9911796707
TMI Blog2007 (4) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 465 is not applicable to the cases arising under the Gujarat Sales Tax Act, 1969, is no longer valid in view of the decision of the Gujarat Sales Tax Tribunal, Ahmedabad, rendered in Second Appeal No. 682 of 2003 filed by M/s. Pandesara Industries Private Limited against State of Gujarat decided on September 28, 2004 and, therefore, circular dated February 19, 2001 is cancelled with effect from the date of issuance of the said circular, i.e., February 19, 2001. Another common alternative relief claimed in all these petitions is to issue a writ of mandamus or a writ of certiorari or any other appropriate writ or order declaring that the circular dated September 2, 2005 revoking and/or cancelling the circular dated February 19, 2001 does not have any retrospective effect. In addition to the abovementioned reliefs, the petitioners in Special Civil Application No. 12104 of 2006 have prayed to issue a writ of mandamus or any other appropriate writ or order to set aside judgment dated September 28, 2004 rendered by the Gujarat Sales Tax Tribunal in Second Appeal No. 682 of 2003, which was filed by Pandesara Industries Private Limited against State of Gujarat. As common questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as "consumable stores" in the manufacture of taxable goods. Rule 42 of the Rules provides that the dealer is entitled to claim the tax paid under section 15B of the Act as a set-off. The petitioners claim that they have paid purchase tax on the LDO and have been granted set-off by the respondent-authorities. What is asserted by the petitioners is that in view of the decision rendered by the Gujarat High Court in Saurashtra Calcine Bauxite and Allied Industries v. State of Gujarat [1993] 91 STC 435 holding that furnace oil used to produce heat in the process of calcination of raw bauxite into calcined bauxite and also used for the purpose of heating the mixture of soda ash and silica in the manufacture of sodium silicate, is not merely a fuel, but is a processing material, the applicants in the said cases were given benefit of set-off under rule 42A of the Rules, and, therefore, circular dated September 2, 2005 is liable to be set aside more particularly when the Division Bench rendered decision after distinguishing the decision of the Supreme Court in Deputy Commissioner of Sales Tax (Law) v. Thomas Stephen & Co. Ltd. [1988] 69 STC 320; [1988] 2 SCC 264 and after follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple laid down by the Supreme Court in Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465 is not applicable to the cases arising under the Act, is no longer valid in view of the decision of the Gujarat Sales Tax Tribunal, Ahmedabad, rendered in Second Appeal No. 682 of 2003 filed by Pandesara Industries Private Limited against State of Gujarat decided on September 28, 2004 and, therefore, the circular dated February 19, 2001 is cancelled with effect from the date of issuance of the said circular, i.e., February 19, 2001, to contend that the judgment of the Tribunal, which is referred to in circular dated September 2, 2005, was inter party and restricted to the facts of that case and, therefore, the same could not have been made basis for the purpose of withdrawing benefits conferred upon the petitioners by the circular dated February 19, 2001. According to the petitioners, in fact, the LDO is used as processing material in the manufacturing process by the petitioners whereas in absence of the same, it is not possible for the petitioners to undertake the manufacturing process and, therefore, the petitioners would be entitled to set-off as provided by the law. The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before the Gujarat Sales Tax Tribunal at Ahmedabad and, therefore, the instant petitions should not be entertained by the court. Mr. Rajendrabhai R. Patel, who is authorised signatory of petitioner No. 1, i.e. M/s. AMI Pigment Private Limited, has filed affidavit-in-rejoinder on behalf of the petitioners stating, inter alia, that in circular of 2001, the respondents had clarified that the raw materials and stores used in the manufacturing process would be entitled to set-off and, therefore, they are estopped from contending to the contrary nor are they entitled to withdraw or revoke the said circular with retrospective effect. In the said rejoinder on behalf of the petitioners, the points, which are urged in the petition, have been reiterated and, therefore, this court is of the opinion that it is not necessary to refer to the same in detail. Mr. Shankerbhai Patel, who is authorised signatory of petitioner No. 10, has filed affidavit dated March 19, 2007 on behalf of the petitioners for the purpose of placing on record the relevant abstracts of the assessment orders for the year 2000-01 in respect of petitioner No. 9-company and the relevant abstracts of the assessment orders f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit, it is asserted that the furnace oil and/or LDO never gets used up or consumed or burnt up or wasted or remains in an identifiable or unidentifiable form in the aforesaid final products. To substantiate this assertion, it is stated that the petitioners use furnace oil/LDO for firing a boiler whereby the water contained therein gets converted into steam which, in turn, is carried through pipelines to the reactor, which normally consists of two vessels, i.e., a bigger vessel containing a small one and between the two, the steam travelling through pipelines enters for creating uniform temperature. It is further explained that the said reactor is filled with raw materials like vinyl sulphone, gama acid, k-acid, etc., wherein chemical reaction takes place and ultimately the above referred to final products get manufactured. What is emphasised in the said reply is that after pronouncement of the judgment of the Supreme Court in the case of Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465, it was realised that the above referred to furnace oil/LDO cannot and would not qualify to be either raw material or processing material or consumable store in the manufacture of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Limited for not accepting form No. 20 filed by the petitioner for availing of the benefit of concessional rate of sales tax on the natural gas purchased by it. The petitioner is a public limited company engaged in the business of manufacture and marketing of float glass. The case of the petitioner is that the State Government had passed a resolution known as "Special Incentive to Pioneer Units Scheme, 1986" to give special package and certain higher benefits under its incentive policy based on the categories of backwardness of the areas whereas the Government of Gujarat had also issued another notification dated June 25, 1987 for Composite Sales Tax Incentive Scheme, 1987 for pioneer industrial units and, therefore, the petitioner had established its unit at the address mentioned in the cause title of the petition. The claim made by the petitioner is that the petitioner has been purchasing natural gas from Gas Authority of India Limited to be used as fuel for the float glass manufacturing process and has availed of sales tax benefits under the composite scheme in the nature of concessional purchase rate of tax for purchase of raw material, processing material, consuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material or as processing material or as consumable goods in the manufacture of its final product, i.e., float glass. Explaining the manufacturing process undertaken by the petitioner, it is stated in the affidavit that the petitioner uses the said natural gas for firing glass furnace for heating the furnace to a very high temperature in order to convert/melt raw materials consisting of sand, limestone, soda ash, dolomite, iron oxide, salt cake, etc., into the final finished product called float glass, which is nothing but a sheet of glass made by floating the molten glass on a bed of molten tin, which gives the glass, uniform thickness and very flat surface. After explaining the manufacturing process undertaken by the petitioner, it is asserted that the natural gas never gets used up or consumed or burnt up or wasted or remain in an identifiable or unidentifiable form in the aforesaid final product, i.e., float glass, and, therefore, natural gas used for firing glass furnace cannot and would not qualify to be either the raw material or the processing material or consumable stores in the manufacturing of finished final product, namely, float glass more particularly in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also prayed to declare that the petitioner is entitled to the sales tax exemption available on purchase of fuel for its unit under the Sales Tax Exemption Scheme. The petitioner has also prayed to direct respondent No. 4 to withdraw the letter dated September 7, 2005 issued to the Gujarat State Petroleum Corporation for non-acceptance of form 40 from the incentive enjoying industries for purchase of fuel necessary for generation of power/steam for the manufacture of the goods. The petitioner, i.e., M/s. Arvind Mills Limited, is a company incorporated under the provisions of the Act of 1913. It is engaged in the business of manufacture and marketing of textiles fabrics and textile products. According to the petitioner, the Government by resolution dated September 11, 1995 announced Premier Unit Scheme for Incentive under the Industrial Policy 1995-2000 whereas the Finance Department issued resolutions dated July 19, 1996 and July 24, 1997, announcing the corresponding incentive scheme under the Gujarat Sales Tax Act, 1969. The petitioner has claimed that it received provisional premier registration certificate on February 1, 1999 whereas it was granted an ad hoc eligibility certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. According to the petitioner, fuel purchased by it is inextricably linked and used in the overall manufacturing process of the petitioner and that naptha, natural gas and furnace oil are used by the petitioner to run its captive cogen power plant for generation of electricity/steam which are, in turn, used for manufacture of the goods. According to the petitioners, the fuel purchased by the petitioner would certainly fall within the ambit of the term raw material or processing material or consumable store as provided in entry 69(2) of the Act, and as fuel used to generate electricity/steam is wholly consumed in the overall manufacturing process of manufacturing goods under the Act, it would be entitled to exemption of sales tax. What is asserted by the petitioner is that electricity and steam generated by the petitioner using the fuel purchased by it at concessional rate are part and parcel of the composite process that produces the end-product and, therefore, the circular dated September 2, 2005 is liable to be set aside. Under the circumstances, the petitioner has filed the instant petition and claimed the reliefs to which reference is made earlier. On service of notice, Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under the Act and as and when it is so done, the petitioner, if aggrieved, will have a remedy before the appropriate forum. What is asserted in the reply is that under the pretext of challenging the validity of circular dated September 2, 2005, the petitioner wants to halt further proceedings with reference to reassessment, etc., which is not permissible in law because if in law, tax is leviable at full rate on the aforesaid products, nothing would prevent the State from recovering the said tax, of course, within the period of limitation available under the Act since there cannot be an estoppel against the statute. It is further asserted in the reply that it is a well established position of law that the law declared by the Supreme Court is binding on all courts, Tribunals and authorities within the territories of the country and, therefore, the contrary view expressed in circular of 2001 perforce loses its validity and becomes non est and, therefore, the petition should be dismissed. It may be mentioned that at the conclusion of the lengthy hearing of the petitions, the learned counsel for the petitioners and the respondents have placed before the court detailed written submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpreting the provisions of the Act and the Rules. Explaining that the word "consumable stores" is a composite word, it was pleaded that it must be construed as such and not as two individual words nor the word "consumable stores" be equated with the word "consumables" which is generic in nature. Referring to common parlance meaning of the word "consumable stores", it was argued that the words "consumable stores" are synonymous with indirect material required to be used in the manufacturing process, e.g., fuel, lubricating oils, greases, etc., and, therefore, the said term should not be interpreted to mean as analogous to the words "raw material". It was pointed out that the application of doctrine of noscitur a sociis while interpreting section 15B of the Act or entry 175(2) would render the words "processing material" and "consumable stores" redundant which should be avoided and the word "consumable stores" should not be interpreted to mean that it is that material which gets used up or consumed or wasted in the final product. It was argued that by circular dated February 19, 2001, it was ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the petitioners by directly feeding the same into the glass-melting furnace for converting raw materials into molten glass in the process of manufacturing glass, natural gas used should be treated as processing material, which would qualify for the benefits as provided under entry 175 of the Act and, therefore, circular dated February 19, 2001 should be upheld by the court whereas circular dated September 2, 2005 should be set aside. It was emphasised by the learned counsel for the petitioners that in the Gujarat Sales Tax Act and the Rules, the term "consumable" is not used along with terms like "components parts" "sub-assembly parts" and "intermediate parts" as is the case in section 5B(1) of the Andhra Pradesh General Sales Tax Act, which was considered by the Supreme Court in Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465, and, therefore, on the basis of the judgment of the Supreme Court in Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465, circular dated September 2, 2005 could not have been issued. What was highlighted on behalf of the petitioners was that natural gas purchased by the petitioners at concessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al at all, but interpreted the word "consumables" after considering the words that were neighbours to the said words and, therefore, the decision rendered in Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465 cannot be interpreted to mean that the fuel used by the petitioners is neither raw material nor processing material nor consumable store and would not earn benefit under the exemption entry. The learned counsel referred to the definition of the word "raw material" as appearing in section 2(19) of the VAT Act and contended that the fuel used by the petitioners should be treated as "raw material" used for the purpose of manufacturing final product. In the alternative, it was argued that respondent No. 2, i.e., Commissioner of Sales Tax, Vechanvera Bhavan, Ashram Road, Ahmedabad, who was the author of the circular dated February 19, 2001, could not have issued circular dated September 2, 2005 in complete volte face cancelling the circular dated February 19, 2001 from its original date, i.e., February 19, 2001, and holding that the judgment in the matter of Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465, would be applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Co. Ltd., Quilon [1988] 69 STC 320 (SC); [1988] 2 SCC 264, (3) K. Rasiklal & Co. v. State of Gujarat [1992] 86 STC 238 (Guj) (S.T.R. No. 3 of 1984), (4) J. K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur [1965] 16 STC 563 (SC), (5) Pournami Oil Mills v. State of Kerala [1987] 65 STC 1 (SC); [1986] Supp SCC 728, (6) Collector of Central Excise, New Delhi v. Ballarpur Industries Ltd. [1990] 77 STC 282 (SC), (7) Filterco v. Commissioner of Sales Tax, Madhya Pradesh [1986] 61 STC 318 (SC); [1986] 2 SCC 103, (8) Vishwanath Jhunjhunwala v. State of Uttar Pradesh [2004] 135 STC 562 (SC); [2004] 4 SCC 437, (9) Chowgule & Co. Pvt. Ltd. v. Union of India [1981] 47 STC 124 (SC); [1981] 1 SCC 653, (10) Standard Fireworks Industries, Sivakasi v. Collector of Central Excise, Madurai [1987] 1 SCC 600, (11) Judgment rendered by the Gujarat Sales Tax Tribunal at Ahmedabad on September 28, 2004 in Second Appeal No. 682 of 2003 which was filed by Pandesara Industries Ltd. against State of Gujarat, (12) Indian Metals and Ferro Alloys Ltd., Cuttack v. Collector of Central Excise, Bhubaneshwar [1991] Supp 1 SCC 125, (13) State of Tamil Nadu v. Mahi Traders [1989] 73 STC 228 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 (State of Gujarat v. Mahavir Engineering & Electric Stores [2009] 22 VST 564 (Guj)) rendered by the Division Bench comprising R.S. Garg & D.H. Waghela, JJ., (40) Ardeec Engineering (Saurashtra) Pvt. Ltd. v. State of Gujarat [2000] 117 STC 178 (Guj), as well as on (a) Interpretation of Statutes & Written Instruments; (b) Statutory Interpretation A Code, third Edition, F A R Bennion MA (Oxon), Barrister, Butterworths; (c) Accounting Standard & Corporate Accounting Practice. Mr. S. Ganesh, learned Senior Advocate, with Ms. Amrita Thakore and Mr. Navin Kumar, learned Advocates for the petitioner in Special Civil Application No. 12106 of 2006, argued that the circular dated February 19, 2001 drawing the conclusion that the decision in Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465 is not applicable to the provisions of the Act inasmuch as the term "processing materials" was missing in the A.P. Act whereas in the Gujarat Act, the term "consumable stores" occurred in the immediate conjunction with the terms "raw or processing materials" was just and is binding on the tax authorities as a result of which, the circular issued in the year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India [1973] 1 SCR 896 and (4) MRF Ltd. v. Assistant Commissioner (Assessment), Sales Tax [2006] 148 STC 225 (SC); [2006] 8 SCC 702; [2006] 9 SCALE 420. It was argued that section 86 of the Act which confers power on the State Government to make Rules does not authorise it to make Rules with retrospective effect, i.e., which has the effect of taking away or nullifying the existing rights and that section 49(2) of the Act confers powers on the State Government to issue exemption notification prospectively as a result of which, the rights accrued in favour of the assessees pursuant to circular of the year 2001 could not have been nullified retrospectively by circular dated September 2, 2005. It was contended that when an assessee is prohibited or prevented from recovering tax from its customers by reason of an exemption notification, no demand for sales tax can be raised on the assessee in respect of the past period during which he was prohibited or inhibited from recovering the amount of tax and, therefore, circular dated September 2, 2005 should be regarded as illegal. In support of this submission, the learned counsel placed reliance on the decisions in (1) West Bengal Hosiery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pandesara's case, it must necessarily follow that if that judgment is found to be incorrect or contrary to law, the circular issued in the year 2005 would be liable to be set aside. It was asserted that the judgment of the Sales Tax Tribunal in Pandesara's case(1) is erroneous and, therefore, it could not have been stipulated by circular dated September 2, 2005 that furnace oil, which is purchased and utilised in an industrial process to manufacture goods is not a "processing material" or "consumable store" within the meaning of para 255(2) of the exemption notification. According to the learned Senior Advocate, in Pandesara case(1), the Tribunal had blindly followed the judgment of the Supreme Court in Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465 without considering the significant and material differences between the scheme of the Andhra Pradesh Act and the Gujarat Act and, therefore, the judgment of the Tribunal in Pandesara's case(1) should be set aside. According to the learned Senior Advocate, in Pandesara's case(1), the assessee had, in fact, succeeded because the Revenue had failed to discharge the burden cast on it of showi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in the matter of Pandesara, the Department has understood the term "raw material or processing material or consumable stores" to include liquid diesel oil and has, therefore, granted set-off available under rule 42 and rule 42E of the Rules as a result of which, circular issued in the year 2005 should be regarded as unconstitutional. In support of this submission, the learned Senior Advocate relied on decisions in (1) Collector of Central Excise, Guntur v. Andhra Sugar Ltd., Venkata-Raypurama [1989] 73 STC 216 (SC); [1989] Supp 1 SCC 144; [1988] 4 JT 410 (SC) and (2) State of Karnataka v. Balaji Computers [2007] 5 VST 120 (SC); [2007] 2 SCC 743. It was argued that the circular dated February 19, 2001 is binding on the Department and the Department cannot canvass a view contrary to what is stated in the circular. In support of this submission, the learned counsel placed reliance on the decisions in (1) K. P. Varghese v. Income-tax Officer, Ernakulam [1981] 131 ITR 597 (SC); AIR 1981 SC 1922, (2) Commissioner of Sales Tax, U.P. v. Indra Industries [2001] 122 STC 100 (SC); AIR 2000 SC 3442, (3) Collector of Central Excise, Guntur v. Andhra Sugar Ltd. [1989] 73 STC 216 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember 2, 2005 could not have been issued with retrospective effect. In support of this submission, the learned counsel placed reliance on the decisions in (1) K.P. Varghese v. Income-tax Officer, Ernakulam [1981] 131 ITR 597 (SC); AIR 1981 SC 1922, (2) Commissioner of Sales Tax, U.P. v. Indra Industries [2001] 122 STC 100 (SC); AIR 2000 SC 3442, (3) Collector of Central Excise, Guntur v. Andhra Sugar Ltd., Venkata-Raypurama [1989] 73 STC 216 (SC); [1989] Supp 1 SCC 144, (4) State of Karnataka v. Balaji Computers [2007] 5 VST 120 (SC); [2007] 2 SCC 743 and (5) Govind Prasad v. R. G. Parsad [1994] 1 SCC 437. As against this, Mr. Kamal B. Trivedi, learned Advocate-General, assisted by Ms. Sangeeta Vishen, learned Assistant Government Pleader for the respondents, contended that while ascertaining the meaning of the words "raw material", "processing material" and "consumable store", the principle of noscitur a sociis should be applied to find out the real meaning of those words as those words are not defined under the Act nor meaning of the words "processing material" and "consumable store" available in the dictionary. After emphasisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the raw material meaning thereby when any process is carried out with reference to the raw material for getting altogether a new commodity with distinctive name, character and use, then in that case the same would amount to "manufacture " and as the said expression cannot be equated with the words "in the manufacture or processing of goods" as used in section 8(3) of the Central Sales Tax Act, 1956 read with rule 13 wherein the goods referred to are final taxable goods, the principle laid down in J.K. Cotton Spinning & Weaving Mills Co. Ltd. [1965] 16 STC 563 (SC) would not apply to the facts of the instant case. It was pleaded that the words, i.e., "in the manufacture and processing of goods", used in the Central Law have wider meaning in comparison to the words "in the manufacture of goods" as used in the Act and, therefore, the fuel used by the petitioners would not qualify for earning exemption under the Act. According to the learned counsel, the facts and circumstances in case of J.K. Cotton Spinning & Weaving Mills Co. Ltd. [1965] 16 STC 563 (SC), were different from those obtaining in the present case and, therefore, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in J.K. Cotton Spinning Weaving Mills Co. Ltd. [1965] 16 STC 563 (SC) cannot be made basis to interpret the provisions of the Act. The learned Advocate-General contended that in the case of Vasuki Carborundum Works [1979] 43 STC 294 (Guj), the assessee was engaged in the manufacturing of crockery, which was being packed by kathi (twine) and while dealing with the facts of the said case, the Division Bench of this court held kathi as a part of the consumable stores being used for the purpose of marketing the goods in question whereas in the case of K. Rasiklal & Co. [1992] 86 STC 238 (Guj), the Division Bench of this court was concerned with articles ghan and hammers used for giving shape to certain articles being used in the manufacture of oil engines as a result of which, the contention of the assessee that ghan and hammers are tools and, therefore, they should be treated as consumable tools, was negatived by holding that neither "ghan" nor "hammer" is being used in the process of manufacture of oil engine as a result of which, by no stretch of imagination, it can be said that ghan and hammer are at any stage becoming an integral part of the taxable goods so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Commissioner of Central Excise, Bolpur v. Ratan Melting and Wire Industries [2005] 142 STC 595; [2005] 3 SCC 57, it was pointed out that the Supreme Court has held that the law declared by the Supreme Court is made binding on all courts, Tribunals and authorities and, therefore, the circular of the year 2005 based on the decision of Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465, cannot be regarded as illegal. It was contended that determination order passed under section 62 of the Act is not binding on the respondents in view of the decisions in (1) J.G. Bavishi & Sons v. State of Gujarat [1992] 84 STC 161 (Guj) and (2) Quality Chemicals v. State of Gujarat [1994] 94 STC 450 (Guj) rendered by the Division Bench on January 19, 1993 in Sales Tax Reference No. 4 of 1988, as well as the decision of the Tribunal in Pandesara Industries Private Ltd. The learned counsel contended that the ratio laid down in the decisions in (1) West Bengal Hosiery Association v. State of Bihar [1988] 71 STC 298 (SC); [1988] 4 SCC 134, (2) British Physical Lab India Ltd. v. State of Karnataka [2000] 119 STC 6 (SC); [1998] 9 JT 313 SC and (3) Shree Cement Ltd. v. State of Rajasthan [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 1216 and other decisions. The learned counsel for the respondents argued that the learned counsel for the petitioners have relied upon the various judgments delivered under the different provisions to contend that the fuel used by them is either raw material or processing material or consumable goods, but those judgments could not have been relied upon because a situation contemplated under one statute cannot, in the absence of any express or clear intentment, be given effect to while interpreting the provisions of another statute. The learned counsel contended that neither the circular dated September 2, 2005 nor the decision rendered in Pandesara Industries Private Limited (Second Appeal No. 682 of 2003, decided on September 28, 2004--Gujarat Sales Tax Tribunal), which is based on sound principles, is demonstrated to be wrong and, therefore, the petitions, which lack merits, should be dismissed. This court has heard the learned counsel for the parties at length and in great detail for days together. This court has also considered the facts pleaded in the petitions and replies thereto. As is evident from the record of the case, the learned counsel for the parties have cited se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Department and as the petitioners are free to raise the contentions and submissions, which are mentioned in the petitions before the quasi-judicial authorities during the course of the assessment proceedings, the instant petitions should not be entertained. What is emphasised in the reply is that if by chance, the contentions and submissions raised by the petitioners before the quasi-judicial authorities are not accepted, they have efficacious alternative remedy available by way of first appeal before the specified appellate authority as well as second appeal before the Gujarat Sales Tax Tribunal at Ahmedabad and, therefore, the instant petitions should not be entertained by the court. On hearing the rival pleas urged before this court, this court is of the view that the question whether fuels used by the petitioners can be regarded as raw materials or processing materials or consumable stores is essentially a question of fact depending upon the process of manufacture employed in different industries. The question whether the fuels used by the petitioners should be regarded as raw materials or processing materials or consumable stores, requires a close look. This and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and used the same for the purchase of furnace oil at the concessional rate of sales tax at the rate of 0.25 per cent from the suppliers. There is no manner of doubt that the fuel purchased by the petitioners was used to obtain the end-products. The petitioners had fixed the prices of their products on the footing that they were required to pay sales tax only at the rate of 0.25 per cent on the purchases of fuels effected by them. Even the suppliers of fuels had also arranged their affairs accordingly by recovering sales tax at the rate of 0.25 per cent from the petitioners. The said tax at the rate of 0.25 per cent, which was recovered by the suppliers from their customers like the petitioners, was, in turn, paid over to the sales tax authorities, which had completed all the assessments on that basis and footing. This position continued from February 19, 2001 till the impugned circular was issued on September 2, 2005. There is no manner of doubt that the transactions, which took place during the period between 2001 and 2005 on the basis that the sales tax chargeable was 0.25 per cent, are now incapable of being reversed, set aside or even modified. Section 86 of the Gujarat S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly the hosiery goods manufactured by hosiery industries in Bihar were exempted from the levy of sales tax. The validity of the said notification was challenged before the Supreme Court. The notification was held to be void for the reasons mentioned in the judgment. It was realised by the court that quashing of the notification on the ground that it was void ab initio would lead to undue hardship to the dealers in the State of Bihar who had sold locally manufactured hosiery goods without considering any amount on account of the liability of sales tax in view of the exemption granted by the said notification dated August 1, 1984. In order to obviate this hardship, the Supreme Court directed that the arrears of sales tax which would become payable by the dealers in the State of Bihar in respect of sales of local hosiery goods made during the period when the said notification was in operation should not be collected. This is quite evident from paragraph 9 of the reported decision. In British Physical Lab India Ltd. v. State of Karnataka [2000] 119 STC 6 (SC); [1998] 9 JT 313 SC, notifications under section 8A of the Karnataka Sales Tax Act prescribing preferential rates of concession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould not be levied. Those show-cause notices were challenged before the Supreme Court. The Supreme Court noticed the decisions rendered in (1) British Physical Lab India Ltd. [2000] 119 STC 6; [1998] 9 JT 9 313 (SC), (2) West Bengal Hosiery Association [1988] 71 STC 298; [1988] 4 SCC 134 and (3) Texmaco Ltd. v. State of Andhra Pradesh [2000] 118 STC 290; [2000] 1 SCC 763 wherein it was noted that local manufacturers had been disentitled to recover the difference in amount of taxes from their customers and would have been liable to penalties if they had done so and held that they could not now be placed in a more disadvantageous position than before as a result of which the State was not permitted to collect the differential amount. The Supreme Court found that the very same position existed in the matter before it and, therefore, directed in the interest of justice and equity that the respondent-State shall not collect the amount of sales tax that became payable only by reason of the order in the case of Shri Digvijay Cement [1997] 106 STC 11 (SC); [1997] 5 SCC 406 quashing the three notifications issued earlier. In Texmaco Ltd. v. State of Andhra Pradesh [2000] 118 STC 290 (SC); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The power of the Commissioner of Sales Tax to issue any circular, which seeks to withdraw a benefit conferred upon an assessee or impose any liability upon an assessee with retrospective effect is seriously in dispute. There is no manner of doubt that the effect of the impugned circular is to seek withdrawal of the benefit of exemption/set-off available under the earlier circular issued in the year 2001. There is no provision either under the Act or under the Rules which enables the Commissioner to issue a circular and, therefore, the issuance of circular will have to be regarded as having been issued in exercise of executive powers. The court is, therefore, of the opinion that the Commissioner of Sales Tax was not competent to issue the circular withdrawing the benefits granted by an earlier circular with retrospective effect. In Govind Prasad v. R.G. Parsad [1994] 1 SCC 437, there were no separate recruitment rules for engineers working in Electrical and Mechanical branches of the Public Works Department of U.P. Government, but by way of long practice, the United Provinces Service of Engineers (Building and Roads Branch) Class-II Rules, 1936 were being mutatis mutandis applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tober 23, 1999, reassessment proceedings were initiated and/or action in terms of section 21 of the Act for revision was initiated. Both these actions related to completed assessments. The learned single judge Reported in [2003] 129 STC 199 (Karn). while dealing with the challenge to circular dated October 23, 1999 held that the circular of April 12, 1996 did not indicate the correct position in law and, therefore, there was no bar in the circular dated October 23, 1999 clarifying the position and indicating the correct position. However, it was held that the Revenue was bound by the incorrect circular and, therefore, for the assessment years 1996-97 to 1999-2000 till the date of subsequent circular, no action could have been taken against the assessees. The Division Bench held that incorrect circular did not bind the Revenue and that law declared by the court had a binding effect. The question, which was considered by the Supreme Court, was when two opinions were expressed in the two circulars on the basis of change in opinion, whether it was permissible for the Revenue to reopen the completed assessments on the basis of the subsequent circular. While considering the said quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any drawback, set-off or refund had been wrongly granted in any order of assessment because set-off, etc., were granted on the basis of circular issued in the year 2001 after judgment of the Supreme Court in Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465. This is also not a case wherein the Revenue can plead that the petitioners had knowingly furnished incorrect declaration or returns. Therefore, this court is of the opinion that the plea that Revenue would be entitled to recover the amount of tax within the period of limitation stipulated by the Act, cannot be accepted. In view of the circular dated February 19, 2001, it was not lawful or permissible for the sellers of fuels to recover sales tax at the rate more than 0.25 per cent on sales of fuels. The purchasing customers, namely, the petitioners had also determined their costings and prices of their manufactured products on the basis and footing that they were required to pay sales tax at the rate of 0.25 per cent. The recovery of sales tax in excess of 0.25 per cent by the sellers of fuels during the period between 2001 and 2005 would certainly have been considered as constituting a serious violation of the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the circular dated September 2, 2005 and the decision rendered in Pandesara's case Second Appeal No. 682 of 2003, decided on September 28, 2004-Gujarat Sales Tax Tribunal. It is further clarified that the questions whether the fuels fall within the term "use as raw material, processing material or consumable stores...in the manufacture of goods" and the correctness of the circular dated September 2, 2005 as well as the decision of the Sales Tax Tribunal in the case of Pandesara Industries Pvt. Ltd. Second Appeal No. 682 of 2003, decided on September 28, 2004-Gujarat Sales Tax Tribunal.have not been examined by this court and the parties would be at liberty to take up their respective stand depending upon the facts of individual case. It would be open to the petitioners to submit before the authorities concerned, a statement showing the tax paid by the petitioners to the named suppliers after September 2, 2005 along with a letter from the suppliers confirming that the same has been deposited with the Sales Tax Department. In addition to this, the petitioners may also submit forms for the concessional rate to the respective suppliers/sellers for the said period dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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