The main legal point established in the judgment is that an Assessee is entitled to tax exemption on sale of finished products under the diversification scheme as per the Industrial Policy Resolution (IPR), 1989 and relevant legal provisions.

JUDGMENT :

S. Muralidhar, J.

1. The present revision petition by the Assessee arises out of an order dated 8th June, 2007 of the Orissa Sales Tax Tribunal (Division Bench), Cuttack (Tribunal) in S.A. No.913 of 2002-03 for the year 1998-99.

2. While admitting the present revision petition on 9th May 2008, the following Questions were framed for consideration:

(a) Whether in the fact and circumstances of the case, the learned Tribunal is erred in law by disallowing the tax exemption on sale of finished products manufactured by the industrial unit under the diversification scheme ?

(b) Whether in the facts and circumstances of the case, the order of enhancement of assessment passed by the Ld. Tribunal without compliance of the provisions of Rule-50 (3) of the Orissa Sales Tax Rules is lawful and valid ?

(c) Whether in the fact and circumstances of the case, the learned Tribunal has committed error of jurisdiction or is erred in law while deciding issues which are not before him in the appeal filed by the Petitioner in absence of cross objection filed by the State ?

3. This Court heard the submissions of Mr. Jagabandhu Sahoo, learned Senior Counsel for the Petitioner and Mr. S. S. Padhy, learned Additional Standing Counsel for the Department-Opposite Party.

4. The background facts are that the Petitioner is a registered dealer under the Orissa Sales Tax Act, 1947 (OST Act) as well as the Central Sales Tax Act, 1956 (CST Act). The Petitioner is a registered Small Scale Industrial Unit (SSI Unit) in terms of the Industrial Policy Resolution (IPR), 1986. It was engaged in manufacture of steel almirahs, racks, tables, air coolers, cabinets. For this, it has been granted a permanent registration certificate by the District Industries Centre (DIC), Rourkela.

5. After coming into force of the IPR 1989, the Petitioner undertook expansion and diversification by virtue of a separate project report, which was duly approved by the Competent Authority. The Petitioner started manufacturing new items viz., foundation packing and rings, gaskets, plates and packing exhaust smoke channel, electrical panel board sheet material like karai, G.P. Tray, Grain Storage Tank, Steel door and window.

6. The Project Manager of the DIC, Rourkela, who was the Competent Authority, issued in favour of the Petitioner a certificate of eligibility that the Petitioner was entitled to exemption from payment of sales tax on purchase of raw materials and sale of finished products under IPR-89 for a period of seven years from the date of commencement of commercial production i.e., 9th September, 1998.

7. In terms of the notification issued on 16th August, 1990 by the Finance Department (FD), Government of Orissa, under Entry 30- FFF of the exemption list issued under Section 6 of the OST Act, existing SSI Unit of 1986 IPR, which had undertaken expansion or modernization or diversification after 1st December 1989, on the basis of a separate project report duly approved by the Financial Institution and starting commercial production thereafter within the State, again as certified by the Competent Authority, would be eligible for exemption from payment of sales tax for a period of seven years from the date of commercial production to the extent of the increased commercial production over and above the existing installed capacity. This exemption would be available only once within the entire effective period.

8. Since the Petitioner was assessed to NIL demand in respect of the products relating to the pre-expansion period, it discontinued production of those products and thereafter only manufactured products under the diversification unit. Thus, the Petitioner claims that it did not manufacture and sell any product from out of the original installed capacity of the industrial unit.

9. While completing the assessment for the period 1998-99, the Sales Tax Officer (STO) by an order dated 21st January 2002 raised a tax demand by estimating the notional value of finished products, whic