2021 (9) TMI 901 - HC - VAT and Sales Tax

Concessional rate of Entry Tax - purchase of raw materials like Coal, Caustic Soda, HFO and LDO etc. - Rule 3(4) (b) as existed prior to 2nd amendment of OET Rules - Coal, Caustic Soda, HFO and LDO utilized by the Petitioner in its CPP units are all raw material for production of electricity as a finished good - requirement to disclose raw material in the registration certificate or not - HELD THAT - The registration certificate issued to the NALCO did mention the items viz., Coal, Caustic Soda, HFO and LDO by an entry made with effect from 14th March, 1987. To say that the entry should have further mentioned that these were raw materials is, in the considered view of the Court, hyper technical. There appears to be no dispute between the parties that in fact those materials were used as raw materials by the Petitioner. In fact, in its original order dated 21st November 2011, the Tribunal accepted that these materials were in fact used as raw materials. The mere fact that the registration certificate does not mention them as raw materials cannot result in depriving the Petitioner of the concession to which it is statutorily entitled. In other words NALCO cannot be made to suffer for the failure of the authority concerned to mention in the registration certificate issued under the OST Act that the above items are raw materials. Whether under the facts and circumstances of the case, no Entry Tax is excisable on purchase of raw material such as Coal, Caustic Soda, HFO and LDO, upto 6 th November 2000 in view of Rule 3(4) (b) as existed prior to 2nd amendment of OET Rules? - HELD THAT - The position under the OET Rules after 6th November 2000 was that, in terms of Rule 3 (4) of the OET Rules, goods specified in Parts I and II of the Schedule to the OET Act when used as raw materials by a manufacturer on its first entry in a local area other than that specified in clause (a) above shall not be exigible to tax. Rule 3 (4) (a) envisages the entry of the goods in a local area notified as a municipality or municipal corporation or a notified area council, in which case the goods would be exigible to tax at 50 % of the rate to which they are exigible under Rules 3 (2) and 3 (4) of the OET Rules. However, if the entry is in a local area other than municipality, municipal corporation or notified area council then no tax would be leviable - It is held that for assessment year 1999-2000, no entry tax was leviable on the purchase by the Petitioner-NALCO of raw materials such as Coal, Caustic Soda, HFO and LDO up to 6 th November, 2000 in view of Rule-3 (4) (b) as it existed prior to the second amendment to the OET Rules. Revision disposed off.

Summary

Issues:
1. Interpretation of concessional rate of Entry Tax under Rule 3(4)(b) of the O.E.T. Rules.
2. Exemption of Entry Tax on purchase of raw materials like Coal, Caustic Soda, HFO, and LDO.
3. Disallowance of concessional rate of tax based on absence of raw material mention in registration certificate.
4. Rectification of mistake concerning non-mentioning of items in the registration certificate.
5. Application of Rule 3(4)(b) of OET Rules for exemption from entry tax in a Gram Panchayat area.

Issue 1 - Interpretation of Concessional Rate of Entry Tax:
The Court addressed whether the Petitioner was entitled to a concessional rate of Entry Tax under Rule 3(4)(b) of the O.E.T. Rules on the purchase of specified raw materials. It was noted that the registration certificate did mention the raw materials, and the Court found the technicality of not explicitly stating them as raw materials irrelevant. The Tribunal's decision was considered hyper-technical, and the Court ruled in favor of the Petitioner.

Issue 2 - Exemption of Entry Tax on Raw Materials:
The Court examined the exemption of Entry Tax on raw materials like Coal, Caustic Soda, HFO, and LDO up to 6th November 2000. Rule 3(4)(b) of the OET Rules stipulated that goods used as raw materials in a local area other than specified areas would not be taxed. The Court found that the raw materials purchased by the Petitioner were not liable for entry tax under the rules before the second amendment.

Issue 3 - Disallowance of Concessional Rate Based on Registration Certificate:
The Tribunal disallowed the concessional rate of tax due to the absence of raw material mention in the registration certificate. However, the Court found that the raw materials were indeed used as such, and the failure to specify them as raw materials in the certificate should not deprive the Petitioner of the entitled concession. The Court ruled in favor of the Petitioner against the Department on this issue.

Issue 4 - Rectification of Mistake in Registration Certificate:
The Petitioner sought rectification of the mistake regarding the non-mentioning of items in the registration certificate. The Tribunal acknowledged the mention of items in the certificate but refused rectification due to the absence of the specific description as raw materials. The Court found the refusal unjustified given the factual use of the items as raw materials and ruled in favor of the Petitioner.

Issue 5 - Application of Rule 3(4)(b) for Exemption in Gram Panchayat Area:
The Court analyzed the application of Rule 3(4)(b) of OET Rules for exemption from entry tax in a Gram Panchayat area. Despite the Tribunal's oversight, the Court clarified that goods brought into a Gram Panchayat area were not liable for any tax. The Court ruled in favor of the Petitioner on this issue as well.

In conclusion, the Court ruled in favor of the Petitioner on all issues, emphasizing the entitlement to concessional rates and exemptions based on the factual use of raw materials and the application of relevant tax rules.