ICI INDIA LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) These two appeals assail correctness of the judgment rendered by a Division Bench of the Orissa High Court dismissing the writ petitions filed by the appellants. The two writ petitions i.e. OJC 16928 of 1998 and 1500 of 2000 were filed questioning correctness of the views expressed by the Sales Tax Authorities that the appellants had contravened the declaration given in Form IV to avail concessional rate as provided in the Orissa Sales Tax Act, 1947 (in short the 'Act') and the Orissa Sales Tax Rules, 1947 (in short the 'Rules'). In the first writ petition challenge was to the appellate order passed by the Assistant Commissioner of Sales Tax confirming the assessment made by the as sessing officer for the assessment year 1997-98, whereas in the second writ petition challenge was to the assessment order passed by the Sales Tax Officer for the assessment year 1998-99.

(2.) Background facts sans unnecessary details are as follows :- The ICI India Ltd. (hereinafter referred to as "the assessee") is a company incorporated under the Companies Act, 1956 having its registered office at ICI House, 34, Chowranghee Road, Calcutta. It is engaged, inter-alia, in the business of manufacture and sale of "Bulk Explosives". For the pur pose of carrying on business at Rourkela in the State of Orissa, the appellant has set up an industry on Plot No. 77, Industrial Es tate, Kalunga, and is registered as a dealer with the Sales Tax officer, Rourkela II Circle, Panposh (Respondent No.3). The certificate of registration granted under Section 9 of the Act indicates that the appellant requires, amongst others, "Ammonium Nitrate" to be used for manufacture/processing of "Bulk Premix" for sale. The appellant had set up and commissioned its third bulk emulsion premix manufacture unit at Rourkela in April, 1997. The principal raw material for manufacture of "Bulk Premix" is "Ammo nium Nitrate Liquor". The principal supplier of the said raw material is the Rourkela Steel Plant of the Steel Authority of India (in short the 'SAIL') from whom the appellant pur chases the same. The other raw materials are either purchased locally or purchased centrally at Gomia in Bihar and the stock is transferred to its Rourkela Plant. At the Rourkela Plant, all the raw materials are utilized for manufacture of Emulsion Premix or Bulk Premix, which is an excisable prod uct. For purchase of raw material from the Rourkela Steel Plant, the appellant gives declaration in Form No.IV to avail the concessional rate of tax @ 4%. It is an ad mitted case of the parties that the "Bulk Premix" so manufactured at Rourkela is not sold as such because it is an intermediary product which is used for manufacture of "Bulk Explosive". This "Bulk Explosive" is not manufactured in the Rourkela plant of the appellant. So the "Bulk Premix" is sent to its other branches at Angul (Talcher) and Belpahar in the State of Orissa, for which the appellant has obtained Sales Tax Regis tration, wherein the raw material has been mentioned as "Bulk Premix", while the fin ished product is mentioned as "Bulk Explo sive". Apart from sending the "Bulk Premix" to its different branches in the State of Orissa, the appellant also transfers/sells the goods outside the State.

(3.) For manufacture of "Bulk Explosive", the "Bulk Premix" is carried in special tank ers dedicated for such purpose to the ac tual blasting site from the onsite support plants where the ingredient i.e. "Bulk Premix" and other chemicals are mixed in proportion commensurate with the charac ter of the rock and/or other substances to be blasted. Such mixing in right proportion takes places at the site of blasting and the resultant manufacture being explosive is discharged into the bore holes at the mine bench. It is at this stage that the "Bulk Premix" when mixed with the other chemi cals and discharged into bore holes becomes explosives and at that stage the sale of ex plosives takes place and the sales tax and excise duty are paid on such sale of "Bulk Explosive".