Law: Sales Tax Act, 1990

Section: 8,33,2(10)

(a) Sales Tax Act (VII of 1990)---S.8---S.R.O. 124(I) of 2000, dated 15-3-2000---Tax credit not allowed---Input tax adjustment on electricity bills was disallowed on the ground that electricity consumed in office area and during off season could not be taken as taxable activity---Validity---All factors and items, which are used as integral part of the manufacturing process and could not be separated merely on the ground that it was used in off season because to run a factory in satisfactory and good condition its maintenance and ever grooming was a fundamental aspect, without which, a good production could not be expected---Input adjustment made was in association with S. 8 of the Sales Tax Act, 1990 and consumption of electricity even in off season was an integral process of manufacturing and production of taxable goods---Charge levied was vacated by the Appellate Tribunal. (b) Sales Tax Act (VII of 1990)--- ----S. 2(10)---Manufacture---Meanings---Essence of term "manufacture" as used in the Sales Tax Act, 1990 means the changing of one object into another for the purpose of making it marketable. (c) Sales Tax Act (VII of 1990)--- ----S. 2(10)---Production---Explanation---Term production appears to contemplate some expenditure of human skill and labour and other connecting aspects and activity spent in bringing the goods to the state in which they may become fit for consumption. (d) Sales Tax Act (VII of 1990)--- ----S.33---General penalties---Imposition of penalty just on the ground that taxpayer had failed to provide documents at the time of audit was nothing but a misuse of power---Imposition of penalty was set aside by the Appellate Tribunal. ORDER Being aggrieved by Order-in-Original No. 81 of 2004, dated 31-7-2004, this appeal has been preferred by appellant. 2. It is alleged that appellant had adjusted an amount on electrical bills for the period from July, 2002 to November, 2002 and April, 2003 to June, 2003, but during that period no production activity was carried out. In the same way appellant had adjusted input tax on Electricity Bills consumed in office area during the period from December, 2002 to March, 2003 in violation of section 8 of Sales…

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