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TMI Blog2001 (3) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... gh which electricity is generated by using high speed diesel oil. The petitioner's case is that high speed diesel used in the generation of electricity falls in the class of goods used for manufacture of oil and, therefore, in terms of section 15-A of the Act, it is entitled to reduction or refund of tax paid at the time of purchase of high speed diesel, but this item has been arbitrarily excluded from the class of goods included in clause (3) of annexure P. 1 depriving it of the said benefit. 3.. Shri Ashok Aggarwal, Senior Counsel, appearing for the petitioner, argued that the impugned notification should be declared ultra vires to the power of the State Government because section 15-A(1) does not empower it to exclude high speed diesel from the list of goods used for manufacture or processing of edible and non-edible oil by the dealer. Learned counsel submitted that high speed diesel used for generating the electricity should be treated as a raw material used for manufacturing edible and non-edible oil because the electricity is necessary for running the industry. In support of this argument, Shri Aggarwal strongly relied on the decisions of the Supreme Court in Indian Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing entitled to reduction or refund of tax under this provision may be specified in different circumstances or for different class of dealers or for different goods or class of goods, used in manufacture or produced. If the input tax credit which is the amount of input tax multiplied by the fraction computed by the given formula exceeds the output tax liability for any period, then the excess amount, subject to a ceiling as the State Government may, by notification, in the Official Gazette, impose, can, at his option, be carried forward by the dealer to the next period or may be claimed as refund by him. (2) The Assessing Authority may, before reducing or refunding any amount under this section, call for such evidence in proof of payment of tax as, in his opinion, is necessary. (3) Where the manufactured goods are sent on consignment transfer out of the State for sale or disposed of in any manner other than by way of sale, the value of such goods shall be taken as the price at which such goods are ordinarily sold; and where the manufactured goods are sent on consignment transfer out of the State for captive consumption, the value of such goods shall be taken as the cost of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /refund of tax. Clause (3) of the impugned notification lays down that for the purpose of calculating input tax, the goods used in or in the processing of manufacture shall be goods used by a dealer as raw materials, processing materials, tools, stores, spare parts, accessories, lubricants or fuel except high speed diesel used in the manufacture or processing of goods for sale include containers and packing materials used for packing of the goods manufactured or processed. The reason for excluding high speed diesel from the class of goods which constitutes raw material used for manufacture or processing goods appears to be that it is not used in the manufacture or processing, but is used for generating electricity which, in turn, is used for running the industry. The petitioner has not produced any evidence to prove to the contrary. The averments made in paragraph 3 of the writ petition also indicate that high speed diesel is used for generating electricity and not for manufacturing the product of the petitioner, i.e., edible and non-edible oil. Therefore, we are unable to agree with the learned counsel that exclusion of high speed diesel from the listed goods used as raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s generated which in turn is used in the process. In the abovementioned second case, LSHS is used in the manufacture of ammonia but not as a feed stock. As such, benefit of notification No. 127 of 1988 would be available to the appellants in respect of LSHS which has been used for generating steam and this will be with effect from 1st March, 1988. In respect of the earlier period, it is only that part of LSHS which will be entitled to 100 per cent exemption from excise duty by virtue of Notification No. 147 of 1974 and Notification No. 75 of 1984 which has been used as feed stock and not for the purpose of generating steam. 7.. We may now refer to the two decisions relied upon by Shri Aggarwal. In Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, Bihar [1965] 16 STC 259 (SC); AIR 1965 SC 891, their Lordships of the Supreme Court examined the provisions of section 8(3)(b) of the Central Sales Tax Act, 1956 (for short, the Central Act ) and rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957 in the context of the appellant's claim for registration of various goods under the Central Act. The facts of that case were that the Superintenden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended for use in those operations. ........ 'Stationery' also is not intended for use in the manufacture or processing of goods for sale or for mining operations. Use of stationery undoubtedly facilitates the carrying on of a business of manufacturing goods or of processing goods or even mining operations; but the expression 'intended to be used' cannot be equated with 'likely to facilitate' the conduct of the business of manufacturing or of processing goods or of mining. Those cane baskets which are intended to be used by the sanitary department for collecting refuse to protect the health and cleanliness of the colony and the workmen employed in the manufacture of goods, cannot, on the test set out earlier, be specified in the certificate of registration. But we are unable to agree with the High Court that the cane baskets which are required for carrying ore and other materials used in mining or in the manufacture of goods are not intended for use in the process of manufacturing or mining operations. 8.. The facts of the second case, i.e., J.K. Cotton Spinning Weaving Mills Co. Ltd. v. Sales Tax Officer [1965] 16 STC 563 (SC); AIR 1965 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression 'in the manufacture of goods'. .The expression 'in the manufacture' takes in within its compass, all processes which are directly related to the actual production. Goods intended as equipment for use in the manufacture of goods for sale are expressly made admissible for specification. Drawing and photographic materials falling within the description of goods intended for use as 'equipment' in the process of designing which is directly related to the actual production of goods and without which commercial production would be inexpedient must be regarded as goods intended for use 'in the manufacture of goods.' Building materials including lime and cement not required in the manufacture of tiles for sale cannot, however, be regarded within the meaning of rule 13, as raw materials in the manufacture or processing of goods or even as 'plant'. .. The expression 'electricals' is some what vague. But in a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant's challenge to the levy of different rates of taxes was upheld by the Supreme Court with the following observations: It is open to the legislature, or the State Government if it is authorised in that behalf by the legislature, to select different rates of tax for different commodities. But where the commodities belong to the same class or category, there must be a rational basis for discriminating between one commodity and another for the purpose of imposing tax. Consideration of economic policy constitute a basic for levying different rates of sales tax. ..Arishtams and asavas, are medicinal preparations, and even though they contain a high alcohol content, so long as they continue to be identified as medicinal preparations they must be treated, for the purposes of the sales tax law, in like manner as medicinal preparations generally, including those containing a lower percentage of alcohol. 13.. In our opinion, the ratio of the aforementioned decision has no bearing on the facts of this case because, as already mentioned above, the high speed diesel oil and other lubricants constitute different classes. 14.. For the reasons mentioned above, we hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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