CHEMSCRAFT INDUSTRIES Vs. STATE OF HARYANA

JUDGEMENT

(1.) Succinctly, the facts, relevant for disposal of present reference petition, at the instance of M/s. Chemscraft Industries (for short "the assessee") and emanating from the record, are that the assessee was engaged in trading of chemicals. It submitted its return for the year 2000-2001 indicating R.D. sale of chemicals worth Rs. 23,09,230/- against Form ST-15A and claiming deduction on it on account of sales to registered dealers. During the course of scrutiny of the assessment case, it revealed that the chemicals sold by the assessee are liable to be taxed at the first stage of sale as per entry No. 49 of the list of goods under the provisions of the Haryana General Sales Tax Act, 1973 (for brevity "the Act"). Therefore, a show cause notice was issued to the assessee on the ground that it has wrongly claimed the deduction of the said amount during the year under assessment. In pursuance of the show cause notice, the assessee submitted the reply. The Assessing Authority, considering its reply, vacated/withdrew the notice and framed the final assessment, vide order dated 29.8.2002.

(2.) The Revisional Authority was of the view that the Assessing Authority has wrongly allowed the deduction on account of sales of chemicals to the registered dealers because the same are liable to be taxed at the first stage, as per entry No. 49 of the list of goods. Therefore, another show cause notice dated 21.1.2003 in this regard was issued. In the wake of this show cause notice, counsel for the assessee appeared, filed the reply and tried to explain that the chemicals are taxable at the first stage only when these are sold to a dealer for use by him for manufacturing or processing of the textile subject to declaration form STD 4 duly filled and signed by him and since the firm had sold the chemicals to the manufacturers and exporters of Ready-made garments and registered trade dealers and not to the manufacturers of textile goods, so, the same are not liable to be taxed at first stage.

(3.) The explanation put forth by the assessee did not find favour and the Revisional Authority negatived the claim of deduction and directed it (assessee) to pay the tax at the rate of 8% on turn over of Rs. 23,09,230/-, vide order dated 3.3.2003.