Interest on provisional tax and diesel used for electricity generation were both held eligible under the sales tax framework.

Interest was held not chargeable on additional tax arising only on final determination where the pre-amendment version of section 11B did not authorise interest on a revised liability based on a provisional return, and the assessee succeeded on that point. High speed diesel used to generate electricity was treated as raw material for manufacture because electricity was regarded as goods, generation of electricity amounted to manufacture, and the statutory definition of raw material included fuel used in the manufacturing process, so concessional tax under section 5C applied. The reference was answered in favour of the assessee on both issues.

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Issues: (i) Whether interest could be charged under section 11B of the Rajasthan Sales Tax Act, 1954 where a revised return disclosed a higher tax liability than that earlier paid. (ii) Whether high speed diesel used for generation of electricity was raw material for manufacture so as to qualify for concessional tax under section 5C of the Rajasthan Sales Tax Act, 1954.

Issue (i): Whether interest could be charged under section 11B of the Rajasthan Sales Tax Act, 1954 where a revised return disclosed a higher tax liability than that earlier paid.

Analysis: The applicable principle was that prior to the amendment effective from 7 April 1979, section 11B did not provide for interest on tax that became payable only on final determination where the return had been filed and tax paid on the basis of the provisional position. The additional liability arose only when the final price was determined, so there was no occasion to treat the earlier payment as delayed payment of tax due on the revised figures.

Conclusion: Interest under section 11B was not chargeable, and the answer to this issue was in favour of the assessee.

Issue (ii): Whether high speed diesel used for generation of electricity was raw material for manufacture so as to qualify for concessional tax under section 5C of the Rajasthan Sales Tax Act, 1954.

Analysis: Electricity was treated as goods under the sales tax law, and generation of electricity amounted to manufacture within the meaning of the Act. Since the statutory definition of raw material included fuel required for the process of manufacture, high speed diesel used for generation of electricity fell within that expression. The concessional scheme under section 5C therefore applied to the purchase of such diesel for that purpose.

Conclusion: High speed diesel used for generation of electricity was raw material within section 5C, and the answer to this issue was in favour of the assessee.

Final Conclusion: The reference was answered in favour of the assessee on both questions, and the revision was disposed of accordingly.

Ratio Decidendi: Where tax liability arises only upon final determination and the statute then in force does not authorise interest on the earlier provisional payment, no interest is payable; and a fuel used in the process of generating electricity, electricity being goods and generation being manufacture, constitutes raw material for concessional taxation where the statutory definition so includes fuel.

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