and B.P. Oil Mill (1998) 111 STC 188 it can be safely held that the process of conversion of raw coal into washed clean coal by extraction and removal of the ash contents thereof amounts to "manufacture" as defined in section 2(22) of the A.G.S.T. Act, 1993. 68.. In the present case, the respondent No. 2, namely, General Manager, District Industries and Commerce Centre, has himself in his order, dated June 3, 2000, held, as correctly points out Dr. Saraf, that the process of removal of foreign materials from coal may, at best, be a process to improve the quality of the commodity and increase its commercial value. I find considerable force in the submissions of Dr. Saraf that in the present case, the respondent authorities totally overlooked the specific definition of the....
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....increased freight carrying capacity for the railway; (vi) Reduction in freight charges to the power station; (vii) Better control in thermal power station operations and the control settings would not need to be changed frequently to take care of fluctuations in the head value in coal feed; and (viii) Increased plant availability and resultant higher Plant Load Factor (PLF). 70.. The petitioners have drawn the attention of this Court to a news item published on July 25, 2003, in the Business Line, wherein it has been reported that the Union Ministry of coal and mines is working out a strategy to ensure that the coal produced in the country is washed so that the use of clean coal becomes the order of the day. Admittedly, in the developed countries, coal washing is an integral part of a mine and no coal is supplied to a user without preparing/washing the raw coal. It has also been reported that the environmental considerations to use clean coal/washed coal and the technological economic advantage in using clean coal, non-cooking coal consumers, such as, power utilisers and cement industries have started preferring washed coal. 71.. Though the respondent No. 3 ha....
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....pany's industrial unit is eligible for issuance of an eligibility certificate. The decision, so taken by the respondent No. 2, cannot, it is obvious, be challenged, now, by the respondent No. 3. 73.. Even if, for a moment, one assumes that the law laid down in Shiv Datt & Sons [1992] 84 STC 497 (SC); (1993) Supp 1 SCC 222, still holds the field, it is clear from a close reading of this decision that the Supreme Court, in State of Maharashtra v. Shiv Datt & Sons [1992] 84 STC 497; (1993) Supp 1 SCC 222, while reading down the scope of the words used by the Legislature, in section 2(17) of the Bombay Sales Tax Act, 1959 in defining the word "manufacture", held that for the purpose of manufacture, there should be some impact on the nature and character of the goods meaning thereby that if there is some alteration in the nature and character of the goods, it can be said that manufacturing process has taken place. In the present case, when raw coal is converted into washed coal, the ash contents in the coal come down from 25 per cent to 5 per cent and the same is done by screening of raw coal, water washing of the screened coal and elimination of visible stones, pebbles and other for....
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.... account of declaration form or to furnish any information required by his Assessing Officer with regard to the implementation of this Scheme shall entail the termination of both the eligibility certificate and the certificate of authorisation. For violation of any condition of eligibility in reference to which the eligibility certificate has been granted to an industrial unit as per the provision of this Government notification or if it is found at any time after the issue of the eligibility certificate to an industrial unit that the information, furnished by it on any of the conditions, which had led to the issue of the eligibility certificate to the unit is false, the competent authority of the Industries Department of the Government of Assam, which had issued the eligibility certificate shall be competent to terminate the eligibility certificate to the concerned eligible industrial unit after giving an opportunity of hearing to the holder of the eligibility certificate against such termination. In the event of any such termination, the competent authority shall intimate the fact of such termination forthwith to the concerned eligible industrial unit and the assessing officer....
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....t report furnished vide your application dated August 30, 1997 to facilitate for grant of eligibility certificate for purpose of producing of wash coal. And whereas it is observed that after the stated activity undertaken by you in washing coal, it does not change the chemical and physical properties of the ordinary coal, rather it retains the same identity, name, character and use. To be an industry a new commercial article must come out after processing, manufacturing, etc., of the raw materials. But in your case, raw "ordinary coal" after washing remain as raw ordinary coal without having any distinction from the raw materials. And whereas the matter was reviewed and discussed elaborately in the meeting of the District Level Committee under the New Industrial Policy, 1991 held on February 16, 2000. And whereas after examining all aspects of the matter the said District Level Committee was satisfied that your unit was not eligible for issue of eligibility certificate for the purpose of sales tax exemption and other incentives under the New Industrial Policy, 1995 and that the said eligibility certificate was issued wrongly to your unit. Now, therefore, you are required t....
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....me to the conclusion that the writ petitioner allowed other parties to dispatch large number of their consignments from the present unit and thereby evaded payment of due tax to the Government. (x) The respondent No. 2, on the basis of the aforesaid, found that it is a fit case for cancellation of the eligibility certificate issued to the writ petitioner on March 31, 1998, with effect from the date of issue thereof and in terms of the said order the eligibility certificate was cancelled by the order dated June 5, 2000. 81.. On a comparison of the grounds specified in the show cause notice and the grounds on which the eligibility certificate was cancelled, it is apparent that the same are totally different except for only two grounds, namely: (i) In the process of producing washed coal from ordinary coal, no manufacturing process is involved; and (ii) There are no plant and machinery installed. 82.. I have already held that the process of producing washed clean coal from ordinary coal is a manufacturing process and no plant or machinery is required for constituting a process as a manufacturing process. 83.. Part III of the said Scheme clearly provides that a show c....
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....t of the Andhra Pradesh High Court in State of Andhra Pradesh v. Loharu Steel Industries Limited [1995] 96 STC 369, wherein the court clearly held that the exercise of power under section 20 of the said Act by the revisional authority could only be on the ground mentioned in the show cause notice; otherwise, the very purpose of affording a reasonable opportunity by giving a show cause notice would become a farce formality. 88.. In the instant case, the grounds on which the show cause notice was issued differ from the grounds on which the eligibility certificate was cancelled by the respondent No. 2. 89.. I respectfully agree with the decision in Loharu Steel Industries Ltd. [1995] 96 STC 369 (AP), and I hold that while cancelling the eligibility certificate, the respondent No. 2, having travelled beyond the scope of the show cause notice, did not afford a reasonable opportunity of hearing to the petitioners, contrary to what has been expressly provided for in the said Scheme. 90. The petitioners have also relied on the decision in Baldev Spinners Pvt. Ltd. v. State of Haryana reported in [2003] 132 STC 594 (P&H) for the proposition "that the provisions of a taxing s....
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....blic orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or what was in his mind or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself." 94.. The above passage, occurring in Gordhandas Bhanji AIR 1952 SC 16 quoted with approval by the apex Court in M.S. Gill v. Chief Election Commissioner (1978) 1 SCC 409, wherein the apex Court further held that the orders are not like old wine becoming better as they grow older. 95.. I have already indicated that the grounds, which were mentioned in the show cause notice and the grounds on which the eligibility certificate was cancelled, are quite at variance and except the two grounds, namely, that in the process of reducing washed coal from ordinary coal, no manufacturing process is involved and that no plant or machinery has been installed at the site of the industrial unit concerned, the remain....
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....; hence, these grounds cannot, now, be treated as grounds for cancellation of the eligibility certificate. 98.. The allegations, mentioned in his affidavit by respondent No. 3 with respect to the omission to amend the certificate of registration, object clause of the memorandum of association of the petitioner-company are irrelevant factors in resolving the present controversy, particularly, when these were not the grounds for issuance of the show cause notice and/or passing of the order of cancellation of the eligibility certificate. Further, the respondent No. 3, as correctly pointed out by the petitioner, has no authority and/or jurisdiction to step into the shoes of the authority empowered to grant the eligibility certificate and put forth irrelevant factors in support of the cancellation of the eligibility certificate, when such factors were not considered to be relevant by the authority empowered to grant and/or cancel the eligibility certificate. 99.. Similarly, as regards the grievance of the respondent No. 3 that the petitioners have furnished false information about the date of commencement of the commercial production as February 5, 1996, the petitioners have point....
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.... report that there is heavy demand for washed coal in the local market as well as in other States of the country and even in Bangladesh. The project report further indicates that though there are automatic and semi-automatic plants/machinery, the petitioner-company would, for this purpose, process the coal for the present manually and thereby create opportunity for wide scale employment of local labour. The project report provides that the processing system aims at eliminating the foreign materials from raw coal in order to bring down the ash contents thereof by taking steps, such as, (i) screening of raw ROM coal, (ii) water washing of screened coal, (iii) elimination of visible stones, shells and other foreign materials by manual labour. 101.. Neither the notice to show cause nor the impugned order of cancellation aforementioned give any indication, as already point out hereinabove, that any of the information furnished by the petitioner-company to the respondents through the medium of its project report was false. Far from this, as correctly pointed out, on the behalf of the petitioners, the industrial unit, in question, was engaged in the manufacturing of washed coal by proc....
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.... be arbitrary, in denial of the principles of natural justice and tantamount to condemning a person without being heard. 103.. In the instant case, there is clear violation of the principles of natural justice. The grounds on which the show cause notice has been issued are not the grounds on which the eligibility certificate was cancelled. Furthermore, the grounds on which the certificate was cancelled are not the grounds available to the statutory authority for cancellation of the eligibility certificate. The writ court will, therefore, be justified to step in, whenever there is violation of principles of natural justice and for the act of the State or its instrumentality is arbitrary. 104.. Keeping in view the above position, when I proceed further, what attracts my eyes is that the writ petition has also been resisted by the respondents on the ground that the petitioner-company obtained the eligibility certificate as a SSI unit only under the Assam Industries (Sales Tax Concessions) Scheme, 1995. The petitioner-company's industrial unit, according to the respondents, is not an SSI unit in as much as the notification, dated August 26, 1993 (annexure C to the affidavit-in-op....
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....from a bare reading of the Scheme of 1995, it clearly follows as to what the condition precedents for granting of eligibility certificate were. No such condition precedent exists under the Scheme showing that the industrial unit, which applies for eligibility, has to be a SSI unit. Thus, the resistance offered to the writ petition on the ground that the industrial unit, in question, is not a SSI unit is of no consequence at all. That apart, this was not the ground for cancellation of the eligibility certificate. 107.. It is, no doubt, true that an assessee claiming relief under an exemption provision in a taxing statute has to show that he comes within the exempted provision; but no tax can be imposed by inference or by analogy or by trying to probe into the intention of the Legislature or by considering what was the substance of the matter (see A.V. Fernandez v. State of Kerala [1957] 8 STC 561 (SC); AIR 1957 SC 657. Further, in a taxing statute, one has to look merely at what is clearly stated, there is no room for any intendment, there is no equity as to tax, there is no presumption as to tax, nothing is to be read in and nothing is to be implied. (see Smt. Tarulata Shyam v. ....
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.... same will amount to extortion or extraction having no sanction of law and, therefore, such act will be violative of articles 14 and 265 of the Constitution of India and, in such cases, writ courts will, undoubtedly, step in. Whenever there is a violation of principles of natural justice and whenever a person has been dealt with arbitrarily or when a person has not been dealt with fairly by any authority, article 226 can, correctly contends the petitioners, be invoked. 111.. The rule of law is the basic structure of the Constitution. The provisions of the Constitution aim at ensuring the rule of law. Article 14 guarantees equal treatment to all persons, be they citizens or not. The apex Court in Shree Meenakshi Mills Ltd. v. A.V. Viswanatha Shastri [1954] 26 ITR 713, has clarified that article 14 of the Constitution not only guarantees equal protection of a taxpayer as regards substantive law, but procedural laws also come within its ambit. The provisions of the Constitution not only guarantee fundamental rights, but also provides machinery, which will protect such fundamental rights against constitutional invasion. The imposition and collection of taxes by any authority u....