SALES TAX OFFICER Vs. SHREEDURGA OIL MILLS

JUDGEMENT

(1.) M/s. Shree Durga Oil Mills, respondent herein, was assessed to tax by the Sales Tax Officer for the assessment years 1979-80, 1980-81 and 1981-82 for purchase of groundnut from unregistered dealers. There is no dispute that groundnut was purchased from time to time by the respondents and utilised for manufacturing oil. The assessment orders were challenged by a writ petition on the ground that in view of the Industrial Policy Resolution (I.P.R.) dated 18-7-1979 issued by the Industries Department of the Government of Orissa, sales tax was not payable by a new industry on the purchase of raw material for the period prescribed in the I.P.R.

(2.) It was contended on behalf of the writ petitioner that it had applied for a license setting up an industry at Betnoti in the district of Mayurbhanj and obtained a provisional registration certificate on 28-11-1979. A permanent registration certificate as a small scale industrial unit was granted by the Director of Industries, Orissa on 10-4-1980. The industrial unit also obtained a production certificate certifying that it has started production on 19-3-1980. The certificate of registration was renewed from time to time. Clause (8) of the IPR effective for the period 1979-83 provided that village cottage and tiny industries certified as such by the State Government and small scale industries shall be exempt from purchase/sales tax for five years on construction material, raw material, machinery and packaging materials. Small scale industrial units in non-backward areas would be entitled to this exemption only for four years. The case of the writ petitioner before the High Court was that it set up its industry in the district of Mayurbhanj pursuant to this IPR. It had obtained a huge loan from the United Bank of India. In terms of the IPR, it was entitled to tax exemption on purchase of groundnut, mustard seeds etc. which were used as raw material for production of oil.

(3.) The Sales Tax Officer took the stand that there was no notification in force under S. 6 of the Orissa Sales Tax Act, 1947 granting exemption to purchase or sale of groundnut, mustard seeds etc. during the relevant period. In the absence of such a notification, the assessee could not gain immunity from payment of tax on its purchases.