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2015 (12) TMI 119 - GUJARAT HIGH COURT

2015 (12) TMI 119 - GUJARAT HIGH COURT - [2016] 88 VST 61 (Guj) - Levy of purchase tax - Section 15B and/or 50 - breach of Form No.26/40 - Held that:- It is evident that the entire naptha purchased by the assessee for running the gas turbine was used for generating electricity used for the purposes of manufacture in its own unit. However, the steam, which was generated in the gas turbine by way of waste material was utilised by the assessee in a steam turbine which also generated the electricity .....

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rm No.26 or 40, namely, naptha, was used by the assessee for generating electricity through the gas turbine and such electricity was used solely for the purpose of manufacture in its own unit. - Wheeling out of a minuscule amount of electricity generated out of the steam turbine, to its sister concern cannot in any manner be said to be a breach of Form No.26 or 40 as is sought to be contended by the appellant. It is also not the case of the appellant that any part of the naptha had been use .....

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peal No. 458 of 2015 With Civil Application (OJ) No. 507 of 2015 - Dated:- 4-9-2015 - MS. HARSHA DEVANI AND MR. A.G.URAIZEE, JJ For the Petitioner : Ms Maithili Mehta, Assistant Government Pleader For the Respondent : Mr Parth Contractor, advocate for M/s Singhi & Co. ORDER PER : MS. HARSHA DEVANI 1. Since common facts are involved in these two appeals, the same were taken up for hearing together and are disposed of by this common judgment. 2 The appellant-State of Gujarat has called in ques .....

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he Naptha purchased by the respondent is used by the respondent only and accordingly the respondent has not breached any condition of entry no.69 or 255 of notification issued under section 49(2) of the Sales Tax Act? [3] Whether the Hon ble Tribunal has erred in holding that Naptha was not taxable goods and so purchase tax cannot be levied under section 15B of the Sales Tax Act? [4] Whether the Hon ble Tribunal has erred in deleting levy of interest u/s 47(4A) and penalty u/s 45(6) of the Sales .....

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o 31st March, 2005. Under the incentive scheme, the assesee could purchase the goods to be used as raw or processing materials or consumable stores used in the manufacture of taxable goods without payment of tax on one hand and was permitted to sell the goods manufactured by it without payment of the tax on the other hand. In respect of purchases of the raw processing materials or consumable stores of taxable goods made by it, the assessee was required to be issued Form No.26 or 40, as the case .....

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the assessee had committed breach of the declaration contained in Form No.26 or 40. 4 The above controversy arises in the backdrop of the following facts: 4.1 The assessee had established a captive power plant, running on gas turbine in the year 1999-2000 and naptha was used to operate the said plaint. The naptha, which was used, was purchased by the assessee by issuing Form No.26 or 40. During the process of power generation, certain amount of steam was produced, which was released in the air. .....

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through the gas turbine (naptha run) was entirely utilised by the assessee; whereas the electricity generated in the steam turbine, though was mostly used by the assessee itself, a small percentage thereof to the tune of 2.5% of the electricity was wheeled to Narmada Cement Company Limited, which is a sister concern, which, according to the appellant, amounted to breach of Form No.26 or 40. On the other hand, it was the case of the assessee that there was no breach as the naptha issued under For .....

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ction 49 of the Act, if any condition of such incentive, as narrated in Form No.26 or 40 as the case may be, was breached, the dealer concerned would be liable to pay purchase tax under section 50 of the Act, which it otherwise was not liable to pay. The assessing authority as well as first appellate authority also levied purchase tax under section 15B on the sales made by the assessee. The assessee contended that both the purchase taxes under sections 50 and 15B were wrongly and illegally impos .....

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re was no question of any breach having been committed by the assessee. The Tribunal was of the view that the wheeling of a small amount of the electricity, which was generated through steam turbine, and not gas turbine, would not amount to a breach of Form No.26 or 40. After appreciating the material on record, the tribunal also recorded a finding of fact to the effect that the average consumption of naptha was the same whether or not the steam turbine was functional and therefore, the consumpt .....

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d the impugned order passed by the Tribunal by submitting that the steam generated by naptha turbine being a byproduct of the naptha and having been used for the purpose of generating the electricity, part of which was wheeled out to the sister concern, there is an apparent breach of Form No.26/40 on the part of the assessee and, therefore, the assessing authority as well as lower appellate authority have rightly levied the purchase tax on the assessee and corresponding interest and penalty and .....

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ed by issuing form No.26/40 had been wholly used for generating electrity and no part thereof was used for generating the electricity wheeled out to the sister concern. Under the circumstances, there is no breach of Form No.26 or 40 on the part of the assessee. It was submitted that the conclusions arrived at by the Tribunal are based upon the findings of fact recorded by it upon appreciation of the material on record and in the absence of any perversity in such findings, the impugned order does .....

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ated in the gas turbine by way of waste material was utilised by the assessee in a steam turbine which also generated the electricity. Such electricity generated in the steam turbine was mostly used by the assessee itself; however, a minuscule quantity thereof, was wheeled out to its sister concern. It is this wheeling of the electricity to the sister concern, which according to the appellant amounts to a breach of Form No.26 or 40 on the part of the assessee. From the findings recorded by the T .....

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