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2023 (4) TMI 911 - HC - VAT and Sales TaxExemption from levy of Entry Tax - coal imported by petitioners for generation of electricity in it’s Thermal Power Plant - applicability of notification dated 13.12.2010 - Whether provisions of Odisha VAT Act, 2004 are pari materia to the provisions of M.P. VAT Act, 2002, to enable petitioners to take advantage of Division Bench judgment of Orissa High Court in ODISHA POWER GENERATION CORPORATION LTD. VERSUS STATE OF ODISHA & ANOTHER [2015 (5) TMI 62 - ORISSA HIGH COURT] whereby in similar facts and circumstances the contention of petitioners therein (which were similar to the petitioners herein) was upheld by treating coal as the raw material brought in the course of business for generation of electricity? Whether coal imported by petitioners for generation of electricity by Thermal Power Plant is exempted from Entry Tax on the anvil of notification dated 13.12.2010 by virtue of being raw material purchased in the course of business? - HELD THAT:- Bare perusal of the charging provision Section 3 of M.P. Entry Tax Act reveals that the levy of Entry Tax is on the entry in the course of business of a dealer of goods specified in Schedule II into each local area for consumption, use or sale. However, no levy of entry tax can be made over goods specified in Schedule III which are for sale - The State is vested with power to exempt certain goods from levy of entry tax subject to such restrictions and conditions and on such terms and conditions as it thinks fit. In the instant case, the State by notification dated 13.12.2010 Annexure P/3 in W.P. No.16965/2016 exempted in whole payment of Entry Tax on coal which is brought by dealers into the local area as raw material in the manufacture of goods. Petitioners or all dealers bring coal into local area for being consumed by their thermal power stations for generation of electricity - In absence of coal which is the very primary source for generation of heat leading to creation of steam resulting in turning of turbines, no electricity can be produced by any thermal power station. Whether coal can be termed as raw material as defined in Section 2(g) of M.P. Entry Tax Act? - HELD THAT:- Bare reading of expression “raw material” reveals that the definition is not only generic in nature but wide enough to include all articles used as ingredients in the process of manufacturing of goods or articles consumed in the process of manufacturing including fuel required for the process of manufacture - Since manufacture is not defined in M.P. VAT Act, resort is made to the definition of manufacture u/S 2(p) of the M.P. VAT Act which is exhaustive in nature due to its inclusive characteristic. The said expression ‘manufacture’ u/S 2(p) in the MP VAT Act includes any activity of brings out change in an article as a result of some process, treatment, labour and leads to transformation into an article which is new and different in commercial parlance having distinct name, character, etc. - In the definition of “manufacture” there is nothing to imply that unless and until any traces or element of raw material are found in the finished product, the requirement of the process of manufacturing is not satisfied. Merely because coal gets burnt out in the initial process of creation of heat for making steam and thereby turning the turbine leading to production/manufacture of electricity and thus coal is not found in any physical form in the finished product i.e. electricity, does not mean that coal cannot be treated as raw material for generation/manufacture of electricity. The other aspects which need to be satisfied is that coal is brought into the local area by petitioners in the course of its business as per Section 3 of M.P. Entry Tax Act - the expression “course of business” is not defined in M.P. Entry Tax Act and therefore, resort is made to M.P. VAT Act which though does not defined the expression “course of business” but defines expression “business” in Section 2(d) of the M.P. Tax Act. The definition of expression “business” in M.P. VAT Act is generic, inclusive and thus exhaustive in nature. This expression “business” includes the process of manufacture - it is obvious that coal is raw material as defined in Section 2(g) of M.P. Entry Tax Act required for the process of manufacturing/generation of electricity. More so coal is also one of the items mentioned in Schedule II appended to the Entry Tax Act. Once it has been held that coal is raw material for manufacturing/generating electricity and thus is exigible to Entry Tax Act, the exemption/concession notification issued by the State u/S 10 of M.P. Entry Tax Act vide Annexure P/3 in W.P. No.16965/2016, and Annexure P/4 in W.P. No.3109/2015 are available to be availed by petitioners exempting them from payment of Entry Tax on coal brought into local area where the thermal power station of petitioners are situated on such terms and conditions as mentioned in the notification. Applicability of judgement in the case of Odisha Power Generation Corporation Ltd. vs. State of Odisha and another - HELD THAT:- Bare perusal of the aforesaid comparison of provisions in Madhya Pradesh and Orissa reveal that textually as well as contextually the provisions are para materia and are not materially different and distinct as contended by the State. Thus, there is no substance in the State’s objection about applicability of Division Bench judgment of Orissa High Court in the case of Odisha Power Generation Corporation Ltd. This Court has no manner of doubt that submissions of State deserve to be rejected and petitions with regard to exemption as well as concession deserve to be allowed.
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