TMI Blog2022 (12) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... reduce the carbon content as per the requirement. The said findings accepted by the assessing officer and confirmed up to the Joint Commissioner Revisional Authority were not required to be interfered with by the High Court in exercise of powers under Article 226 of the Constitution. The High Court lacks the expertise on deciding the disputed questions and more particularly the technical aspect which could have been left to the Committee consisting of experts. In the case of DEPUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE (TAXES) ERNAKULAM VERSUS THOMAS STEPHEN CO. LTD. [ 1988 (3) TMI 59 - SUPREME COURT] , the cashew shells had been used as fuel in the kiln. It was found that cashew shells did not get transformed into the end product. The same was not used as raw material in the manufacture of the goods and it was found that these have been used only as an aid in the manufacture of the goods by the assessee. Applying the law laid down by this Court in the case of DEPUTY COMMISSIONER OF SALES TAX (LAW) BOARD OF REVENUE (TAXES) ERNAKULAM VERSUS THOMAS STEPHEN CO. LTD. [ 1988 (3) TMI 59 - SUPREME COURT] to the facts of the case on hand and the findings by the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently re-named as Linde India Limited. The State Government vide notification dated 12.04.1982 under Section 13(1)(b) of the Bihar Finance Act, 1981, notified a special rate of tax at 1% for raw material inputs . However, the rate of tax for other than raw material inputs continued at 3%. A certificate (Form VI-B) under Section 8 of the Bihar Finance Act, 1981 was issued in the name of respondent No.2 herein - M/s Tata Iron and Steel Company (for short, Tata Steel ). As per Annexure-B of the certificate, oxygen gas was to be taxed at 3%, which respondent No.2 herein Tata Steel continued to pay at 3%. 2.1 The State Government issued a fresh notification dated 9.9.1983 directing that the rate of tax payable under section 13(1)(b) on raw materials for use in the manufacture or processing of goods for sale in the State or in course of Inter-State trade or commerce excluding such raw materials which have already undergone any manufacturing or production process and which are required for further assembly, shall be at the rate of 2%. Vide notification dated 3.2.1986, the State Government deleted the term or in the course of interstate trade or commerce . 2.2 Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as to why oxygen may not be considered to be a refining agent . The assessing officer passed an order of assessment dated 1.10.2011 relating to financial years 2001-02, 2002-03, 2003-04, 2004-05 and 2005-06 holding that the oxygen is used as goods other than raw material in steel making and that it is a refining agent , reducing agent and that 3% tax is to be levied on oxygen. On the basis of the order of assessment, the Deputy Commissioner, Commercial Taxes, Jamshedpur Circle issued a demand notice dated 10.10.2011against respondent No.1 Linde India Limited. 2.4 Tata Steel assailed the assessment order by way of writ petition before the High Court. The High Court relegated the Tata Steel to file an appeal under Section 45 of the Bihar Finance Act, 1981. That thereafter, respondent No.1 Linde India Limited filed an appeal under Section 45 of the Bihar Finance Act, 1981 before the Joint Commissioner, Commercial Taxes (Appeals). The Joint Commissioner dismissed the said appeal vide order dated 7.6.2013. Revision application came to be dismissed against the order passed by the first appellate authority, by order dated 30.03.2015. The order passed by the revisional auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Co. Ltd., (1988) 2 SCC 264, goods used for ancillary purposes like fuel in the process of the manufacture cannot be said to be raw material for manufacture of goods. 3.4 It is submitted that in the present case, the fact-finding committee consisting of experts submitted a detailed inspection report and it was specifically found that the oxygen gas is not a direct raw material of steel production and the work of oxygen is only a refining agent and its main function is to reduce carbon content as per requirement and as such, oxygen gas is not a direct raw material of steel. It is submitted therefore that once that is the position, oxygen gas cannot be said to be a raw material in manufacture of the steel and therefore the rate of tax at 3% would be leviable. 3.5 It is submitted that in fact the 3% tax was paid by the respondents on the pure oxygen till the bifurcation of the State of Bihar into State of Bihar and State of Jharkhand and no dispute at any point of time was raised by the respondents. The respondents continued to pay the rate of tax at 3%. However, a dispute was raised only when the State of Jharkhand came into existence and they demanded the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t refining agent can also be a raw material , if it is indispensable, non-replaceable, used in large quantity, which is inevitable to be used. 4.4 It is submitted that the High Court, while holding so, has relied upon the principle laid down by this Court in the case of Collector of Central Excise, New Delhi v. Ballarpur Industries Limited, (1989) 4 SCC 566. It is submitted that in the case of Ballarpur Industries Limited (supra), the issue was, as to whether input of sodium sulphate used in the manufacture of paper would cease to be a raw material by reason alone of the fact that in the course of chemical reactions the ingredient is consumed and burnt up. In the said case, this Court laid down the test in paragraphs 13 14 about what constitute raw material in the absence of a definition in the statute and held that the same would be as per common parlance of the people who deal with the matter. It is submitted that in the aforesaid decision, it is further observed and held that the stage of manufacture is not decisive about the use of raw material. 4.5 It is further submitted that as such the State of Jharkhand has admitted before the High Court that oxygen is used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation between the parties, which culminated in the judgment of this court in the case of BOC India Limited (supra). It is submitted that in the said judgment, this Court had specifically overruled such an objection of the State which was based upon an inadvertent incorrect declaration. It is submitted that this Court noticed that there is no prohibition or estoppel in this regard and the matter is required to be considered independent of the same. 4.10 Shri S. Ganesh, learned Senior Advocate appearing on behalf of the respondents has submitted that the contention raised by the State that the oxygen is used as a refining agent and not as a raw material may not be accepted for the following reasons, i) refining agents and raw materials are not mutually exclusive or opposite to each other. A particular product can be raw material, even if it is also a refining agent; ii) in order to find out whether a particular product is raw material, the test is the indispensability of the said product in the manufacturing process. If the end product cannot be manufactured without the use of a particular product, the same would definitely constitute a raw material; iii) the import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 5. We have heard learned counsel for the respective parties at length. The short question which is posed for the consideration of this Court is, as to whether the oxygen gas supplied by respondent No.1 to respondent No.2 is used as raw material in the manufacturing process of steel, so as to entitle respondent No.1 to pay concessional rate of tax on the same under Section 13(1)(b) of the Bihar Finance Act, 1981. This may be noted that only in a case where oxygen gas is used as raw material , the same would be taxed at the rate of 2% of the sales tax, which otherwise is chargeable @ 3% on the sale thereof. 5.1 One another question which may fell for consideration would be, whether in the facts and circumstances of the case and faced with a detailed inspection report pertaining to inspection and enquiry of respondent No.2 by a six members expert committee, upon which reliance was placed by the assessing officer holding that oxygen gas is a refining agent , confirmed up to the revisional authority, was it open for the High Court to upset the concurrent findings recorded by all the three authorities below, while exercising powers under Article 226 of the Constitution? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O.C., it is called Refining Process, and its main objective is to reduce carbon contents. The pure oxygen used in Refining process is called rawmaterial by M/s Tata Steel and M/s B.O.C. It is clear from the above mentioned facts that pure oxygen is not being used as raw-material in extraction of iron, and it is used in the Refining Process to increase the quality of production. Before considering whether the used oxygen is raw material or not, it is necessary to consider the various ingredients of steel. It is to be mentioned here that Steel is nothing but Alloys of Iron Alloying is method of improving the properties of the material by adding meal or non-metal. Various alloys of iron are as given below: - Iron+ Carbon (.1 to 1.5%) =Steel Iron + Carbon + Chromium + Nickel = Stainless Steel = used for cycles, utensils, pens etc. Iron + Nickel + Aluminum + Co= Alnico for permanent magnet Iron + Chromium = Chrom - used for cutting tools and crushing machine. Iron is not used in pure form because it is soft and readily stretchable upon heating, however, if 0.1 +1.5% carbon is mixed in it, it becomes hard and strong and ready to use. Here it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiry and inspection and considering the process of manufacture of steel specifically came to the conclusion that the work of oxygen is only of a refining agent and its main function is to reduce the carbon content as per the requirement. The said findings accepted by the assessing officer and confirmed up to the Joint Commissioner Revisional Authority were not required to be interfered with by the High Court in exercise of powers under Article 226 of the Constitution. The High Court lacks the expertise on deciding the disputed questions and more particularly the technical aspect which could have been left to the Committee consisting of experts. 8. Even otherwise on merits also, in light of the findings recorded by the committee, accepted by the assessing officer and confirmed up to the Joint Commissioner Revisional Authority, it is required to be considered, whether the oxygen gas used in the manufacture of processing of goods, the same can be said to be a raw material for the manufacture of the end product steel. 9. The High Court as well as learned counsel appearing on behalf of the respondents have heavily relied upon the decision of this Court in the case of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention of this Court was also drawn to the decision of this Court in the case of Thomas Stephen Co. Ltd. (supra) and in fact pressed into service on behalf of the revenue. However, the said decision came to be distinguished by this Court while observing in paragraph 15 as under: 15. The decision of this Court in Dy. CST v. Thomas Stephen Co. Ltd. [(1988) 2 SCC 264, 267 para 9 : 9:8 SCC (Tax) 190 : JT (1988) 1 SC 631, 634] relied upon by Shri Ganguly, does not really advance the appellant's case. The observations therein to the effect that consumption must be in the manufacture of raw material or of other component which go into the making of end product (SCC p. 267, para 9) were made to emphasise the distinction between the fuel used for the kiln to impart the heat treatment to ceramics and what actually went into the manufacture of such ceramics. The observations, correctly apprehended, do not lend themselves to the understanding that for something to qualify itself as a raw material it must necessarily and in all cases go into, and be found, in the end product. As such, the decision of this Court in the case of Thomas Stephen Co. Ltd. (supra) has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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