Industrial product exemption applies to coal-ash; residue from manufacturing can qualify even if it is not the principal output.

Coal and coal-ash were treated as different commodities for sales tax purposes under the Andhra Pradesh General Sales Tax Act, so the classification question was decided against the assessee. Coal-ash was nevertheless held to be a product of the industrial unit because it arose from the industrial process, even though it was only residue and not the principal output. The sale of coal-ash therefore qualified for exemption under G.O. Ms. No. 606 dated 9 April 1981, which exempted products of the industry for a limited period. The result was partial relief, with the exemption question decided in favour of the assessee.

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Issues: (i) whether coal and coal-ash (cinder) are the same commodity or different commodities for taxation under the Andhra Pradesh General Sales Tax Act, 1957; (ii) whether coal-ash is a product of the industrial unit and whether its sale is eligible for exemption under G.O. Ms. No. 606 dated 9 April 1981.

Issue (i): whether coal and coal-ash (cinder) are the same commodity or different commodities for taxation under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The Court found no reason to differ from the High Court's view on the first question. The issue turned on whether coal and the ash remaining after burning coal could be treated as one and the same commodity for sales tax purposes.

Conclusion: The answer was against the appellant; coal and coal-ash were treated as different commodities for the purpose of taxation.

Issue (ii): whether coal-ash is a product of the industrial unit and whether its sale is eligible for exemption under G.O. Ms. No. 606 dated 9 April 1981.

Analysis: The exemption order granted complete exemption to the products of the industry for a limited period. Coal-ash was held to be a product of the industrial unit because it resulted from the industrial process, even though it was only residue and not the principal output. On that basis, the exemption was held applicable.

Conclusion: The answer was in favour of the appellant; sale of coal-ash qualified for exemption under the government order.

Final Conclusion: The appeals succeeded only on the exemption question, while the classification question was decided against the appellant, resulting in partial relief.

Ratio Decidendi: A residual output generated in the course of industrial manufacture can be a product of the industry for purposes of a sales tax exemption granted to products of the industry, even if it is not the principal product.

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