JAGANATH INDUSTRIES Vs. STATE OF ORISSA

JUDGEMENT

(1.) WHETHER the case of Savitri Industries v. State of Orissa, OJC No. 1269 of 1990, decided on (2 5 1991) lays down the correct position of law is the question referred to the Full Bench. It has arisen in the context of the orders passed by authorities under the Orissa Sales Tax Act, 1947 (the Act) taking a view that paper was not a raw material for preparing the exercise book and hence was not entitled to exemption under the Industrial Policy Resolutions of the State of Orissa.

(2.) THE petitioners are registered dealers under the Act. Certificates of registration issued under Section 9 of the Act, indicate the nature of their business as manufacturing and wholesale distribution. The certificates further state that the dealers intend to use paper, board, binding cloth rexines thread stitching wire, ink, maida and marble paper in the manufacture/processing of goods for re sale and that they carry on business, inter alia, of manufacturing and otherwise producing for sale exercise books, registers, etc. The petitioners purchased requisite machines for manufacturing exercise books, etc. and their factories were provisionally registered as S. S. I. units on 13 2 1987. Entry 26 D was inserted in the I. P. Resolutions in the list of tax free goods for giving exemption for a period of five years from the date of production to small industries purchasing raw materials irrespective of whether such industries are Manufacturing or processing industries. The petitioners were also assessed for some years in which the exemption availed for the raw materials purchased for producing exercise books was accepted.

(3.) UNDISPUTED factual position about the activity of petitioners in the preparation of exercise book, bound book, etc. is as follows : The petitioners purchase plain papers and by separate machines cut them, roll them, stitch them apply sizing and bind them either by cloth or leather and sell these articles in the market as bound books, exercise book etc. All these processes are done in the factory by different machines, such as cutting machine, rolling machine, stitching machine, sizing machine as well as by manual labour.