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TMI Blog2010 (2) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... IA] would apply, while deciding the above question, to the Gujarat law. Though we have held that fuels consumed by the industry to generate electricity which is used in the manufacture of end-product are considered to be raw material or processing material or consumable stores for the purpose of section 15B, rule 42A or exemption notifications issued from time to time under the Act, as per the decision of the apex court in the case of Maruti Suzuki Limited v. Commissioner of Central Excise [2009 (8) TMI 14 - SUPREME COURT], the excess electricity used for any other purpose including by grid for distribution or by joint ventures or by vendors, etc., and that too for a price (sale), the process and the user test fails to this extent. In such a case, the nexus between the process and the use gets disconnected. In such a case, it cannot be said that the electricity generated is used in or in relation to the manufacture of final product. Therefore, to the extent of use of electricity for the purposes other than manufacturing activities or not connected therewith would not be considered as raw materials, processing materials or consumable stores. - 9169-1990 & Others - - - Dated:- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 (SC)) rendered in Civil Appeal Nos. 679-714 of 2009 set aside the impugned judgment of this court and remitted back the matters to this court. After framing two questions to be decided by this court the apex court directed this court to decide as to which line of cases this court should apply while deciding the questions framed by the apex court. Before framing the questions, the court observed that the fuels consumed are natural gas, furnace oil, diesel oil and naphtha. Broadly, these fuels are used by the industry for carrying on its manufacturing process. In most cases, these fuels are used to generate electricity which is then used in the manufacture of end-products like caustic soda, industrial chemicals, etc. The court further observed that the point which arises for consideration is whether the abovementioned fuels would come within the meaning of the expression raw materials processing materials or consumable stores . For that purpose, it is the case of the assessees that the tests laid down in Ballarpur Industries Ltd. [1990] 77 STC 282 (SC); [1989] 4 SCC 566; AIR 1990 SC 196 and in J.K. Cotton [1965] 16 STC 563 should be applied to the Gujarat law which is differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l one and between the two, steam travelling through pipeline, enters for creating uniform temperature. The said reactor is filled with raw material, like vinyl sulphone, gama acid, k-acid, etc., wherein, chemical reaction takes place and ultimately the final products like dyes, dye-intermediates and pigments, get manufactured. The petitioners of group No. 1 are non-recognized dealers-manufacturers and are liable to pay purchase tax under section 15B at the specified rate when they use furnace oil/LDO as raw material, processing material or consumable store to the State and are, thereafter entitled to set off for the said full amount of tax paid, under the Rules. The majority of the petitioners belonging to group No. 2 are engaged in the manufacture of varied products like textile products, cement, petroleum products, etc., wherein they purchase naphtha/furnace oil/natural gas and use the same as fuel for generating electricity in their captive power plants, which, in turn, is used for running their machines to manufacture their respective final products. Some use the said naphtha, etc., to fire their glass furnace to provide constant heat for the manufacture of float/molten glas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controversy. Way back on November 20, 1963, this court has decided the case of Commissioner of Sales Tax v. Ajay Printery Ltd. [1964] GSTB 12 Sales Tax Reference No. 9 of 1962 wherein the court was concerned with the construction of words used in section 12(b) of the Bombay Sales Tax Act, 1959. The Assistant Sales Tax Commissioner, in the facts of the case, took the view that only those materials which actually merged or entered physically or by chemical action into the manufactured goods could be said to be covered by the expression goods . . . purchased . . . for use by him in the manufacture . . . of taxable goods for sale by him , and therefore, the assessee was entitled to recognition only in respect of raw material, subsidiary materials and processing materials which formed integral part of the manufactured goods. The assessee contended before the Tribunal that those goods which directly help the process of manufacture were goods used in the manufacture of taxable goods, even though they did not get consumed in the manufactured goods or become integral part of the manufactured goods. The Tribunal accepted this contention and held that in the course of manufacture, whateve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and used for packing of goods for sale would fall within the above expression, inspite of the fact that the words packing material are not used therein. Thereafter on December 5, 1978, the Division Bench of this court had an occasion to decide the case of Mercury Pharmaceuticals Industries v. State of Gujarat [1979] 43 STC 301, wherein this court was concerned with the issue as to whether glass ampules used for injectable liquid medicine would be raw material, processing material or consumable stores used in the manufacture of goods for sale. This court interpreted the term use in the manufacture and observed that the phrase use in manufacture is not to be given a narrow and constricted meaning and that it would take in the entire process carried on by a manufacturer with a view to converting raw material into finished goods and that if any particular process is so integrally connected with or related to the ultimate manufacture of goods that without that process or activity, manufacture, even if theoretically possible, would be commercially inexpedient, goods required in that process would fall within the expression goods used in the manufacture of goods . The ratio of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... homas Stephen Co. Ltd. [1988] 69 STC 320; [1988] 2 SCC 264, as to whether cashew shells used by the assessee as fuel in the kiln in the manufacture of tiles, terracotta ware and ceramics would be liable to tax, since none of the conditions prescribed in clauses (a), (b) or (c) of section 5A of the Kerala General Sales Tax Act is satisfied. The apex court while interpreting the words consumes such goods in the manufacture of other goods in section 5A(1)(a) held that the consumption must be in the manufacture as raw material or other components which go into the making of the end-product to come within the mischief of the section. Cashew shells do not tend to the making of the end-product and therefore, do not fall within section 5A(1)(a) of the Act. On October 16, 1990 a special incentive to the Pioneer Units Scheme, 1990-95 was announced by the Government of Gujarat emphasizing the need for rapid industrialization to encourage balanced growth of industries and to generate employment in rural and less developed areas. The said Scheme provided that a pioneer unit set up in an eligible area will be eligible to composite sales tax exemption up to 100 per cent of the fixed cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On September 11, 1995, the Government of Gujarat vide Resolution No. INC/1095/2002(3)/I announces the Capital Investment Incentive to Premier/Prestigious Units Scheme, 1995-2000. The policy was announced to accelerate the development of backward areas of the State and to create large-scale employment opportunities. The scheme contemplated sales tax exemption of 100 per cent of eligible fixed capital investment for a period of 12 years in the case of most backward areas (category I), 80 per cent of the eligible fixed capital investment for a period of 10 years in the case of backward areas (category II) and 60 per cent of eligible fixed capital investment for a period of nine years in the case of other eligible areas (category III). This was applicable both to prestigious units and premier units. On July 19, 1996 exemption entry 69(2) was inserted by the exemption notification issued under section 49(2) of the Gujarat Sales Tax Act. The said notification provided that the sale of raw materials, processing materials, consumable stores or packing materials by a registered dealer to an eligible unit to the extent to which the amount of sales tax exceeds one fourth of one per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies [2006] 146 STC 9 (Guj), this court after following the J.K. Cotton [1965] 16 STC 563 and Vasuki Carborundum [1979] 43 STC 294, held that dry ice which is utilized by the assessee for preserving ice-cream during transportation and which is not utilized as an input in the manufacturing process is consumable stores, applying the principle of commercial expediency. On September 2, 2005, a circular was issued by the Commissioner of Sales Tax revoking the earlier circular dated February 19, 2001 with retrospective effect from February 19, 2001 itself on the basis that, in view of the decision of the Tribunal in the case of Pandesara Industries Pvt. Ltd., the judgment of the apex court in the case of Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465 would be applicable to the provisions of the Gujarat Sales Tax Act. This circular was challenged before this court and this court has quashed and set aside the said circular. The Revenue being aggrieved by the said decision of this court approached the apex court and ultimately the above-referred two questions are referred to this court for its decision. On behalf of the petitioners, learned senior counsel Mr. Mihir Thakore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es culminating in the manufacture of goods. The terms consumable stores or processing material cannot be read noscitur a sociis or ejusdem generis with the term raw materials . Consumable stores has been given a distinct meaning in the judgments and also processing material has been given a distinct meaning. They will not necessarily be an integral part of the ultimate product. It is further contended that Thomas Stephen judgment [1988] 69 STC 320 (SC); [1988] 2 SCC 264 has been explained by this court in two decisions and a view has been taken that the said judgment has no applicability for interpreting the language of the Gujarat statute. It is further contended that this court has consistently followed the view in the J.K. Cotton case [1965] 16 STC 563 (SC). The decision in the Coastal Chemicals case [2000] 117 STC 12 (SC); [1999] 8 SCC 465 follows the decision in Thomas Stephen's case [1988] 69 STC 320 (SC); [1988] 2 SCC 264. The Coastal Chemicals case [2000] 117 STC 12 (SC); [1999] 8 SCC 465 takes a view that the decision in J.K. Cotton [1965] 16 STC 563 (SC) is inapplicable to Andhra Pradesh law. This court has held that the decision in Thomas Stephen's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in the case of Thomas Stephen Co. Ltd. [1988] 69 STC 320 (SC); [1988] 2 SCC 264 and Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465 as also ruling out the application of the principle of statutory interpretation noscitur a sociis, held that the words consumption and use are of wide import. If a process or an activity is such an integral part of the ultimate manufacture of goods that in its absence, the manufacture may not be commercially expedient, that activity or process must be considered as manufacturing activity itself, the goods intended for use in that process or activity to be goods required in the manufacture of other goods for sale and the goods utilized to be used or consumed. It is further submitted that the Orissa High Court in the case of Reliance Industries Ltd. v. Asst. Commissioner of Sales Tax reported in [2008] 15 VST 228 distinguished the decisions in the case of Thomas Stephen Co. Ltd. [1988] 69 STC 320 (SC); [1988] 2 SCC 264 and Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465, rejected the contention of the Department that furnace oil used by the dealer to produce flame is fuel and not consumable which is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of this court itself cannot in law hold that the decisions of the earlier Division Benches of this court are impliedly overruled without referring such matter to a larger Bench, it does not behove the Tribunal not to follow binding precedents of this court and in substance hold that they are impliedly overruled by the Supreme Court. So far as the non-application of the doctrine of noscitur a sociis and ejusdem generis is concerned, it is submitted that for interpreting the expression goods required for use by him as raw material, processing material or consumable stores in the manufacture of goods for sale or as packing material in the packing of goods so manufactured , the doctrine of noscitur a sociis and ejusdem generis will have no application as the maxim of noscitur a sociis will have application only if the result is consistent with the legislative intent, for the maxim noscitur a sociis is a mere guide to legislative intent. The maxim noscitur a sociis is not to be applied, where the meaning of a word and phrase is clear and unambiguous. The rule will not be applied where there is no ambiguity or to thwart the legislative intent or to make general words meaningles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what are his consumable stores. There is no ambiguity in the use of that composite word and it necessarily excludes raw material used in the manufacture of goods. The words raw materials , consumable stores and processing materials are all distinct categories of goods and none are analogous to the other. They together comprise all that is required to be purchased and on which sales tax would be otherwise payable by the industry to enable it to carry on manufacturing activity. Therefore, the said maxim would have no application. Bennion on Statutory Interpretation lays down the circumstances under which the noscitur a sociis principle could be applied. They are enumerated as words used in the same sense, determining a meaning of a neutral word, adopting a restricted meaning, adopted a less usual meaning, determining extent of a qualifying term, applying a special meaning and resolving an ambiguity. None of these circumstances exists and, therefore, the doctrine of noscitur a sociis would have no applicability in interpreting the phrase raw material or processing material or consumable stores . Unless there are analogous words in a phrase, there is no question of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Revenue's contention is not sustainable. The language of the notification is clear and plain. The notification is to be construed reasonably and rationally and not in a manner which deprives the benefit thereof. The expression assembly in the context and setting in which it has been used cannot be construed to mean bringing into existence a new article. This expression cannot be equated with the expression manufacture. If the construction as placed by the CEGAT is accepted, it would render the expression assembly in the notification redundant. The expression assembly has been used as opposed to dismantle. The notification does not contemplate denial of its benefit on the ground of reuse of certain parts and/or use of some indigenous parts with the imported parts. Thus, the appellants are clearly entitled to the benefit of the notification. In Collector of Central Excise, New Delhi v. Ballarpur Industries Ltd. [1990] 77 STC 282 (SC); [1989] 4 SCC 566; AIR 1990 SC 196, while considering the question of pro forma credit for duty paid on raw materials used in manufacture, the court held that it is improper to say that for an input or ingredient to qualify itself is raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstood in common parlance and for that purpose, reliance is placed on section 363, Bennion Statutory Interpretation and Novopan India Limited v. Collector of Central Excise and Customs [1994] Supp. 3 SCC 606 and Tata Engineering Locomotive Company Ltd. v. State of Bihar [1995] 96 STC 211 (SC); [1994] 6 SCC 479. Consumable stores in common parlance has a meaning distinct from raw material. It is further submitted that the term raw material itself has been construed in the widest possible manner by the Supreme Court to cover ingredients which retain their dominant individual identity in the end-product, ingredients which undergo changes and find themselves in altered form in the end-product; ingredients while influencing and accelerating chemical reaction may remain uninfluenced and unaltered and remain independent of and outside the end-products; and ingredients which might be burnt up or consumed in chemical reactions. The test for determining what is a raw material is not its absence in the end-product, but the dependence of the end-products for its essential presence at the delivery end of the process. With such wide meaning given to the raw material in decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f processes through which a raw material passes culminating into a commercially different product. A material requires for undertaking any of the processes that is any change in the raw material will have to be termed processing material . Reliance is placed on the decision of the apex court in the case of Chowgule Co. Pvt. Ltd. v. Union of India [1981] 47 STC 124; [1981] 1 SCC 653 wherein it is held that what is necessary in order to characterise an operation as processing is that the commodity must, as a result of the operation, experience some change. In Commissioner of Central Excise v. Rajasthan State Chemical Works [1991] 4 SCC 473, it is held that manufacture thus involves series of processes. Process in manufacture or in relation to manufacture implies not only the production but the various stages through which the raw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjected to manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SCC 699 and the consistent interpretation placed by the Department on the exemption notifications since the very inception and granting benefits thereof in respect of fuel purchased by the petitioners since the day they commenced manufacturing activity, irrespective of the notification under which the exemption was claimed followed by this circular of 2001 which in no uncertain terms states that the prevailing practice of granting benefit of the exemption to fuel shall continue shows the interpretation placed by the Department and on the principle of contemporaneo expositio by the Department, the interpretation so far placed ought to be accepted as the correct interpretation. It is further contended that in interpreting the exemption notification, the eligibility clause must be given a strict meaning. However, once a person is eligible, liberal interpretation has to be given to the exemption notification. These principles would apply only in the event of there being real difficulty in ascertaining the meaning of a particular enactment. Strictness or liberality arises only in such situation and not otherwise. Once a person is eligible to exemption and assuming two views are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld also hold that the tests laid down by the apex court in the case of Coastal Chemicals [2000] 117 STC 12; [1999] 8 SCC 465 would apply to Gujarat law for deciding the above question. Mr. Trivedi further submitted that section 15B refers to three important words, namely, raw material , processing material and consumable store and the principle of noscitur a sociis is required to be applied. The words raw material , processing material and consumable store are not defined under the Gujarat Sales Tax Act, 1969. So far as the words raw material and material are concerned, the definitions thereof are found in the relevant dictionaries, similarly the meaning of the words consumable and stores are found in certain dictionaries. However, the dictionary meanings of the words processing material and consumable store are not available. The New Webster's Dictionary of the English Language, deluxe encyclopedic edition, defines raw material as any material in its natural form suitable for being manufactured or processed into a finished form . The New Lexicon Webster's Encyclopedic Dictionary of the English Language, deluxe edition, defines raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . An item may be raw material for manufacturing goods 'A' and the goods so produced may itself be raw material for goods 'B'. Raw material has further been explained by using the word 'inputs' which dictionarily means, 'what is put in', 'enter', 'enter system' . (5) In Union of India v. Ahmedabad Electricity Co. Ltd. reported in [2004] 134 STC 24 (SC), the raw material should be linked with emergence of the end-product. It has to be present in the end-product whether visibly or invisibly. Use of an item as fuel cannot be called part of the manufacturing activity in relation to production of the end-product . (6) In Coastal Chemicals Ltd. v. Commercial Tax Officer reported in [2000] 117 STC 12 (SC); [1999] 8 SCC 465, it is observed that, . . . the word 'consumables' therein refers only to material which is utilized as an input in the manufacturing process but is not identifiable in the final product by reason of the fact that it has got consumed therein. It is for this reason that 'consumables' have been expressly referred to in the said provision, though they would fall within the broader scope of the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re coupled together, they had to be understood in the common analogous sense and not in the general sense. Applying this rule of noscitur a sociis, the word perfumes in the entry was to be understood in conjunction with cosmetics and depilatories . (4) In Stonecraft Enterprises v. Commissioner of Income-tax reported in [1999] 237 ITR 131 (SC); [1999] 3 SCC 343, entries in the Schedules of sales tax and excise statutes list some articles separately and some articles are grouped together. When they are grouped together, each word in the entry draws colour from the other words therein. The court held that the word minerals in section 80HHC should be read in the context of the word ores with which it is associated and must draw colour therefrom; that is to say, it must read as referring only to such minerals as are extracted from ores and not others, thus excluding granite. (5) In Commissioner of Sales Tax v. Gordhandas Tokersey reported in [1983] 52 STC 381 (Bom), it is held that it is a well-known rule of construction that the words in such entries have to be construed with reference to the words found in immediate connection with them. When two or more words which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as used in the provisions of the Act as well as in the exemption notifications issued thereunder. He has further submitted that the words raw materials , processing materials and consumable stores as used under the provisions of the Act and the notification issued thereunder, are not distinct and independent of each other, as argued on behalf of the petitioner. They are not having varied meaning in contradistinction with each other as was the situation in the case of State of Bombay v. Hospital Mazdoor Sabha reported in AIR 1960 SC 610. In this case, the question which arose for consideration was as to whether the principle of noscitur a sociis can be made applicable for interpreting the definition of the term industry as defined under section 2(j) of the Industrial Disputes Act, 1947. In the said case, there was an inclusive definition of the term industry containing several items from the standpoint of the employer as well as from the standpoint of the workmen and each of the words used therein is independent of each other, having distinct meaning, not belonging to one society. Mr. Trivedi also refers to the decision of this court in the case of Vallabh Glass Works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch goods . However, what is required in law in the present matter is a meaning of the said words which people conversant with the subject-matter which the statute are dealing, would attribute to it. This is in fact, known as a common parlance test to be determined on the basis of the understanding of the people dealing with the subject-matter not by a group of special people like cost accountants, chartered accountants, persons dealing with Yacht Charter, Rajya Sabha Secretariat, etc. Mr. Trivedi further submitted that there is distinction between the words manufacture and processing . For this purpose he relied on the decision of the apex court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers reported in [1980] 46 STC 63, wherein it is held that, there are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case, the same cannot be pressed in service, more particularly after the later pronouncement of the judgment of the apex court in Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465. The apex court in the case of J. K. Cotton Spinning Weaving Mills Co. Ltd. [1965] 16 STC 563 was concerned with section 8(3) of the Central Sales Tax Act, 1956 read with rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957. The said section 8(3)(b) authorizes the Sales Tax Officer to specify in the certificate, subject to any Rules made by the Central Government, goods intended for use by a dealer in the manufacture or processing of goods for sale or in mining or in the generation or distributions of electricity or any other form of power, for the purpose of attracting concessional rate of tax as prescribed under section 8(1) of the Act, whereas rule 13 of the said Rules deals with various goods like raw materials, processing materials, machinery, plant, equipment, tool stores, spare parts, accessories, fuel or lubricants to be used in the manufacture or processing of goods, i.e., final taxable goods. It was on the basis of the aforesaid provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions can be made applicable to the facts and circumstances of the present case. He has submitted that the judgment of the apex court in the case of Chowgule Co. reported in [1981] 47 STC 124; [1981] 1 SCC 653 relied upon by the petitioners, on the contrary, supports the aforesaid view of the respondents. In the said case the question was as to whether the activity of blending of different kinds of ores would amount to processing within the meaning of section 8(3)(b) read with rule 13 of the Central Sales Tax (Registration and Turnover) Rules and in that context, the apex court observed that as a result of processing, the commodity experiences some change whether physically or chemically, though not in the nature of the manufacture of altogether a new commodity, yet such an operation would amount to processing . Pertinently, the word processing is conspicuously absent under the provisions of the Gujarat Sales Tax Act, 1969 and the Rules framed thereunder. Similarly, the judgment of the apex court in the case of Collector of Central Excise v. Rajasthan State Chemical Works reported in [1991] 4 SCC 473, as relied upon by the petitioners, would not apply to the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y includes fuel as raw material, required for the purpose of manufacture and that the word includes has a wider meaning. Admittedly, such is not the position in the instant matter and hence, this judgment is not applicable. Mr. Trivedi further submitted that State of Maharashtra v. Mahalaxmi Stores reported in [2003] 129 STC 79 (SC); [2003] 152 ELT 30, the apex court dealt with section 2(17) of the Bombay Sales Tax Act defining the term manufacture which was of wide import while including various processing activities, of course of the nature of manufacturing activities and not mere processing activities. The said judgment cannot apply to the facts of the instant case since the Act under reference does not have the word processing in section 15B of the Act or in rule 42 of the Rules. Mr. Trivedi further submitted that in case of Partap Steel Rolling Mills Ltd. v. State of Punjab reported in [2007] 9 VST 629, the Punjab and Haryana High Court was dealing with rule 29(ii) of the Punjab General Sales Tax Rules, 1949, which is differently worded as compared to the provisions of the Act in the present case and in that context, the High Court held that furnace oil purchased a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 35B(1A) of the Income-tax Act, the respondent is not entitled for weighted deduction in respect of the goods being exported inasmuch as they cannot be said to have been manufactured or produced by the assessee, but were merely the result of processing activities. Mr. Trivedi further pointed out the distinguishing features of the judgments of this court as relied upon by the petitioners. In the case of Vasuki Carborundum Works reported in [1979] 43 STC 294 (Guj), the assessee was engaged in the manufacturing of crockery which was being packed by kathi (twine). While dealing with the facts of the said case, this court held kathi as a part of the consumable stores being used for the purpose of marketing the goods in question. He has further submitted that in the said case the court had no occasion to apply the principle of noscitur a sociis as the court has observed therein that it is not possible to say much less urge successfully that consumable stores must necessarily partake the nature of raw materials or processing materials or must more or less stand on the same footing. The court has further held that consumable stores must be given a very restricted meaning since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set-off benefit under rule 42. This court vide its judgment dated December 17, 2004, in Sales Tax Reference No. 7 of 1994 while relying upon the above referred judgment in the case of Vasuki Carborundum Works [1979] 43 STC 294 (Guj), answered the above question in the affirmative by observing, inter alia, that the ice cream by its very nature, has to be kept in containers and preserved so as to ensure that the ice-cream retains its characteristic as ice-cream during transportation from the manufacturing centre to the selling centre and does not lose the form in which it is manufactured. Mr. Trivedi, therefore, submitted that all these four judgments of this court have been rendered in the peculiar facts and circumstances obtaining in the said cases. It is not permissible for the petitioners to rely upon the said judgments in their favour so as to contend that fuel, i.e., furnace oil/LDO/natural gas/naphtha used in producing electricity/steam which, in turn, is used as an aid in the actual manufacturing process, are processing materials and/or consumable stores used in the manufacture of final goods. Even if one were to carefully examine the ratio decidendi of all the aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 42 of the Gujarat sales tax legislative provisions do not deal with all goods, but only those which are raw or processing materials or consumable stores which are used in the manufacture of taxable goods. Thus, the said judgment cannot have any applicability to the facts of the instant matter. Mr. Trivedi further submitted that the petitioners have relied upon the following judgments to contend that the State Government should be bound by the doctrine of promissory estoppel by not resiling from its promise held out in its first circular dated January 19, 2001: (i) Pournami Oil Mills v. State of Kerala reported in [1987] 65 STC 1 (SC); AIR 1987 SC 590. (ii) Pine Chemicals Ltd. v. Assessing Authority reported in [1992] 85 STC 432 (SC); [1992] 2 SCC 683. (iii) State of Orissa v. Mangalam Timber Products Ltd. reported in [2004] 1 SCC 139. (iv) State of Punjab v. Nestle India Ltd. reported in [2004] 136 STC 35 (SC); [2004] 6 SCC 465. He has, however, submitted that the said judgments do hold that any action of the Government in violation of law cannot be treated as a representation to base a plea of promissory estoppel. Since what was stated in the aforesaid circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia v. Indian Tobacco Association reported in [2005] 7 SCC 396. (iii) Bombay Chemical Private Limited v. Collector of Central Excise reported in [1995] 99 STC 339 (SC); [1995] Supp 2 SCC 646. (iv) Commissioner of Sales Tax v. Industrial Coal Enterprises reported in [1999] 114 STC 365 (SC); [1999] 2 SCC 607. He has submitted that all these judgments merely provide that once the subject is held eligible for getting the benefit of the notification, then in that case notification should receive the beneficent construction. However, the respondent-State relies upon the following judgments to show that an exception or an exempting provision has to be construed strictly and a person invoking an exception or an exemption provision to relieve him of the tax liability, must establish clearly that he is covered by the said provision and in case of doubt and ambiguity, benefit thereof must go to the State: (i) Union of India v. Wood Papers Ltd. reported in [1991] 83 STC 251 (SC); [1990] 4 SCC 256. (ii) Novopan India Limited v. Collector of Central Excise and Customs reported in [1994] Supp 3 SCC 606. (iii) Liberty Oil Mills (P) Ltd. v. Collector of Central Excise reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identical controversy while referring to the circular dated February 19, 2001 by following the law declared by the apex court in the case of Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465. As a matter of fact, this court in the case of Madhu Silica Private Limited [1992] 85 STC 258; 34 (1) GLR 143, held that the provisions of section 15B of the Act are pari materia with corresponding provisions of sales tax legislations operating in the State of Tamil Nadu, Kerala and Andhra Pradesh. In that view of the matter, Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 interpreting said pari materia provisions of the Andhra Pradesh General Sales tax Act would very much apply to the provisions of the Act and that therefore the said judgment of the Tribunal is absolutely legal and valid. Even otherwise, no circular contrary to even such a decision can operate in the field. Based on the above submissions and various judicial pronouncements, in conclusion Mr. Trivedi has submitted that: (i) Since fuels, viz., natural gas, furnace oil, light diesel oil, naphtha, etc., used by the industries in the present case for generating steam, electricity, etc., are not integra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is rather incumbent to follow the rulings pertaining to the provisions of the said sales tax legislations operating in the said State rather than the Central Sales Tax Act and similar other sales tax legislations operating in the States other than the above. (vi) In other words, the Central law on the one hand and the Gujarat law on the other stand on a different footing but such is not the position in the case of Gujarat law on the one hand and the Andhra Pradesh law on the other. (vii) In view of the above, the judgment of the apex court in the case of Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465, would apply in the instant case for deciding the questions referred and not the earlier judgment of the apex court rendered in the case of J. K. Cotton [1965] 16 STC 563. (viii) In the aforesaid circumstances, all the earlier judgments of this court referred to above, rendered prior to the judgment of the apex court in case of Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465, should be treated as having been decided in the facts and circumstances obtaining in those cases only and should not be applied to the present case. Even otherwise, the said earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rule 47, and further condition specified below, grant him drawback, set-off or as the case may be refund, of the whole or any part of the tax in respect of the purchases of goods used by him in manufacture: Conditions: (1) and (2) . . . (3) the said goods have been used by the assessee within the State, as raw or processing materials or as consumable stores in the manufacture of taxable goods as defined in clause (33) of section 2 of the Act and . . . Notification entry 118 Entry No. Class or sales or purchases Exemption whether of whole or part of tax Conditions 118 (2) Sales of raw materials, processing materials, consumable stores or packing materials by a registered dealer to a specified manufacturer. Whole of tax. (4) If the specified manufacturer furnishes to the selling dealer a certificate in form 1 appended hereto declaring inter alia that the goods are required for use by him within the State of Gujarat as raw materials, processing materials or consumable stores, in the manufacture of goods for sale .... Notification entry 255 Entry No. Class or sales or purchases Exemption whether of whole or part of tax. Conditions 255 (2) Sales of raw materials, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of goods and without which commercial production would be inexpedient, must be regarded as goods intended for use in the manufacture of goods . (ii) Collector of Central Excise, New Delhi v. Ballarpur Industries Ltd. [1990] 77 STC 282; [1989] 4 SCC 566; AIR 1990 SC 196. In this case, the honourable Supreme Court observed that the ingredients used in the chemical technology of manufacture of any end-product might comprise, amongst others, of: (a) those which may retain their dominant individual identity and character throughout the process and also in the end-product; (b) those which as a result of interaction with other chemicals or ingredients might themselves undergo chemical or qualitative changes and in such altered form find themselves in the end-product; (c) those which like catalytic agents, while influencing and accelerating the chemical reactions, however, may themselves remain uninfluenced and unaltered and remain independent of and outside the end-products; and (d) those, which might be burnt up or consumed in the chemical reactions. The court held that in order to determine whether the ingredients of the last mentioned class qualify themselves as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end-product. The court concluded that goods used for ancillary purposes, like fuel, in the process of manufacture, do not fall within section 5A(1)(a). It is also worthwhile to note here that in the case of Saurashtra Calcine Bauxite and Allied Industries v. State of Gujarat [1993] 91 STC 435 (Guj), while interpreting the provisions of rule 42A of the Gujarat Sales Tax Rules, 1970, this court held that heat treatment was the key process in the manufacture of goods and that the said process could not have been acquired without the use of furnace oil. If the furnace oil was not used, the heating process could not have been accomplished and the end-product could not have been achieved. Therefore, it was concluded that furnace oil must be regarded as being used as processing materials and not merely as fuel. It is further to be noted that Saurashtra Calcine Bauxite's case [1993] 91 STC 435 (Guj) comprises of two reference applications under the Act and in so far as the second matter was concerned, furnace oil was used only for the purpose of generating heat during the process of manufacture and there was no finding to the effect that furnace oil formed part of the finishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (B) articles which can be purchased tax-free on furnishing a prescribed certificate by a manufacturer must be either raw materials or processing materials or consumable stores. But it is not possible to say that consumable stores must necessarily partake the nature of raw materials or processing materials or must more or less stand on the same footing. It was held that consumable stores or materials required in a process or activity which is integrally connected with the manufacturing activity and without which the activity of manufacture may be commercially inexpedient can be purchased by an assessee free of tax under section 13(1)(B) of the Act. Kathi is part of consumable stores which would be necessarily required in the activity of marketing the goods which is essentially connected with the larger activity of manufacture. Therefore, it was concluded that the assessee was entitled to purchase kathi free of tax under section 13(1)(B) of the Act. (iii) Vallabh Glass Works Ltd. v. State of Gujarat [1982] 50 STC 352 (Guj). In this case, the assessee purchased timber and prepared wooden crates. The crates so prepared out of timber were used in packing of the final product. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication of the principles of commercial expediency. The entire controversy in the present case has arisen only because of the decision of the honourable Supreme Court in the case of Coastal Chemicals [2000] 117 STC 12; [1999] 8 SCC 465. In this case, following the earlier decision in the case of Thomas Stephen [1988] 69 STC 320 (SC); [1988] 2 SCC 264, the honourable Supreme Court held that the word consumables used in section 5B of the Andhra Pradesh General Sales Tax Act, 1957, takes colour from and must be read in the light of the words that are its neighbours, namely, raw material , component part , sub-assembly part and intermediate part . So read the word consumables therein refers only to materials which are utilized as an input in the manufacturing process but are not identifiable in the final product by reason of the fact that they have got consumed therein. It was, therefore, concluded that gas used as fuel was not consumables as used in section 5B of the A.P. General Sales Tax Act. The decision in the case of Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 is not applicable to the Gujarat provisions as the provisions of the Gujarat Act are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer in the process of manufacture of iron and steel and without use thereof, the production itself was not possible. Therefore, it was concluded that furnace oil was used or consumed in the manufacture of goods. (b) Reliance Industries Ltd. v. Asst. Commissioner of Sales Tax [2008] 15 VST 228 (Orissa). The court held that furnace oil which is used in the process of manufacture of PSF is to be treated as input as defined in section 2(25) of the OVAT Act. In both these cases, the Revenue relied upon the decision of the honourable Supreme Court in the case of Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 and Thomas Stephen [1988] 69 STC 320 (SC); [1988] 2 SCC 264 but the courts have held that those decisions are not applicable to the provisions for consideration before the respective court. The above decision of the Punjab and Haryana High Court as well as Orissa High Court settled the law that the interpretation of the word consumables in the case of Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 will not be applicable wherever the word consumables has been used. The meaning of the said word has to be gathered from the language of the statute in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed in Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 on the ground that the provisions of the Kerala General Sales Tax Act were different from the provisions of the Act and hence, the decision in Thomas Stephen [1988] 69 STC 320 (SC); [1988] 2 SCC 264 was not applicable to the provisions of the Act. Consequently, Coastal Chemicals' judgment [2000] 117 STC 12 (SC); [1999] 8 SCC 465 is also not applicable to the Gujarat law. Under the Gujarat Act, three words used, viz., raw material, processing material and consumable stores do not have a common genus and therefore they cannot be read ejusdem generis. The words consumable and consumable stores used in the two statutes are distinct and different and the emphasis in Gujarat statute is on the word stores . If the stand taken by the State Government is accepted, it would lead to an anomaly that if the raw material is used to generate power in a power plant, it will be exempted but if the raw material is used to generate power in a composite plant manufacturing another end-products, it will not be exempted. Since the policy of the Government is to promote more and more captive generation of power, it must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of it as redundant. Thus, processing materials and consumable stores as such would include goods which are necessary in the process of manufacture but which as such do not form part of the finished goods. The legislative intent behind the incorporation of the term consumable stores is clearly indicated in the case of Commissioner of Sales Tax v. Ajay Printery Ltd. [1964] GSTB 12. This was a case concerning the period prior to the adoption of the Act, wherein while interpreting the language of the Bombay Sales Tax Act, which was applicable in the State of Gujarat then, this court had held that all those goods which are required for converting raw materials into finished goods can be said to be goods used in the manufacture of finished goods and this will include both consumable and non-consumable stores also. While enacting the Act, in order to ensure that non-consumable stores would also not qualify as being used in the manufacture of goods, the provisions of the Act specifically included only consumable stores. Thus, non-consumable stores were excluded from the goods which can be considered to have been used in the manufacture of goods. This was the deviation adopted under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able Supreme Court in the case of Coastal Chemicals [2000] 117 STC 12; [1999] 8 SCC 465, various terms were used by using in between, while in the Gujarat Act, the term or its use between raw material or processing material and/or as before the term consumable stores. This difference in language clearly establishes that each of the terms used in the provisions of the Gujarat Act is distinct and independent and the principle of noscitur a sociis is not applicable. Even if it is assumed that this principle of noscitur a sociis applies to the Gujarat provisions, the words consumable stores would take colour from the immediate preceding words processing materials which are not akin to raw materials and never get transformed into the final product. Thus, even this principle would be applicable in favour of the petitioners. We have also considered the main submission made on behalf of the State Government that the provisions of the Central Act which were considered in the case of J.K. Cotton [1965] 16 STC 563 (SC) used the term processing apart from manufacture unlike the provisions of the Act which uses the term manufacture only and, therefore, the provisions of the Central A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction to direct that the award should be enforced in terms of the provisions of the 1996 Act which was not applicable. This court also could not have deprived the parties from a remedy which is otherwise available to them in law. It is true that this court did not pass an order when such an application was filed by the appellants herein being I.A. No. 4 in Civil Appeal No. 1920 of 1997 but the same was not necessary to do as the parties were at liberty to raise the said question before the High Court. 13.. A court of law has no jurisdiction to direct a matter to be governed by one statute when provisions of another statute are applicable. This court merely directed the parties to enforce the said award which would mean that the same should be enforced in accordance with law. If a party to the lis has a right to question an award in terms of the 1940 Act, no court has the requisite jurisdiction to deprive him therefrom. Based on the above proposition, it was contended that a legal remedy available to a party cannot be whittled away by an order of court. It was further contended on behalf of the petitioners that the plea of res judicata is not applicable to the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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