Consumable stores and input tax credit: furnace oil used in manufacturing was treated as eligible, with disallowance set aside.

Furnace oil used in a boiler to generate steam for a connected acrylic fibre manufacturing process was treated as consumable stores eligible for input tax credit under the West Bengal Value Added Tax Act, 2003 and Rules, 2005. Because the Act did not define consumable stores and furnace oil was not then included in the negative list, the fuel was regarded as goods intended for use in manufacture, and the later exclusion of furnace oil from the negative list was read as confirming prior eligibility. The disallowance orders were therefore set aside.

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Issues: Whether furnace oil used in the boiler for manufacturing acrylic fibre qualified as consumable stores entitled to input tax credit under the West Bengal Value Added Tax Act, 2003 and the West Bengal Value Added Tax Rules, 2005.

Analysis: The dealer was a registered manufacturer and had purchased furnace oil for use in the boiler that generated steam for the connected manufacturing plants. The term "consumable stores" was not defined in the Act, and furnace oil was not then included in the negative list under section 22. The material showed that the manufacturing process would become commercially inexpedient without furnace oil, and the fuel was therefore treated as goods intended for use in the manufacture of the finished product. The later legislative insertion excluding furnace oil from the negative list was taken as confirming that, before that amendment, such credit was available.

Conclusion: Furnace oil was held to be eligible for input tax credit as consumable stores, and the orders disallowing the claim were set aside.

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