TMI Blog2007 (1) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is a fuel and lubricant as defined under Section 2(34) of the Sales Tax Act. Thus the arguments advanced by learned counsel for the appellant has no force and merit. Appeal dismissed. - Civil Appeal No. 177 of 2007 - - - Dated:- 12-1-2007 - A.R. Lakshmanan and Altamas Kabir, JJ. Sanjay Jhanwar, Y.P. Mahajan and K.C. Dua, Advocates for the respondent. Sushil Kumar Jain, H.D. Thanvi, Sarad Singhania, Puneet Jain and Ms. Christ Jain, Advocates for the appellant. [Judgment per : AR. Lakshmanan, J.]. - Leave granted. 2. The above appeal filed by the Commercial Taxation Officer Circle-B, Udaipur raises a very interesting question of law of general public importance, as to the parameters for the test for the determination of raw materials and in addition to whether the use of articles or commodities not generally used in the manufacturing process can still be categorized as raw materials for the purpose of concession in the levy of taxes, for consideration by this Court. 3. In other words; "Whether diesel can be called raw material in the manufacture of polyester yarn." 4. In the present case, the respondent is engaged in the business of manufacture of polye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leviable on purchase of diesel (according to the Department). 9. The assessment for the year 1996-97 was completed by the Assessing Authority and it was found that the respondent had paid a lesser rate of tax on the purchase of diesel contending that the same was a raw material used in the manufacture of final product. The Assessing Authority held that since diesel was not directly used for the manufacture of final product, the respondent was not entitled to the benefit under the notification dated 29-9-1995 and it ought to have paid the tax @ 4%. The Assessing Authority, therefore, levied a differential tax @ 1% along with interest in total amounting to Rs. 15,02,224/-. 10. Being aggrieved with the above order, the respondent filed an appeal before the Deputy Commissioner (Appeals) Udaipur being Appeal No. 164/RST/1999-2000. The Deputy Commissioner (Appeals) dismissed the appeal of the respondent and affirmed the order passed by the Assessing Authority. Being aggrieved by the above order, the respondent filed appeal before the Rajasthan Tax Board, Ajmer which allowed the appeal filed by the respondent and set aside both the orders passed by the Assessing Authority and the Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of tax and interest upon the respondent in the facts and circumstances of the case. 14. Mr. Sanjay Jhanwar, learned counsel for the respondent submitted on merits as under: 1. That the respondent is a manufacturer of Synthetic Blended Yarn in the State of Rajasthan. 2. That for the said purpose, the Respondent purchases diesel as raw material in accordance with the provisions of Section 10(1) of the Rajasthan Sales Tax Act, 1994 by paying a concessional rate of tax as notified by the State Government. 3. The respondent purchased diesel as raw material pursuant to the specific entry in its Registration Certificate by making the payment of tax at concessional rate of 3% in accordance with the provisions of Section 10(1) of the Rajasthan Sales Tax Act, 1994. 15. The appellant even on change of opinion cannot revoke/cancel or amend the Registration Certificate with retrospective effect on account of the principle of promissory estoppel. It was submitted that the registration certificate granted to the assessee is an order. Section 37 which deals with the rectification of a mistake provides that any officer appointed under this Act can rectify any mistake ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent cannot be sustained in respect of diesel. 19. Learned counsel for the State has also submitted that the concession under the Act is only for the raw materials required in the process of manufacture of goods and the power generated by the use of diesel is used not only in the industrial establishment but also in the offices within the same compound and therefore the whole of the diesel purchased by the respondent would not be entitled for the concession under Section 10(1). Concluding his reply, learned counsel for the State submitted that unless the fuel used is an essential requirement of the manufacturing process, the same cannot be categorized as a raw material. 20. We are unable to countenance the submission made by the learned counsel for the appellant. It is not in dispute that the respondent is a manufacturer of synthetic blended yarn in the State of Rajasthan and for the said purpose, respondent purchases diesel as raw material in accordance with the provisions of Section 10(1) of the Rajasthan Sales Tax Act, 1994 by paying a concessional rate of tax as notified by the State Government. 21. We have already reproduced the question raised before this Court by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey shall include. There is no dispute in the instant case that the diesel and lubricant is used to generate electricity through DG sets which is admittedly used for the purpose of manufacturing yarn. Thus, it is seen that as diesel is specifically and intentionally included in the definition of raw material by the legislature, the question that whether it is directly or indirectly used in the process of manufacture is irrelevant as argued by Mr. Sushil Kumar Jain. 24. The respondent purchased the diesel as raw material pursuant to the specific entry in its registration certificate by making the payment of tax at concessional rate of 3% in accordance with the provisions of Section 10(1) of the Rajasthan Sales Tax Act, 1994. The registration certification granted to the assessee, in our opinion, is an order. Section 37 which deals with the rectification of a mistake provides that any officer appointed under this Act can rectify any mistakes apparent from the record either suo motu or otherwise of any order passed by him within a period of 4 years from the date of order sought to be rectified. Similarly, the Commissioner under the provisions of Section 87 of the Rajasthan Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and in this view penalty under section 5C(2) could not be imposed". 26. The Bench also held as under:- "We agree with the view taken in Bowen Press's case (1977) 39 STC 367 (Bom) that the entry in the registration certificate of the dealer-assessee that certain articles are raw material for the manufacture of goods is conclusive and in face of the entry in the registration certificate, it is not open to the assessing authority to contend that though a particular article has been mentioned in the registration certificate as raw material, is not in fact a raw material within the meaning of section 2(mm) of the Act and if any cancellation or modification is sought in respect of that entry, then, it is only by following the procedure laid down under the Act and the Rules framed thereunder that entry can be cancelled or modified." 27. In Bowen Press v. State of Maharashtra, 1939 STC 367 (Bombay), the High Court held as under:- "When an application by a registered dealer for recognition under section 25 of the Bombay Sales Tax Act, 1959, is made to the Sales Tax Officer, he has to determine whether the dealer is entitled to get the certificate of recognition. Before granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilized by him for the purpose specified. In the instant case, it can be seen that the respondent has purchased diesel as raw material and utilized the same for the purpose specified in the registration certificate and thus no condition is violated for invoking the provisions of Section 10(2) of the Act. 30. In view of the fact that the diesel is being used for the purpose of running the generator set for the production of the ultimate product which is also required for the purpose of manufacturing the end-product the diesel can only be termed as raw material and not otherwise. The Rajasthan Tax Board was, therefore, justified in setting aside the orders passed by the Assessing Authority as confirmed by the Deputy Commissioner (Appeals). 31. To avail the concessional rate of tax under Section 10, the assessee has to satisfy 3 conditions: (a) he must be a registered dealer of any raw material; (b) raw material must be used for the manufacture of goods; and (c) the said manufacture in the State should be for the purpose of sale by him within the State or in the course of inter-State trade or commerce or in the course of export outside the territory of India. 32. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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