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TMI Blog2009 (5) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... inder is either packing material and covered by item No. 202 of the List appended to entry 58 of Schedule B of the VAT Act or that in their hands the LPG cylinders are the "capital goods". Thus answer to the first question is liable to be given in favour of the Revenue. LPG gas cylinders in the hands of Indian Oil Corporation and other corporations have to be treated as "capital goods" and assessable according to the rate of tax as per the provisions of the VAT Act. Thus the second question is answered in favour of the dealer-appellants and against the Revenue. While discussing question No. (ii) we have found that the property in the goods is not transferred when gas cylinders are used for supply of gas to the customers.The dealer-appellants would be entitled to ITC once the capital goods are considered as plant by virtue of definition of expression "plant" used in section 2(d) read with section 13(1) of the VAT Act. The gas cylinders company is sufficiently aggrieved if the purchaser of its product, namely, empty gas cylinders, are given the benefit of ITC or not granted that benefit. The gas cylinders company would be directly affected by any such decision. Therefore, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 85? Facts in brief are being referred from VATAP No. 16 of 2007. The appellant-Indian Oil Corporation is a company owned by the Government of India and registered under the provisions of the VAT Act. During the normal course of its business it makes sales of liquefied petroleum gas (LPG) to its dealers for onward supply to the consumers. The cylinders filled with LPG are purchased from local suppliers in Punjab State on payment of tax under the VAT Act. Section 13(1) of the VAT Act entitled a taxable person to the input-tax credit (for brevity, ITC ) in respect of taxable goods including capital goods purchased by him from a taxable person within the State of Punjab during the tax period. However, first proviso of section 13(1) stipulates that ITC would be available if such goods are for sale or for use in manufacture, processing or packing of taxable goods for sale within the State or in the course of inter-State trade or commerce or in the course of export. On March 30, 2006 (A1), the appellant-Indian Oil Corporation filed an application under section 85 of the VAT Act before the Commissioner, Excise and Taxation Department, Punjab-respondent No. 2 for deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble and only LPG filled in the cylinder, is sold. These are 'used for' supply of gas to the consumer and are not 'used in' the packing of LPG as envisaged in the Punjab VAT Act. One has to read statute as it stands. We cannot add, subtract or change any word of the enacted provision. LPG cylinder is used for packing of the LPG for supply to the consumers on returnable basis and cannot be construed that it is 'used in' the packing of LPG. In view of this legal position, LPG cylinders are not covered under the definition of packing material as it stands in the Punjab VAT Act. The judgments of the Karnataka High Court and the Kerala High Court cited on packing material were entirely on different facts and are not applicable to the present case. The second judgment of the honourable Patna High Court referred, holds that the empty bottles and crates used for supply of soft drink were covered under item 'plant' and were therefore eligible for exemption. On the same analogy, it was pleaded that empty LPG cylinders are capital goods of oil companies and therefore, eligible for ITC. Judgment of the Patna High Court was on different facts and in different cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the judgment relied upon by the learned counsel for the appellant, Ms. Sharma has submitted that the provisions which were subject-matter of consideration in those cases are not pari materia with the one under consideration in the present case. She has also submitted that the judgment of the Madhya Pradesh High Court has used the expression empty barrels , which is clearly indicative of iron and steel container whereas no such expression has been used by the Legislature in item No. 202 of entry 58, Schedule B. Therefore, she has prayed that the view taken by the Tribunal is the correct view and it deserves to be upheld. After hearing learned counsel we are of the view that it would be necessary to consider whether item No. 202 of the List appended to entry 58 of Schedule B of the VAT Act could be interpreted to include the LPG cylinders. It would be necessary to read the aforesaid entry, which reads thus: All packing material including the plastic containers, tin containers and the glass containers. A perusal of the aforesaid entry shows that it covers all packing material. The entry has been illustrated by examples of the plastic containers, tin containers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh High Court is entirely different in its content and in material particulars. Likewise, the judgment of the Division Bench of the Kerala High Court in the case of Vazhakkala Agencies [2006] 148 STC 576 could also not have been attracted to the facts of this case because in that case the language of the section was also entirely different from the one in hand. The low density poly ethylene (LDPE) is transparent film, which is used for packing, sold by the dealer. Such a film would certainly be covered by the entry 101 of the Kerala General Sales Tax Act, 1963, which provided that plastic and articles of plastics including PVC pipes, plastic paper, cellophane, polythene, polyurethane, polythelene, polyster, whether expanded or not, polysterene formatted sheet, sun control polyster film, polyster tracing and drafting film, polyster self-adhesive insulation tapes, fibre reinforced plastics, were to be taken as plastic and articles of plastic. In the present case, the question is entirely different and the Division Bench judgment of the Kerala High Court would have no application. Therefore, we have no hesitation to reject the argument advanced by the learned counsel for the dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing or packing of taxable goods for sale within the State or in the course of inter-State trade or commerce or in the course of export: Provided further Not relevant Provided further Not relevant Provided further Not relevant A perusal of the aforesaid section shows entitlement of a taxable person to the ITC in respect of input tax on taxable goods including capital goods purchased by him from a taxable person within the State of Punjab during the tax period provided that such goods are, inter alia, for sale in the State of Punjab. The answer to the question would be dependent on whether the gas cylinders are capital goods purchased by the oil companies for filling gas in it. It is pertinent to notice that section 2(d) of the VAT Act defines capital goods in the following language: 2(d) Capital goods means any plant, machinery or equipment including equipment for pollution control, quality control, laboratory and cold storage, used in manufacturing, processing and packing of taxable goods for sale; A perusal of the aforesaid definition shows that plant, machinery or equipment includes equipment for pollution control, quality control, laboratory and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961. After noticing various foreign as well as Indian decisions the Division Bench has, inter alia, held that the bottles are essential tools of the trade for it is through them that the soft drinks are passed on from the assessee to the customers. Without these bottles the soft drinks cannot be effectively transported. According to their Lordships, the bottles and shells also satisfy the durability test for it is nobody's case that their life is too transitory or negligible to warrant an inference that they have no function to play in the assessee's trade. The Division Bench has agreed with the decision of the Rajasthan High Court in the case of Commissioner of Income-tax v. Jai Drinks (P.) Ltd. [1988] 173 ITR 100. In the case of Commissioner of Income-tax v. Taj Mahal Hotel [1971] 82 ITR 44, a question was posed before the Supreme Court as to whether sanitary and pipeline fittings in a building which is run as a hotel would fall within the meaning of word 'plant' in section 10(2)(vib) of the Indian Income-tax Act, 1922. Their Lordships held that sanitary fittings, etc., in a bathroom is one of the essential amenities or conveniences which are normally provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are only used as a mode of transportation of gas to the consumer. She has submitted that the orders passed by the Tribunal and the Excise and Taxation Commissioner do not suffer from any legal infirmity. While discussing question No. (ii) we have found that the property in the goods is not transferred when gas cylinders are used for supply of gas to the customers. In the absence of transfer of property in the goods like gas cylinders, ITC can be claimed by the dealer-appellants. The view of the Tribunal by refusing to apply the judgment of the Division Bench of the Patna High Court is wholly unwarranted and cannot be accepted. Therefore, order of the Tribunal to that extent is erroneous. The dealer-appellants would be entitled to ITC once the capital goods are considered as plant by virtue of definition of expression plant used in section 2(d) read with section 13(1) of the VAT Act. Re: Additional Question No. (iv) The gas cylinders company has claimed an additional question concerning its locus standi to move an application before the Excise and Taxation Commissioner for determination of question under section 85 of the VAT Act. On the aforesaid issue the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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