2005 (1) TMI 658 - HC - VAT and Sales Tax

Summary

Issues Involved: Eligibility for tax exemption under Section 4-A of the U.P. Trade Tax Act, 1948; Classification of products as "industrial oxygen" vs. "air product oxygen"; Compliance with procedural requirements by the Divisional Level Committee.

Issue-wise Detailed Analysis:

1. Eligibility for Tax Exemption under Section 4-A of the U.P. Trade Tax Act, 1948:
The applicant established a new unit for manufacturing industrial oxygen gas in 1994 and received an exemption certificate under Section 4-A of the Act. In 1998, the applicant set up a second unit for manufacturing air product oxygen, liquid nitrogen, gaseous nitrogen, and medical oxygen, and sought a similar exemption. The Divisional Level Committee initially granted the exemption but imposed restrictions based on Section 4-A(5)(d) of the Act. The applicant contended that the products from the second unit were different from those of the first unit and thus should not be subject to these restrictions.

2. Classification of Products as "Industrial Oxygen" vs. "Air Product Oxygen":
The fundamental question was whether air product oxygen is the same as industrial oxygen. The applicant argued that they were industrially and commercially different, citing differences in raw materials, manufacturing processes, and applications. The Tribunal, however, found that both products were chemically and commercially the same, as both were forms of oxygen used for welding purposes, despite differences in purity and potential medical applications. The Tribunal upheld the Divisional Level Committee's decision that air product oxygen was not a different product from industrial oxygen.

3. Compliance with Procedural Requirements by the Divisional Level Committee:
The applicant's exemption application underwent multiple rounds of appeals and remands. The Tribunal and the Divisional Level Committee were directed to reconsider the nature of the products based on evidence and rulings cited by the applicant. Despite these directives, the Divisional Level Committee consistently rejected the exemption application for air product oxygen, relying on reports from the Joint Commissioner (Executive), Trade Tax, Moradabad. The Tribunal's final decision was that the Divisional Level Committee's findings were not erroneous and were based on a proper understanding of the products' commercial and chemical nature.

Conclusion:
The Tribunal held that air product oxygen and industrial oxygen are commercially the same goods, despite differences in manufacturing processes and purity levels. The applicant's claim that these were different products was not sufficient to justify a different tax treatment under Section 4-A of the Act. The Tribunal's decision to uphold the Divisional Level Committee's findings was based on the consistent interpretation that both products were forms of oxygen used for welding, and thus commercially identical. The revision was dismissed, and no costs were awarded.