9911796707
TMI Blog2008 (2) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the petitioner is wholly justified as these items pass the scrutiny of the functional test. Petitioner is fully justified in claiming inclusion of items such as road materials like chips, tars, road rollers, concrete mixer and vibrator, manure, water treatment plant, filtration plants and associated materials, etc., canal materials like gates, stones, earth-moving and cutting machineries, etc. X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to incorporate certain items in the petitioner's registration certificate under the CST Act the petitioner-company filed O.J.C. Nos. 2875 and 2876 of 1992 before this honourable court and the same came to be disposed of by order dated October 26, 1992 passed by this court holding that the impugned order dated March 2, 1991 passed by the Commissioner, Commercial Taxes was quashed on the finding that the Commissioner has failed to apply his mind to the relevant matters and therefore the order was quashed and the matter was remanded to the Commissioner of Sales Tax, Orissa to re-examine the matter by giving opportunity of hearing to the petitioner. That as a consequence of the direction issued by this court in the abovementioned writ applications, the Commissioner, Commercial Taxes, issued notice to the petitioner and after affording the opportunity of hearing, the Additional Commissioner of Commercial Tax as (O.P. 2.) passed an order on June 10, 1993 and partially allowed inclusion of certain items into the registration certificate of the petitioner-company and rejected most of other items which had been sought for inclusion in the registration certificate. This order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6000 liters/hr. H.P. and L.P. chemical dozing (phosphate and hydrazine) pumps, tanks, valves piping and instruments boiler elevators. These materials are required to cool the generator of turbine (c) Passenger elevators, passenger cum goods elevators (in transform tower for CHP), chimney elevator, diesel generator set for emergency power supply, dozers, scraper, dumpers, chemical laboratory, service water piping, valves generator. These materials are required in operation of power house (d) Generator phase bus duct, main bus duct, tap-off bus duct, bends, generator neutral bus duct, unit auxiliary phase bus duct, bus duct, bends, seal-off brushing. To evacuate generated power to the switchyard (e) L.T. transformer power control center, 415V local distribution board, manual starter station, unit battery 220V., 1400 AH, switchyard battery 200 V, 400 AH, + 24V battery for C and I, unit battery charger, unit distribution board, switchyard distribution board, CW pump house battery charger, unit distribution board, switchyard distribution board, CW pump house battery charger, unit distribution board, switchyard distribution board, CW pump house distribution board, +_24V system dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, contended that the petitioner-company having been formed/constituted for the purpose of establishing, operating and maintaining the thermal power plant for generation and distribution of electricity is entitled under section 8(3)(b) of the CST Act, for registration of goods of the class or classes required for use in the generation or distribution of electricity. He further submitted that on a review of all the items sought for inclusion whereas most of the items claimed were justified yet in his considered view certain specific items were not directly relatable to the generation or distribution of electricity are no longer being pressed for by the petitionercompany for inclusion. An additional affidavit on behalf of the petitionercompany was sworn by the Senior Manager (Finance) on December 20, 2007, enclosing therein the statement in a tabular form indicating various items, which in their view justified inclusion in the registration certificate granted to the petitioner-company under the CST Act and in the said documents the petitioner-company scored through those items which they no longer consider justified for the purpose of inclusion. Copy of the said statement in tabular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts boiler elevators. These materials are required for feeding coal to the boiler to run the turbine. Allowed but not incorporated. 5(c) Passenger elevators, passenger-cum-goods elevators (in transform tower for CHP), chimney elevator, diesel generator set for emergency power supply, dozers, scraper, dumpers, chemical laboratory, service water piping, valves, generator. These materials are required in operation of power house. Allowed but not incorporated. 5(d) Generator phase bus duct, main bus duct, tap-off bus duct, bends, generator neutral bus duct, unit auxiliary phase bus duct, bus duct, bends, seal-off brushing. To evacuate generated power to the switchyard Allowed but not incorporated. 5(e) L. T. transformer power control center, 415V local distribution board, manual starter station, unit battery 220 V., 1400 AH, switchyard battery 200 V, 400 AH, +_24 V battery for C and I, unit battery charger, unit distribution board, switchyard distribution board, CW pump house battery charger, unit distribution board, switchyard distribution board, CW pump house battery charger, unit distribution board, switchyard distribution board, CW pump house distribution board, +-24V sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax, Andhra Pradesh v. Taj Mahal Hotel [1971] 82 ITR 44 (SC), and that too by misconstruing and misapplying the said judgments to the facts of the present case. Mr. Das on the other hand relies on the judgment of the honourable Supreme Court in the case of Commercial Taxes Officer, Circle-D, Jaipur v. Rajasthan Electricity Board [1997] 104 STC 89, and contends that the honourable Supreme Court has held that the Rajasthan Electricity Board, which was engaged in the business of generation and distribution of the electricity, could purchase, in the course of inter-State trade, at concessional rate of tax under section 8(1) of the Central Sales Tax Act, 1956, trucks, trolleys trailers and the like (but not passenger vehicles), as also there its certificate of registration was altered to include "tools and plants, including vehicles and other transportable goods, including their spare parts, tubes and tyres". It is further held that purchase of soaps and paints and varnishes was permissible at concessional rate of tax only in so far as they were intended to be used for the purpose of cleaning boilers and machinery and other equipment and for the purpose of pain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antially rejected the petitioner's prayer for inclusion of these items by impugned order dated June 10, 1993. The learned Standing Counsel for the Revenue on the other hand supports the impugned order dated June 10, 1993 passed by the Commissioner, Commercial Taxes, Orissa and, inter alia, submits that the petitioner should not have any grievance whatsoever since the Commissioner, Commercial Taxes has complied with the earlier direction of this court dated October 26, 1992 in its letter and spirit by dealing with each items sought for inclusion and has given the reasons either permitting its inclusion or not. The learned Standing Counsel further submits that these findings being findings of fact ought not to be interfered with in a writ application especially since the present writ application has been filed seeking to challenge the order of the Commissioner, Commercial Taxes, dated June 10, 1993 after a gap of more than four years. The learned Standing Counsel further submits that the Commissioner has not misconstrued the decision relied upon by him in the order and has correctly applied the same. He further submits the reliance placed by the petitioner on the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of J. K. Cotton Spinning & Weaving Mills Co. Ltd. [1965] 16 STC 563. In that decision, their Lordships came to hold that section 6 of the CST Act, imposes liability upon every dealer as may be specified by the Central Government to pay tax under the Act on sales effected by it in the course of inter-State trade or commerce during any year on and from the date so notified. Section 7 sets up the machinery for registration of dealers and section 8 prescribes the rates of tax on sales in the course of inter-State trade or commerce. Sub-section (1) of section 8, as is stood at the material time, provided for the rates of tax to be paid on the turnover by a dealer selling in the course of inter-State trade or commerce to registered dealer the goods of the description mentioned in sub-section (3). Sub-section (2) prescribed the rate of tax payable by any dealer in any case not falling within sub-section (1) in respect of the sale by him of any goods in the course of inter-State trade or commerce. The honourable Supreme Court also took note of the fact that section 13 conferred power upon the Central Government, to make rules on several matters including enumeration of goods or class of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on. In our judgment, rule 13 does not justify the importation of restrictions, which are not clearly expressed, nor imperatively intended. Goods used as equipment, as tools, as stores, as spare parts, or as accessories in the manufacture or processing of goods, in mining, and in the generation and distribution of power need not, to qualify for special treatment under section 8(1), be ingredients or commodities used in the processes nor must they be directly and actually needed for 'turning out or the creation of goods.'" In para 9(1) of the said judgment it was stipulated that ". . . if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in rule 13 will qualify for special treatment." The Lordships took into account the earlier judgment of the honourable Supreme Court in the case of Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, Bihar [1965] 16 STC 259; AIR 1965 SC 891 and came to hold that the vehicle used by a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns advanced by the learned counsel for the Board of Revenue to the effect that section 5(2)(a)(ii) takes into account only such goods which are actually used in the manufacture and not those goods which are used in the course of manufacture. This contention was negatived in view of the decision of the honourable Supreme Court referred to in the case of J.K. Cotton Spinning & Weaving Mills [1965] 16 STC 563 and their Lordships were bound by the ratio of the said decision. In the later judgment of the honourable Supreme Court in the case of Star Paper Mills Ltd. v. Collector of Central Excise, Meerut [1990] 76 STC 312, while dealing with the term "manufacture", their Lordships came to hold that term "manufacture" includes any process incidental or ancillary to the completion of a manufactured product. Having so held the honourable Supreme Court came to hold that use of paper cores was necessary in "any process incidental or ancillary to the completion of paper as marketable goods and it would consequently be commercially inexpedient to sell paper without the use of paper core and therefore held that for use of paper core, it would be a constituent part of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts, it could not be said that the warehouses were something by means of which the assessee's business activities were carried on, but that they did not play any part whatsoever in the carrying on its business activity, but merely provided a place within which this business activity was carried on. In coming to such conclusion apart from referring or rendering on the decisions of the honourable Supreme Court in the case of Commissioner of Income-tax v. Taj Mahal Hotel [1971] 82 ITR 44, the honourable Allahabad High Court came to rely upon the definition of term "plant" given in the case of Yarmouth v. France [1887] 19 QBD 647 (QB) where a horse was held to be a plant because it was used by a wharfinger to carry on his business, was accepted as correct. According to such meaning the term "plant" includes whatever apparatus or instruments are used by a businessman in carrying on his business and "not his stock-in trade which he buys or makes for sale, but all goods and chattels, fixed or movable, live or dead, which keeps for permanent employment in his business. In the said judgment, their Lordships came to rely upon a judgment of Jarrold (Inspector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparatus or a tool of the trade of the tax-payer or it is merely a space to carry on his business. For this purpose, the use, which is made of the subject-matter under consideration, is to be kept in view. If the building, structure or part thereof is something by means of which the business activities are carried on, it would amount to a plant but where the structure plays no part in the carrying on those activities but merely constitutes a place within which they are carried on, it cannot be regarded as a plant. After going through various judgments referred to in the impugned order and the judgments relied on by the learned counsel for either parties, it is now necessary to take note of the basic facts of the present case. The petitioner-company was established to operate a thermal power plant and therefore it is not a dealer, which seeks to purchase goods with any intent for re-selling by it nor is it a dealer, which is seeking to purchase goods for use by it in the manufacture or process of any goods for sale. The petitioner-company is a registered dealer, which is seeking to purchase goods for use by it "in the generation of power and distribution of electricity" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the findings arrived at by the Commissioner, Commercial Taxes with regard to item at serial No. 1 is erroneous. Applying the "functional test" it would be clear that it would be clearly practically not possible to consider establishing a thermal power plant without a power house building and therefore, the Commissioner is clearly in error of law in coming to hold that a power house building is meant to be a place where the business activities were carried on. So far as item No. 2 is concerned, the same also relates to construction of the power house building and associated civil structure and the reasons referred to above, it has to be accepted to constitute an integral part of the plant. Without this construction, it would not be possible on the part of the petitioner to engage in the generation of electricity and distribution thereof and therefore, findings of the Commissioner without scrutiny of the law as laid down by the apex court, are also erroneous. So far as item No. 3 is concerned, H.S. meters, G.I. pipes, C.I. pipes, street-light fittings are required for the purpose of construction of power house and control room required for operation and maintenance o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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