2016 (8) TMI 134 - HC - VAT and Sales Tax

Input tax credit - Whether the use of the furnace oil as processing materials or consumable stores - captive generation of power - Held that - Tribunal has committed an error in holding that the use of the furnace oil is not processing materials or consumable stores. Accordingly, this appeal is allowed. The question posed for our consideration is answered in favour of the assessee and against the department.

Summary

Issues Involved:
Challenge to order of Gujarat Value Added Tax Tribunal on the use of furnace oil as processing materials or consumable stores.

Analysis:
1. The appellant challenged the order of the Gujarat Value Added Tax Tribunal regarding Second Appeal Nos.59, 55, 84 of 2001 and subsequent orders. Questions of law were framed regarding the use of furnace oil as processing materials or consumable stores, and the Tribunal's adherence to certain legal precedents.

2. A request was made to amend the question of law to clarify whether the Tribunal was correct in holding that furnace oil is not processing materials or consumable stores. The issue was compared to a previous decision involving AMI Pigments Pvt. Ltd. and Others v. State of Gujarat & Another, where the court interpreted the definition of "raw material" under the Gujarat Value Added Tax Act, 2003.

3. The court noted that the legislative intent was to promote captive generation of power and grant exemptions for fuel used in manufacturing processes. It was emphasized that goods used as fuel for electricity generation were excluded from the definition of raw material, implying that other fuels were considered processing materials or consumable stores.

4. The court found that the Tribunal erred in its decision regarding the use of furnace oil, holding that it should be considered as processing materials or consumable stores. The appeal was allowed in favor of the appellant, with a reminder that the matter was pending before the Supreme Court, and parties were to abide by the final decision of the apex court.

5. The judgment highlighted the importance of interpreting tax laws in line with legislative intent and previous legal interpretations. The court's decision aimed to ensure consistency in tax treatment and promote industrial activities in compliance with the statutory framework.

6. The judgment provided a detailed analysis of the legal provisions, precedent cases, and the specific issue at hand, ultimately clarifying the Tribunal's error and ruling in favor of the appellant. The decision underscored the significance of legal interpretation and adherence to established principles in tax matters.