Concessional tax treatment for plant and machinery used after amendment in electricity generation upheld over higher tax demand.

Plant and machinery purchased against form IIID before the amendment to section 3G, but installed and used thereafter for generation of electrical energy, were treated as falling within the concessional scheme under section 3G(1) rather than remaining taxable under section 3G(3). The court relied on the amended wording of section 3G(2), the meaning of "used in the manufacture" in the context of electricity generation, and earlier decisions supporting concessional treatment for machinery commissioned after the amendment. The departmental circulars were also noted as consistent with that view, and the demand under section 3G(3) was not sustained.

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Issues: Whether plant and machinery purchased against form IIID prior to the amendment to section 3G, but installed and used thereafter for generation of electrical energy, attracted the concessional treatment under section 3G(1) of the U.P. Trade Tax Act, 1948 or remained liable to tax under section 3G(3).

Analysis: The revision turned on the effect of the amendment to section 3G(2) with effect from 13 September 1985 and on the meaning of the expression "used in the manufacture" in the context of electrical energy. The Court followed earlier decisions holding that plant and machinery purchased against form IIID and used for commissioning and generation of electricity after the amendment were covered by the concessional scheme, and that the departmental understanding reflected in circulars supported that view. On the facts, the earlier authorities did not warrant a different result.

Conclusion: The demand raised under section 3G(3) was not sustained and the revision failed.

Ratio Decidendi: Where plant and machinery are purchased against form IIID and are used for generation of electrical energy after the relevant amendment, the concessional scheme under section 3G applies and the demand under section 3G(3) cannot be upheld.

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