By C. B. Thakar, Advocate
G. G. Goyal, Janak Vaghani, Chartered Accountants
fiogf49gjkf0d
Sales Tax – Rate of Tax – Machinery used for manufacture to produce water – Which is used for dyeing fabrics – Is machinery used for manufacture of goods – Subject to concessional rate of tax – Section 3 and Entry 3 of Schedule VIII of Tamilnadu General Sales Tax Act, 1959.
Facts
The dealer sold water treatment plant and claimed concessional rate of tax u/s 3(5) of the Act being sale of plant and machinery used for manufacture of goods duly covered by Entry 3 of Schedule VIII of the Act. The Department including Tribunal did not accept claim of the dealer on the ground that the water treatment plant is not used for manufacturing any goods and as such not eligible for concessional rate of tax u/s 3(5) of the Act. The dealer filed revision petition before the Madras High Court against such decision of the Tribunal.
Held
In order to prove the claim of the concessional rate of tax u/s 3(5) of the Act, the dealer has to satisfy three conditions namely;-
i) The goods sold must be one enumerated in Schedule VIII,
ii) The goods must be used in factory site within the State, and
iii) It should be used for manufacturing of any goods.
Entry 3 of Schedule VIII covers machineries of all kinds other than those mentioned in First Schedule. There is no dispute that machinery sold by the dealer is not covered by Entry 3 of schedule VIII. The first condition is satisfied and the second condition is also satisfied as the machinery is used in factory site within the State.
The dispute is with regard to third condition of use in manufacturing any goods. The use of machinery may be direct or in aid in the manufacture. It is not in dispute that the plant is used by the customer for treating the effluent which resulted in purified water and the same is used for manufacturing fabrics. The words” used in factory site within the State for manufacture of goods “cannot be construed narrowly so as to confine it to direct use only. The use may be direct or indirect.
It is a well settled principle that a provision which is a taxing statute, granting concessional and incentives for promoting growth and development, should be construed liberally.
The High Court accordingly, allowed the revision petition filed by the dealer and held that the dealer is entitled to the concessional rate of tax and set aside the order passed by the lower authorities.
