Trial production of Cement and Clinker does not come under Head of ‘Business ‘ u/s 2(d), No VAT leviable: Madhya Pradesh HC [Read Order]

The Madhya Pradesh High Court held that no vat leviable as the Trial production of cement and clinker does not come under the head of ‘Business ‘ u/s 2(d) of the Value Added Tax Act, 2005

M/s Prism Cement, the appellant challenged the legality and validity of the final order dated 11.12.2017 passed by the M.P. Commercial Tax Appellate Board.

The appellant raised the issue that whether the material consumed during trial production undertaken by the petitioner between 05.08.2010 to 01.11.2010 (the alleged date of commencement of commercial production), the said material is exigible for Entry Tax or not

The Appellate Board rejecting the appeal of the appellant upheld the order of the Appellate Authority dated 21.01.2014 and also the order dated 27.09.2013 of the Assessment Officer who found on facts that production of cement had started on 05.08.2010 and not on 01.11.2010 as claimed by the appellant.

It was observed that the term “Business” reveals that tax is leviable inter alia on the event of the manufacturer whether or not such event is carried on with motive to make gain or profit and whether or not any gain or profit accrues from such manufacturer.

The authorities have factually found that the manufacturer had started business on 05.08.2010. Whether the appellant chooses to call this process a trial manufacturer will not make any difference. Importantly, the authorities have also factually found that not only manufacturing but the sale of cement had also started from 05.08.2010 which is luminous by reading of the order of the Appellate Board.

A Bench consisting of Shri Justice Sheel Nagu & Shri Justice Virender Singh has held that the so-called trial production of cement and clinker from 05.08.2010 till 01.11.2010 when the appellant claims to have started commercial production has been claimed to be not coming within the definition of “Business” as defined in Sec.2(d) of VAT Act.

The Court dismissed the appeal. The appellant was represented by Shri Mukesh Agrawal, advocate and the respondent was represented by Shri Darshan Soni, Government Advocate.

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