Concessional tax treatment for diesel used in factory generators extends to electricity generation for production purposes.

High speed diesel oil used to run a generator in a factory qualifies as a concessional input where it is intended for generation of electricity for production purposes. The statutory scheme under the Central Sales Tax Act and the Registration and Turnover Rules covers goods used as fuel and similar items in manufacturing, and separately covers goods used in generation or distribution of electricity. The phrase relating to generation or distribution of electricity is not limited by the words "for sale", so fuel used for operating a factory generator falls within the registration certificate and is eligible for concessional tax treatment.

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Issues: Whether high speed diesel oil used for operating a generator in the factory for generation of electricity is eligible for inclusion in the registration certificate and for concessional tax treatment under section 8(3)(b) of the Central Sales Tax Act, 1956 read with rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957.

Analysis: The relevant statutory scheme permits concessional purchase of goods intended for use as fuel, lubricants, machinery, plant, equipment and similar items in the manufacture or processing of goods for sale, and also in the generation or distribution of electricity or any other form of power. The words relating to generation or distribution of electricity are not qualified by the expression "for sale". High speed diesel oil used for running a generator is treated as fuel, and the generator installed in the factory was intended to supply electricity for production purposes. On this construction, the goods used for operating the generator fall within the statutory language and are not excluded merely because they are not directly used in the manufacturing process.

Conclusion: High speed diesel oil used for running the generator qualifies for concessional treatment under section 8(3)(b) of the Central Sales Tax Act, 1956 and rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957.

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