- (1.) The petitioner Industry manufacturing steel was given benefit of Sales Tax Incentive Scheme, 1989 by the order of competent Screening Committee dtd.7.8.1999 (Annex.1). The relevant condition in the Sales Tax Incentive Scheme for grant of such benefit of incentive for making eligible investment on the expansion project by the industry as contained in definition of "expansion" as given in clause 2(f) of the Scheme, reads as under: "2(f) Expansion means increase in the value of fixed capital investment by not less than 25% of the net fixed assets of the existing project and accompanied by an increase in the production to the extent of at least 25% of the original licensed/registered capacity. Explanation : The benefits of Sales Tax incentive for Expansion shall be admissible to the eligible units only after they have achieved at least 85% of their licensed/registered capacity before expansion."
(2.) The increase in production upon expansion was to be computed to the basis of production made by the assessee industry. The question which cropped up in the matter was whether such production would include 'own manufacture' only or production done on the basis of third party's job work also. The petitioner succeeded before the Tax Board and the High Court and the revision petition filed by the Revenue was dismissed by the High Court vide order dtd.14.8.2002 (Annex.3) passed in SB STR No.457/2002. The said order is reproduced hereunder for ready reference: "S.B. Sales Tax Revision No.457/2002 14.8.2002 Hon'ble Dr. B.S. Chauhan,J. Mr. Sanjeev Johari, for the petitioner. Mr. Dinesh Mehta, for the respondents. In view of the judgment of this Court in C.T.O. Vs. M/s Vishnu Metals wherein, while considering the case under the Rajasthan Sales Tax Incentive Scheme, 1989, it has been held that production or manufacture on the basis of job work shall also be taken into consideration, no relief can be granted to the petitioner. The petition is, therefore, accordingly dismissed. Sd/- (Dr.B.S. Chauhan)J."
(3.) The revenue went up before the Hon'ble Supreme Court in other connected matter and present assessee also and the Hon'ble Supreme Court in Civil Appeal No.4944/2001 CTO V/s M/s Vishnu Metals allowed the Revenue's appeals on 7.11.2006 and set aside the orders of the Rajasthan Tax Board and the High Court observing as under: "The question that, therefore, falls for determination in this appeal is whether the job work performed by the assessee in addition to its production for its own purposes can be taken into consideration for the purposes of clause 2(f) of the 1989 Incentive Scheme, as had been held both by the Rajasthan Tax Board and the High Court. Although, the Rajasthan Tax Board was of the view that the job work performed by the assessee would have to be added to the production capacity of the assessee's unit, there is no reasoning in support thereof. The said lacuna has been addressed by the High Court by holding that the expression used in the statute did not indicate that the manufacture of goods for sale must be by any particular individual and that the entire production in order to make the unit eligible for grant of benefit under the 1989 Incentive Scheme must be on its own account and not by way of doing job work. On such interpretation of clause 2(f) of the 1989 Incentive Scheme, the High Court affirmed the finding of the Rajasthan Tax Board and directed the District Level Screening Committee to issue necessary Eligibility Certificate to the respondent assessee. While arriving at a conclusion that job work would also have to be taken into consideration for grant of Eligibility Certificate under Clause 2(f), both the Rajasthan Tax Board and the High Court omitted to take into consideration the nature of job work performed by the respondent assessee and whether the same would amount to production as contemplated in the said clause. Learned counsel appearing for the respondent assessee was also unable to specify the nature of job work said to have been undertaken by the respondent assessee. Both the Rajsthan Tax Board and the High Court laboured under the presumption that the job work performed by the respondent assessee involved manufacture of goods which were similar in nature to its own goods for sale. Such an approach, in our view, was erroneous, since the very nature of the incentive given under the aforesaid 1989 Incentive Scheme involves calculation of the actual production of the unit in question. In the absence of any material to indicate the nature of job work undertaken, it would be improper to proceed only on the basis of presumption. The Department's appeal must, therefore, succeed and is allowed and the judgment of both the Rajasthan Tax board and the High Court dated 18 th January 2000 and 9 th February, 1999 respectively are set aside. There will, however, be no order as to costs." ;