TMI Blog2003 (3) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhartiagram, district Jyotiba Phula Nagar (Amroha). The petitioner has established a continuous process chemical industry for the manufacture of vinyl pyridine, picoline, etc. The petitioner is registered both under the U.P. Trade Tax Act as well as under the Central Sales Tax Act as a dealer. 4.. The petitioner has been granted a registration certificate under section 7 of the Central Sales Tax Act, 1956. True copy of the registration certificate under section 7 including the list of materials which the petitioner is entitled to purchase under the Central Sales Tax Act is annexure 1 to the writ petition. 5.. The petitioner has also been granted a recognition certificate under section 4-B of the U.P. Trade Tax Act, 1948 authorising the petitioner to purchase various goods on concessional rate from May 14, 1980. The recognition certificate was granted on June 20, 1980 but was made effective from May 14, 1980. True copy of the recognition certificate is annexure 2 to the writ petition. 6.. Section 4-B(2) of the U.P. Trade Tax Act reads as follows: Where a dealer requires any goods, referred to in sub-section (1), for use in the manufacture by him, in the State of any no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re under the administrative control of respondents 1 and 2 have issued notices for cancellation of the recognition certificates under section 4-B of the U.P. Trade Tax Act and also for cancellation of registration certificates under the Central Sales Tax Act. The respondent No. 3 consequently issued notices on June 29, 2000 for cancellation of recognition certificate under section 4-B of the U.P. Trade Tax Act and notice dated July 5, 2000 was issued for cancellation of registration certificate under the Central Sales Tax Act, i.e., for deleting the diesel oil from the said certificate. True copies of the notices are annexures 4 and 5 to the writ petition. 9.. In paragraph 17 of the writ petition it is alleged that diesel oil is a fuel which is absolutely essential for operating the machineries in the petitioner s factory which is a continuous process industry, and in the absence of diesel oil the diesel generating set cannot function and hence electricity cannot be generated for operating the machines. Aggrieved this writ petition has been filed. 10.. A counter-affidavit has been filed by the respondents. In paragraph 3 of the same it is alleged that the notice issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese generating sets is only used for manufacture of notified goods, namely, various chemicals at its factory and a certificate has been issued by the statutory auditors to the same effect vide annexure R.A. 1. In paragraph 7 it is alleged that clause (a) of the explanation to section 4-E(2) is not confined to those goods which are directly used as raw materials or processing material but it also includes consumable spare parts, fuel, lubricants, stores, etc. Hence the diesel generating set installed in the petitioner-factory is part and parcel of the machinery used by the petitioner. The diesel oil is fuel for running the diesel generating sets. In paragraph 8 it is stated that the petitioner has established a continuous process industry and if there is a disruption for the manufacture of power/electricity supply, it will block the entire production, and machinery will be damaged causing heavy losses. Hence diesel oil is clearly covered under clause (a) of the explanation to section 4-B(2) of the U.P. Trade Tax Act. It is denied that the electric energy generated from the diesel generating sets is also used for electric appliances and for running light, fan and other electrical ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Taxation Officer v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239 (SC) the concessional rate under the Punjab General Sales Tax Act was payable if certain raw materials were used in the manufacture of goods for sale. The contention of the assessee was that the words used in the Act were for sale and not for sale by him and hence the goods sold by a third party were also covered by the provision. The contention was accepted by the Supreme Court which followed the literal rule of interpretation. 17.. In Steel Authority of India Ltd. v. Collector of Central Excise AIR 1996 SC 2544 the question was whether raw naphtha intended for use in the manufacture of fertilisers was exempted although it was not actually used. It was held that the exemption notification only required proof that the raw naphtha was intended for use in the manufacture of fertiliser, and there was no further requirement that it was actually so used. Since it was purchased with the intention to be used for the manufacture of fertiliser, it was exempt, even though it could not be so used for some reason subsequently. 18.. The principle of strict interpretation of taxing statutes was best enunciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... templated [vide Lord Hatherley in Pardo v. Bingham (1869) 4 Ch App 735] was made while construing a non-taxing statute. It follows from this decision that the mischief rule laid down in Heydon's case [1584] 3 Co Rep 7a(v) has only a limited application to taxing statutes. 22. In Bank of Chettinad Ltd. v. Commissioner of Income-tax [1940] 8 ITR 522 (PC); AIR 1940 PC 183 the Privy Council protested against the suggestion that in revenue cases the substance of the matter may be considered as against the strict legal position. 23.. It is a corollary to the literal rule of interpretation that omissions in a statute are not to be inferred. If there is any defect or omission in the phraseology used by the Legislature it is not for the Court to make good the deficiency [Vide Smt. Tarulata Shyam v. Commissioner of Income-tax [1977] 108 ITR 345 (SC)] as it would then be taking on the role of the Legislature vide Gupta (S.P.) v. Union of India AIR 1982 SC 149. This rule applies with greater force to taxing statutes, and the general rule of interpretation that words can be supplied where there are adequate grounds to justify the inference that the Legislature intended something ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income-tax on the dividends, but the Supreme Court held that that could only be done if there was total income, and in this case there was no income. The court held that though the interpretation might lead to some anomalies it was for the Legislature to remove them. A similar view was taken in Collector of Customs v. Western India Plywood Mfg. Co. Ltd. (1989) 2 SCC 515. 26.. In Commissioner of Sales Tax, U.P. v. Mangal Sen Shyam Lal [1975] 35 STC 621 (SC); (1975) 4 SCC 35 the question was whether the limitation for filing a revision against the assessing order started from the date of the order or from the time the assessment officer apprised the department about the order. The Supreme Court held that since the language of the provision was imperfect, imprecise and deficient, the remedy lay in a legislative amendment, as the court was unable to provide an adequate solution. 27.. Where the question was whether certain provisions of the Limitation Act, 1963 could be applied in a case under the U.P. Sales Tax Act, the Supreme Court held that the Legislature did not apply the provisions of the Limitation Act to the Sales Tax Act, and hence they could not be imported into the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age to the machinery. Hence diesel oil is certainly goods used by the petitioner for the manufacture in his factory. 32.. Taking a realistic view of the matter, in our opinion, the diesel generating sets installed in the factory are part and parcel of the machinery as held by the Supreme Court in Commissioner of Income-tax v. Mir Mohammad Ali [1964] 53 ITR 165 (vide pages 171 and 172). 33.. The word require has been interpreted in 21st Century Reference Dictionary, Volume II, page 701 as follows: to depend on for success, fulfilment growth 34. We can take judicial notice of the fact that in U.P. supply of electricity to industries is often erratic leading to power shedding and power cuts which affects the industry vide Mohavir Prasad Jain v. State of Orissa [1987] 67 STC 376 (Orissa) in which it was observed: Judicial notice can be taken of the fact that supply of electricity in the State is erratic. In summer, very often, there is load-shedding and power cut-off. At other times, there is discontinuance of supply due to tripping. It is needless to emphasise its effect on an industry depending on supply of electricity. In this connection we may refer to exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture by him . 41.. In our opinion, the word fuel will include all kinds of fuel whether in gaseous, liquid or solid form and hence it will include diesel oil, fuel, RFO, natural gas, naphtha, etc. 42.. In view of the above this writ petition deserves to be allowed. Hence the circulars dated June 20, 2000, July 25, 2000 and August 5, 2000 issued by the Commissioner, Trade Tax, U.P., being contrary to the statutory provisions of section 4-B(2) (explanation) and the consequential notices as well as consequential orders (in some writ petitions) for deleting diesel oil, furnace oil or other liquid fuels or gaseous fuel are hereby set aside. The impugned circular dated June 20, 2000 and notice dated June 29, 2000 are hereby quashed. The respondents are directed to treat the diesel oil which is used by the petitioner in its generators as goods required for use in the manufacture by the petitioner as notified goods. Accordingly a mandamus is issued to the respondents to issue form III-B and form C regularly to the petitioner for the purpose of diesel oil to be used in its diesel generating sets. 43.. The petition is allowed. No order as to costs. Petition allowed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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