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TMI Blog2012 (8) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... as fuel. The above observations clearly shows that the coal used in the process of manufacturing of sponge iron is used as a raw material and not as a fuel - in favour of assessee. Entitlement to claim set off as regards purchase of HSD Oil - Held that:- Considering the provisions of Rule 54(b), it is clear that the use of HSD Oil i.e. motor spirit as a fuel does not fall within the aforesaid provisions for the purpose of claiming set off. On account of this specific provision which permits claiming of set-off under peculiar circumstances mentioned in Rule 54(b) of said Rules, the provisions of Rule 52 and Rule 53 cannot applied in favour of the assessee - The Assessing Officer as well as the Appellate Authority has rightly declined to grant set off to the respondent in regard to the HSD Oil - against assessee. - SALES TAX APPEAL NO. 11 OF 2011, 13 OF 2011 - - - Dated:- 17-8-2012 - J.P.DEVADHAR R.Y.GANOO, JJ. Mrs. Uma Palsuledesai for the Appellant Mr.C.B.Thakkar for the Respondent JUDGMENT (PER R.Y.GANOO, J). : 1. These two appeals arise out of judgment dated 2.12.2010 being common judgment in VAT Second Appeal No. 55 of 2010 and 56 of 2010 deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 30.4.2008. So far as the assessment year 1.4.2006 to 31.3.2007, the Assessing Officer did not grant set off in respect of purchase of HSD Oil, which according to the respondent was used as a fuel in the manufacture of sponge iron. 4. Being aggrieved by the two orders as mentioned aforesaid, the respondent filed two separate appeals. So far as the assessment period 1.4.2005 to 31.3.2006, the Joint Commissioner of Sales Tax (Appeals) Nagpur upheld the stand of the Assessing Officer and dismissed the appeal whereby the respondent wanted the Appellate Officer to accept its contention that the coal used in the manufacture of sponge iron should not be treated as fuel. So far as the assessment period 1.4.2006 to 31.3.2007 the Appellate Authority rejected the contention of the respondent on both the counts i.e. (i) use of coke as a raw material and (ii) seeking set off for HSD Oil as a fuel. Consequently, the Appellate Authority dismissed the appeal filed by the respondent for the period 1.4.2006 to 31.3.2007. Both the orders are dated 21.01.2010. 5. Being aggrieved by the judgment dated 21.1.2010 respectively, the respondent filed two appeals being Second Appeal No.55 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing on behalf of the respondent took us through the entire record, including the report furnished by the Head of the department. He submitted that the said report has been referred to by the Assessing Officer and therefore it was necessary for the Assessing officer to appreciate the text of the report in the perspective in which it was given, namely to show that the coal used was used as raw material. He submitted that the observation of the said officer who gave the report viz. it indirectly plays a role of the fuel in the rotary kiln process clearly goes to show that it is not used as a fuel. He submitted that on account of the chemical qualities of the coal in the process, once the process starts, heat is generated and the iron ore is converted into sponge iron. Learned Advocate Mr. Thakkar submitted that the Assessing Officer as well as the Appellate Authority failed to appreciate the chemical qualities of the coal and they appeared to be impressed by the fact that in the process of manufacture of sponge iron heat is generated and that is how they treated that the coal is used as a fuel. Learned Advocate Mr. Thakkar submitted that the said Tribunal rightly came to the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of non-coking coal reduces the iron oxide slowly to sponge iron and carbon monooxide gas is generated. The report specifically mentions that inside the bed the Non-cooking coal plays the role of a reductant. It further indicates as to how highly exothermic reaction takes place and produces the bulk of the heat required for the process. It also shows that non-coking coal provides the gas carbon mono-oxide for satisfying the heat requirements of the process. On account of this, the author of the report has observed It indirectly plays a role of fuel in the rotary kiln process . It is seen that chemical qualities of Noncooking coal to generate heat are used. Merely because heat is generated in the process it cannot be a ground to hold that Noncooking coal so used was used as fuel. The above observations clearly shows that the coal used in the process of manufacturing of sponge iron is used as a raw material and not as a fuel. It is clear that the Assessing Officer as well as the Appellate Authority misread the text of the report dated 29.12.2008. We hold that the tribunal has rightly held that the coal used by the respondent was a raw material and not used as a fuel. 11. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate Mr. Thakkar appearing for the respondent supported the view taken by the said Tribunal and submitted that the said appeal has been rightly allowed. Learned Advocate Mr.Thakkar submitted that Rule 52 grants set off, Rule 53 speaks of reduction of set off. According to him since HSD Oil was used as fuel, hence the reduced set off was required to be granted and has rightly been granted by the said Tribunal. He, therefore, submitted that the appeal filed by the appellant as regards HSD Oil should be dismissed by answering the question in favour of the respondent. 16. We have considered the rival submissions. We have also perused Rule 52, Rule 53 and Rules 54 of the said Rules. In our view, Rule 54(b) creates an embargo as regards claiming set off except in the cases mentioned in Rule 54(b) of said Rule. The provisions of Rule 54(b) are as follows: Non-admissibility of set-off:- No set-off under any rule shall be admissible in respect of:- (b) purchases of motor spirits as notified under subsection (4) of Section 41 unless such motor spirits are re-sold or sold in the course of inter-State trade or commerce or in the course of export out of the territory of India or are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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