JAI CHEMICAL INDUSTRIES Vs. STATE OF ASSAM

JUDGEMENT

(1.) This order will dispose of W.P. (C) No. 1683 of 2010, W.P. (C) No. 6445 of 2010 and W.P. (C) No. 1677 of 2010, as it is stated by learned counsel for the parties that the same issue is involved in all the three petitions. In W.P. (C) No. 1683 of 2012, the petitioner has challenged the order dated August 28, 2009 passed by the Commissioner of Taxes, Guwahati, under section 105 of the Assam Value Added Tax Act, 2003 holding that the process of production of soapstone powder from soapstone did not amount to manufacturing for the tax benefits under the Assam Industries (Tax Exemption for Pipeline Units) Order, 2005 and consequential order dated March 3, 2010 declining to renew certificate of entitlement.

(2.) The case of the petitioner is that it is producing soapstone powder from soapstone. The process followed is as follows:

(3.) Under the Industrial Policy of the State of Assam, 2003, certain sales tax exemption benefits have been given as per the Assam Industries (Tax Exemption for Pipeline Unit) Order, 2005. Accordingly, the petitioner made an application for eligibility certificate. The District Level Committee approved the petitioner for issuing of eligibility certificate on January 2, 2007 subject to clearance from the Sales Tax Department. Thereafter, on February 7, 2007, after due enquiry, the Sales Tax Department found the petitioner eligible for sales tax concession as per conditions applicable to such exemption. Accordingly, eligibility certificate dated July 9, 2007 was issued in favour of the petitioner. Based thereon, certificate of entitlement was also issued, which was valid from June 13, 2006 to March 31, 2007, subject to renewal from year to year. The said certificate was renewed up to March 31, 2009. The Assistant Commissioner of Taxes in the case of R.K. Chemicals who is W.P. (C) No. 1677 of 2010 sought clarification from the Commissioner of Taxes whether production of soapstone powder from soapstone amounted to manufacturing. The Commissioner held in negative relying upon the judgment of the honourable Supreme Court in State of Maharashtra v. Mahalaxmi Stores, 2003 129 STC 79 wherein it was held that crushing of boulders into stone chips did not amount to manufacturing. According to the petitioner, the said judgment was distinguishable as crushing of boulders to small size was different from converting soapstone to powder by a process which amounted to manufacture. As a result of the said process, a new marketable product came into existence, in any case, a view had already been taken by the Department in the case of the petitioner and eligibility certificate had been issued. The same could not be cancelled nor refused to be renewed on mere change of opinion on a debatable issue.