LAWS(MAD)-2002-12-14

UNION OF INDIA Vs. CHEMFAB ALKALIS LIMITED

Decided On December 04, 2002
UNION OF INDIA Appellant
V/S
CHEMFAB ALKALIS LIMITED Respondents

JUDGEMENT

(1.) The above tax case revision is filed under Section 42 of the Pondicherry General Sales Tax Act, 1967, (hereinafter referred to as "the PGST Act".) by the revenue i.e., the Union of India represented by the Deputy Commissioner of Commercial taxes, Government of Union Territory of Pondicherry against the order of the Sales-tax Appellate Tribunal, Pondicherry dated 5.11.1992 made in Tax Appeal No.1 of 1992 on the following questions of law

(2.) The respondent is an assessee in the books of commercial Tax Officer (IAC), Pondicherry and was an industrial undertaking manufacturing Caustic Soda, Chlorine gas, Hydro Chloric acid (100 percent) and Calcium Hydro chlorite under licence issued by the Government of India, New Delhi. The Industry has commenced production in their factory at Kalapet with effect from 2.7.1985. For the assessment year 1988-89, the respondent have reported the total and taxable turnover of Rs.95,70,369-85ps and Rs.71,118-76ps claiming exemption on a turnover of Rs.94,99,251-09ps in their return filed. The respondent claimed exemption of sales turnover of liquid chlorine in a sum of Rs.1,20,029/-. This exemption has been claimed under the notification in G.O.Ms.No.15 dated 25.6.1974 issued by the Government of Pondicherry in exercise of the power under Section 19 of the PGST Act, 1967. According to the assessee, the said notification exempts the tax payable under the said Act on the sales turnover of goods manufactured by the small scale industries, which went into production on or after 6th November, 1969 and all Industries other than small scale industries which went into production on or after 1st April, 1971 as certified by the Director of Industries, Pondicherry located in the Union territory and registered with the Government of Pondicherry. The said exemption in respect of the goods manufactured in the said industries shall be effective and valid for a period of five years from the date of commencement of production. The exemption so claimed by the assessee has been negatived by the Assessing Officer on the ground that the liquid chlorine was manufactured by the assessee in a plant taken on lease from 16th April, 1987 from M/s.Lichlor. Hence, the liquid chlorine manufactured by the assessee, respondent from a manufacturing unit owned by other person is not entitled to the benefit under the notification.

(3.) In respect of the sales turnover of "Brine" in a sum of Rs.3,88,863-89ps, a raw material for manufacture of caustic soda, the assessee claimed exemption under entry 10 of the third schedule. The third schedule to the Pondicherry General Sales Tax Act enumerated goods, which are exempted from tax. Entry No.10 of the third schedule provides for sale of "salt". Hence, the Assessing Officer rejected the claim of exemption on the sales turnover of "Brine" on the ground that "salt" and "Brine" are commercially different commodities. The specific gravity of "Brine" in liquid form and the "salt" in crystal form are different. "Brine" form the basic solution or raw material for manufacture of Caustic Soda and hence the exemption granted from levy of tax to "salt" under Entry 10 of the third schedule is not available to "Brine".