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2010 (2) TMI 1068 - HC - VAT and Sales TaxWhether the abovementioned fuels like natural gas, furnace oil, diesel oil and naphtha would come within the meaning of the expression "raw materials" "processing materials" or "consumable stores"? Held that:- The fuels consumed, namely, natural gas, furnace oil, light diesel oil, naphtha, etc., by the industry to generate electricity which is then used in the manufacture of end-products, namely, caustic soda, industrial chemicals, etc., can be considered to be "raw material" or "processing material" or "consumable stores" for the purpose of section 15B of the Gujarat Sales Tax Act, 1969 or for the purpose of rule 42 or for the purpose of exemption notification issued from time to time under the Act. We are also of the view that the test laid down by the honourable Supreme Court in the case of Coastal Chemicals [1999 (10) TMI 599 - SUPREME COURT OF INDIA] would not apply but the tests laid down in the case of J.K. Cotton [1964 (10) TMI 2 - SUPREME COURT OF INDIA] and in the case of Ballarpur Industries [1989 (9) TMI 102 - SUPREME COURT OF INDIA] 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.
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