MAHABIR INDUSTRIES Vs. STATE OF U P

JUDGEMENT

(1.) This is a writ petition under Article 226 of the Constitution of India for quashing the notice dated 5th September, 1985, issued by the Sales Tax Officer, Saharanpur (respondent No. 2), which is annexure 3 to the writ petition ; for restraining the respondents from taking any proceedings for the cancellation of the recognition certificate issued under Section 4-B of the U.P. Sales Tax Act, 1948 (briefly "the Act"), to the petitioner for the manufacture of packing paper and for issuing a suitable writ that the petitioner is entitled for exemption from payment of tax on the purchase of raw materials required for the manufacture of waterproof packing rolls and sheets.

(2.) The petitioner, a registered firm is engaged in the manufacture of waterproof packing rolls and sheets by sandwiching bitumen by craft paper on one side and hessian or polythene on the other side. The packing material manufactured by the petitioner is wholly used for waterproof packing of the goods. The Government of Uttar Pradesh issued a notification dated 31st December, 1976 (annexure 1 to the writ petition) (hereinafter referred to as "the notification"), Clause 2 of which provides inter alia, that no tax shall be payable on the sales or purchases by any unit in respect of raw materials required by it for the use in the manufacture of the goods, mentioned in annexure III, as referred to in Clause 2 of the notification. Item No. 4 in annexure III as referred to in Clause 2 of the above notification is as under : 4. All kinds of packing materials including cases and containers.

(3.) So, the case is that the manufacturing unit of the petitioner being engaged in the manufacture of packing material is entitled to full exemption of tax on the purchase of raw materials within the meaning of Clause 2 of the notification, that the petitioner was granted a recognition certificate as such under Section 4-B of the Act, which is annexure 2 to the writ petition, in May, 1976 and that the petitioner continued to avail the exemption thereafter. A show cause notice dated 5th September, 1985, was received from the respondent No. 2 by the petitioner calling upon it to show cause as to why the recognition certificate (annexure 2) be not cancelled. The said notice is based upon the circulars, issued by the Sales Tax Commissioner on 12th July, 1985 and 3rd December, 1983, to the departmental officers that the packing paper is covered by item 3 of annexure III, (sic) as referred to in Clause 2 of the notification.