COMMERCIAL TAXES OFFICER Vs. PRAKASH UDHYOG

JUDGEMENT

(1.) THE question which has been addressed to this Court for determination is whether production of the stone ballast (gitti) by breaking the large stones amounts to manufacturing, so as to make the respondent unit entitled to claim benefit of exemption from payment of tax under the New Sales Tax Incentive Scheme, 1989 (hereinafter called the "incentive Scheme") in the light of definition of "manufacture" given in the Rajasthan Sales Tax Act, 1994 which governs the present case. THE respondent, M/s. Prakash Udhyog, had made an application on November 17, 1997 under the Incentive Scheme for the purpose of sanctioning issue of eligibility certificate for exempting its new industrial unit which started commercial production and has applied for eligibility certificate on November 17, 1997. THE new unit was shown to be engaged in the production of "stone, grits/chips" for which large stones are used as raw material. "stone grits" is known commonly in this part of the country as "gitti" which is a colloquial expression for ballast or metal used for laying pathways or roads. It is required of such material that the stones do not exceed required maximum size, and do not be of smaller than the minimum size. In other words, the commodity known as gitti has to be of size within such variable limits, so that it can be used as such. THE process required to get "gitti" is to grind or crush large sized stones to required sizes. So also chips is still finer small pieces of stone of various types for use in laying floor or used in concrete structure and laying bitumen road layer. THE material which is used for shaping them in gitti or chips are uncut and unsized stone which are otherwise unusable in any work.

(2.) THE District Level Screening Committee referred to its decision in Volkem India Limited, in which it was stated to have held that where there is no change in the physical properties of the end-product of raw material, it does not amount to manufacture but only amounts to processing. Following the same it declined to accept the process of stone crushing or grinding as activity of manufacturing and rejected the application in its meeting held on March 5, 1998. Aggrieved by the aforesaid order, the assessee preferred an appeal before the Rajasthan Tax Board which found after considering the factual aspect in the light of definition of "manufacture" that the assessee is purchasing boulders or large size of stones as raw material under declaration in form No. S. T. 17 and therefrom, by applying the mechanical process the commodity known as gitti and chips are produced which are distinct commercial commodity than the raw material used therein. Such activity is an activity of manufacturing. It also referred to the fact that the decision of the State Level Screening Committee in the case of M/s. Volkem India Limited that the commodity involved was processed to "wallstone night coalsit" which is altogether a different commodity, was in the context of the provisions of the statute and its marketing conditions. THE case is distinguishable and cannot ipso facto be applied to the present case without discerning the facts of that case, without adverting to the same, by merely referring to the fact of making a decision. It was also found from the notings on the record in relation to present case that all the officers of the Industrial Department and the members of the Screening Committee were throughout considering the production of grits (gitti) and chips as an activity of manufacturing and in fact District Level Screening Committee has been, until decision in present case, sanctioning issue of eligibility certificates to such units for grant of benefit under the incentive scheme. Merely because the Director of Industries have sent a note to the District Level Screening Committee inviting the attention to the case of M/s. Volkem India Limited, the D. L. S. Committee has taken different course in the present matter without considering the facts of M/s. Volkem India Limited which were entirely different and held that the decision was not justified. Accordingly, the Board allowed the appeal and directed the D. L. S. Committee to issue eligibility certificate to the applicant-dealer within two months.

(3.) THE basic facts which are before us in the present case are that the assessee purchases large stone boulders or stone pieces of uneven sizes and dimensions as a raw material and by crushing or grinding them through the use of machinery at the unit in question the end-product in the form known as gitti or chips is obtained. THE name of product spelt in application in its chaste English is given as stone "grits and chips".