M.E. Javeed, CTM,-This appeal is directed against the order passed by the Joint Commissioner of Commercial Taxes (Administration), Gulbarga
Division, Gulbarga (hereinafter referred to as ''Revisional Authority'') vide his Order No. KST/SMR-9 of 1996-97, dated 6-7-1996 for the period
1-4-1991 to 31-3-1992.
2. The appellant is a manufacturer of groundnut oil and oil-cake. Assessment during this period has been concluded by the Deputy Commissioner
of Commercial Taxes (Assessment), Raichur (hereinafter referred to as ''Assessing Authority'') vide his assessment order dated 26-2-1993. While
concluding the assessment, he has determined the gross turnover of Rs. 2,50,19,683/- and taxable turnover of Rs. 1,32,36,792/-. The tax liability
of Rs. 7,55,680/- was determined out of which tax exemption was allowed as per G.O. dated 7/8-6-1989 to an extent of Rs. 5,99,068/-. This
assessment order was the subject-matter of revision. The Joint Commissioner of Commercial Taxes (Administration), Gulbarga Division, Gulbarga
has passed the order under Section 21(2) of the Karnataka Sales Tax Act, 1957 dated 6-7-1996 by restricting the tax benefit as per the G.O. to
an extent of Rs. 2,83,000/- as against Rs. 5,99,068/- allowed by the Assessing Authority which is the 50% of Rs. 11,98,135/-being the total
investment in plant and machinery as per the certificate issued by the Department of Industries and Commerce. This certificate indicates wrong
totalling of the figures at Rs. 11,98,135/- instead of indicating the correct figures at Rs. 11,18,135/-. The restriction of tax benefit ordered by the
Revisional Authority is based on the view that the total investment made in land, plant and machinery mentioned in the G.O. dated 7/8-6-1989
does not include the investment in building and bore-well and therefore by deleting the investment so made in building, bore-well valued at Rs.
5,52,135/- out of the total investment of Rs. 11,18,135/- he arrived at the actual investment in plant and machinery at Rs. 5,66,000/- and 50% of
this amount i.e. Rs. 2,83,000/- was allowed as tax benefit under the incentive scheme. It is against this revision order dated 6-7-1996, the
appellant has filed the appeal in the Tribunal on the following grounds.
3. It is contended that sales tax exemption is limited to 50% of Rs. 11,98,135/- which has been rightly allowed by the Assessing Authority to an
extent of Rs. 5,99,068/-. That the Revisional Authority has no jurisdiction to disturb the assessment order as there is no illegality and impropriety.
It is a view of the appellant that the G.O. dated 7-6-1989 indicates the total investment in fixed asset in plant, machinery and land. The expression
land"" also comprises of building and other allied property in real estate connected to the activity of the appellant. The word ""land"" mentioned in the
G.O. is stated to signify everything in fixed assets classed as real estate or real property. In view of this position, the appellant is of the view that the
investment in building valued at Rs. 5,37,135/- and bore-well valued at Rs. 15,000/- totalling to Rs. 5,52,135/- should also be considered for the
purpose of arriving at the total investment, of which 50% should be given as the tax benefit.
4. The learned Advocate for the appellant argued the case reiterating the grounds of appeal and prayed to set aside revisional order and to restore
the assessment order whereas, the learned State Representative argued the case stating that the value of building does not form part of land, plant
and machinery for the purpose of calculating the total investment as per the G.O. dated 7/8-6-1989.
5. The issue for our consideration is whether the investment in building valued at Rs. 5,37,135/- and bore-well valued at Rs. 15,000/- totalling to
Rs. 5,52,135/- could be considered along with the other investment in plant and machinery for the grant of 50% benefit in tax as per the G.O.
dated 7/8-6-1989.
6. Our answer to this issue is in the affirmative.
7. In this regard, the recent judgment of the Hon''ble High Court of Karnataka in the case of M/s. Jayadev Oil Mill, Hubli, STA No. 23 of 1994,
dated 20-2-1996,is very much relevant. The Hon''ble High Court has observed that the ""building"" is an apparatus or tool used by the assessee for
carrying the business or manufacturing activity, then it would be a part of the ''plant''. If on the other hand, if a building or part of a building has no
connection with the business or manufacturing activity that is being carried on, then obviously such a building or portion of the building will not be
part of the plant. It is therefore been decided that the building if used for the business or manufacturing activity would be part of the plant. On this
analogy even the bore-well if used for the activity will be part of the plant.
8. In view of this position, it is therefore stated that investment in building and bore-well would form part of the total investment in plant and
machinery for the purpose of quantifying the 50% tax incentive, if, the building and bore-well have been used for manufacturing activity. This aspect
requires to be examined. The revision order dated 6-7-1996 is therefore not correct. The matter is remanded to the Assessing Authority to verify
this aspect and to pass orders accordingly. As stated earlier, the total investment in land, building, plant, machinery and bore-well has been
wrongly shown at Rs. 11,98,135/- in the certificate of fixed assets dated 19-5-1992 issued by the Industries and Commerce Department. There is
a error in totalling, the correct figure would be Rs. 11,18,135/-.
9. In the result, the SMR order is set aside and the appeal is allowed in the light of observations made above.