Proof of destruction and manufacturing consumption determine sales tax liability for by-product stock and firewood inputs.

A claim that valuable by-product stock was destroyed must be supported by cogent evidence; in the absence of adequate proof, tax liability remains on the disputed quantity. The note also states that firewood used to generate energy in the manufacture of khandsari sugar is consumed in manufacture for the purpose of section 6-A of the Andhra Pradesh General Sales Tax Act. Where transportation charges are not separately proved and are only shown as part of a consolidated figure, no deduction is allowable. The practical effect is that unsupported destruction claims and unsegregated transport claims fail for sales tax purposes.

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Issues: (i) whether the assessee had proved destruction of 890.180 metric tonnes of molasses so as to avoid tax on that quantity; (ii) whether firewood used in the manufacturing process was consumed in manufacture within the meaning of section 6-A of the Andhra Pradesh General Sales Tax Act and whether transportation charges were deductible.

Issue (i): whether the assessee had proved destruction of 890.180 metric tonnes of molasses so as to avoid tax on that quantity.

Analysis: Molasses was a valuable by-product whose sale was controlled and whose alleged destruction in such a large quantity required clear proof. The assessee produced no material to substantiate the claim, apart from two receipts evidencing refusal to take delivery of a small quantity. On the record, the authorities were justified in accepting the claim only to that limited extent and rejecting it for the balance.

Conclusion: The claim of destruction was proved only for 19.250 metric tonnes and failed for the remaining quantity, against the assessee.

Issue (ii): whether firewood used in the manufacturing process was consumed in manufacture within the meaning of section 6-A of the Andhra Pradesh General Sales Tax Act and whether transportation charges were deductible.

Analysis: The account books did not separately show transportation charges, but only a consolidated figure for firewood and transport. The use of firewood to supply energy in the manufacture of khandsari sugar amounted to consumption in manufacture, and the statutory objection to the application of section 6-A to firewood could not be accepted. In the absence of separate proof, the deduction towards transportation charges was not allowable.

Conclusion: The firewood was consumed in manufacture and the assessee was not entitled to the claimed transportation deduction, against the assessee.

Final Conclusion: The revision failed on both substantive issues, and the tax demand as sustained by the authorities was left undisturbed.

Ratio Decidendi: A claim that valuable by-product stock was destroyed must be proved by cogent evidence, and fuel used to generate energy in the manufacturing process is consumed in manufacture for the purpose of the sales tax provision.

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