1987 (2) TMI 482 - HC - VAT and Sales Tax

Summary

Issues: Interpretation of the term "raw material" under the Rajasthan Sales Tax Act, 1954 in relation to edible oil used in the manufacturing process of pulses.

In this judgment, the High Court of Rajasthan addressed a reference that was heard as a revision under section 15 of the Rajasthan Sales Tax Act, 1954. The central question was whether edible oil used in the manufacturing process of pulses could be considered a raw material under the Act. The dealer had purchased and utilized edible oil for manufacturing pulses, treating it as a raw material. The assessing authority initially rejected this classification, but the Tribunal ruled in favor of the dealer, considering the edible oil as falling within the definition of "raw material" under section 2(mm) of the Act. The Tribunal's decision was challenged by the department, leading to the present revision before the High Court.

The primary issue before the Court was to determine whether the edible oil used by the dealer in the process of manufacturing pulses could be classified as "raw material" as defined in section 2(mm) of the Act. The Court examined the inclusive definition of "raw material," which encompasses any lubricant required in the manufacturing process of the finished product. Referring to the Supreme Court's ruling in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur, the Court emphasized that goods intended for use in a process integral to the ultimate manufacture of goods qualify as raw materials. Applying the test of commercial expediency and integral connection to the manufacturing process, the Court found that the edible oil used for dehusking the grain in the manufacturing of pulses met the criteria of being a lubricant required for the manufacturing process, thus falling within the definition of "raw material."

The Court concluded that the Tribunal's decision to consider the edible oil as a raw material under the Rajasthan Sales Tax Act was justified based on the application of the legal principles and the specific facts of the case. By satisfying the test of commercial expediency and integral connection to the manufacturing process, the edible oil qualified as a raw material under the Act. Consequently, the department's revision was dismissed, and no costs were awarded in the matter. The petition was ultimately dismissed, upholding the Tribunal's decision regarding the classification of edible oil as a raw material for taxation purposes under the Rajasthan Sales Tax Act.