HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
M/s. Gem Granites v. Commissioner of Income Tax, Tamil Nadu
Civil Appeal No. 319 of 2004 / Civil Appeal No. 3962 of 2003 / Civil Appeal Nos. 7574 and 7573 of 2004
[2004] Supp. 6 SCR 332 ·
80HHC(2)(b)
Sources & disclosures includedDownload original judgment / order
Three-judge bench · Ruma Pal, J. · Arijit Pasayat, J. · C.K. Thakker, J.
Assessment years: 1987-88 (lead appeal)
01 · Facts of the case
The lead exporter claimed section 80HHC relief for AY 1987-88 on granite said to have been cut and polished. It argued that processing took the goods outside minerals and relied on the export-incentive purpose, a 1984 CBDT letter about diamonds and gems, and the later 1991 statutory exception. The High Court had rejected the claim following counsel’s concession, but the Supreme Court examined the legal issue independently (physical pages 5–8).
The common judgment also dealt with Revenue’s Civil Appeal 3962/2003, in which the High Court had accepted the taxpayer’s reading of the 1984 letter, and two further assessee appeals, 7574 and 7573/2004. The lead AY is not assigned to all companions without source support.
Source: See the proposition-specific paragraph and PDF-page references below.
02 · Discussion by the Hon’ble Court
The unamended expression minerals and ores was not qualified to exclude goods merely because they had undergone processing while retaining the mineral’s character. Cutting and polishing did not remove the granite in question from that exclusion. The 1991 words other than introduced a specific exception for scheduled processed minerals; treating all processed minerals as already outside the exclusion would deprive that change of meaning (physical pages 9–11).
The Court found no language or necessary implication making that benefit retrospective. An export-promotion purpose could not override the clear statutory exclusion. The 1984 CBDT letter addressed the distinctive import/export arrangements for diamonds and gemstones, not granite. The 1994 and 1995 circulars interpreted the scheduled cut-and-polished category after the amendment and did not extend it to the lead earlier year. Customs and excise classifications for duty rates were not imported into this different income-tax provision (physical pages 11–13).
Source: See the proposition-specific paragraph and PDF-page references below.
03 · Judicial decision
Civil Appeal 319/2004 was dismissed without costs. Revenue’s Civil Appeal 3962/2003 was allowed and the contrary High Court judgment set aside. Leave was granted in the two remaining matters, and Civil Appeals 7574 and 7573/2004 were dismissed for the same reasons. No reassessment remand or fresh quantified demand was ordered; the final reporter shorthand does not capture the separately allowed Revenue appeal (physical pages 13–14).
Source: See the proposition-specific paragraph and PDF-page references below.
04 · Outcome / in whose favour
In whose favour: Revenue on the common pre-amendment issue
Three assessee appeals dismissed; Revenue Civil Appeal 3962/2003 allowed
Final determination of the identified historical minerals-exclusion issue
Lead AY 1987-88; not a ruling that scheduled cut-and-polished granite can never qualify after the amendment, or that every modern processed-mineral incentive is unavailable.
Source: See the proposition-specific paragraph and PDF-page references below.
05 · AKHB REVIEW POINT
Identify the year, the exact exclusion and the actual scheduled exception before using an industrial-processing label. A later exception can help explain the reach of an earlier general category without itself becoming retrospective. Conversely, a holding about pre-amendment granite cannot be used to deny the later exception on its own terms.
The bounded official-hosted 2011 compilation check, physical page 470 footnote 18, confirms that the processed-minerals exception was inserted by the Finance (No. 2) Act, 1991 from 1 April 1991. Page 469 separately records the section’s deduction phase-out from AY 2005-06. These historical checks do not certify all intervening treatment, current law or a 2025-Act counterpart.
Source: See the proposition-specific paragraph and PDF-page references below.
Proposition-specific source paragraphs and PDF pages
- topic
- Identity, bench and four appeals
- source url
- Open cited source
- pdf pages
- 1; 5
- paragraphs
- Unnumbered judicial text
- source role
- reported metadata and judicial text
- topic
- Lead year, statute, submissions and concession
- source url
- Open cited source
- pdf pages
- 5; 6; 7; 8
- paragraphs
- Unnumbered judicial text
- source role
- judicial text
- topic
- Mineral scope and non-retrospectivity
- source url
- Open cited source
- pdf pages
- 9; 10; 11
- paragraphs
- Unnumbered judicial text
- source role
- judicial text
- topic
- Circulars and other tariff regimes
- source url
- Open cited source
- pdf pages
- 11; 12; 13
- paragraphs
- Unnumbered judicial text
- source role
- judicial text
- topic
- Separate appeal dispositions
- source url
- Open cited source
- pdf pages
- 13; 14
- paragraphs
- Unnumbered judicial text
- source role
- judicial text
- topic
- Historical phase-out and processed-mineral amendment
- source url
- Open cited source
- pdf pages
- 469; 470
- paragraphs
- Section 80HHC(1B), (2)(b)(ii); footnote 18
- source role
- bounded historical statutory text
Judicial authorship and separate opinions
Ruma Pal, J.Act identified in the reviewed source
Income-tax Act, 1961Source & verification
Download original judgment / order · Open cited source rendition
Identified source rendition: 14 PDF pages; SHA-256 72ea76e6f55b0c6ec03f65834335c02357eb8b1886128c938c2a9da2489c7662. Original bytes preserved. Complete unnumbered judicial text on physical pages 5–14/SCR 336–345; four appeal units preserved and preceding headnote excluded.
- The judicial ending separately allows Revenue’s Civil Appeal 3962/2003, although the final reporter line simply says Appeals dismissed. All four appeal units are retained.; Physical page 9 prints section 80-HHB in one sentence analysing the minerals exclusion; the surrounding reproduced text and reasoning clearly concern section 80HHC(2)(b).; The headnote prints 27 May 1984 for the circular, while the judicial text and reproduced letter identify 22 May 1984. The source also recites 7 November 1984 in one discussion of the later circular, before discussing the 1994 and 1995 circulars. These date recitals are not silently harmonised.; The source’s older section 89A history is not relied upon as an independently verified legislative crosswalk.; The Court proceeded against the claim even if the lead counsel’s concession were ignored; the decision is not merely a concession-based dismissal.
Statutory scope
No automatic mapping to the Income-tax Act, 2025 or present-law certification. Apply the statutory text for the relevant year.
Later treatment
Source checked 2026-10-04. Comprehensive subsequent judicial and statutory treatment has not been verified. Only the expressly identified bounded comparisons have been checked. No current-law or Income-tax Act, 2025 mapping is certified.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
Identified source links
- reported judgment — PDF 14 pages
SHA-256: 72ea76e6f55b0c6ec03f65834335c02357eb8b1886128c938c2a9da2489c7662
- official department hosted historical statutory compilation — PDF 1251 pages
SHA-256: 1ec6e4c38dc1d524d1d40b1fd35d13ac1336c8fc549cef2af1bf723a999c822b
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