Fuel used to generate electricity for manufacture qualifies for exemption under the U.P. Trade Tax Act.

High speed diesel and L.D. oil purchased to run generators for producing electricity used in manufacturing were treated as fuel used for the purpose of manufacture under section 4B of the U.P. Trade Tax Act, 1948. The court reasoned that the oil generated heat and electricity which was directly employed in the manufacturing activity, so the view that such oil was not fuel was unsustainable. The assessee was therefore entitled to the exemption.

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Issues: Whether high speed diesel and L.D. oil used in generators for producing electricity employed in manufacturing activity qualified as fuel used for the purpose of manufacture, so as to attract exemption under section 4B of the U.P. Trade Tax Act, 1948.

Analysis: The claim for exemption had been made with reference to fuel used in the manufacturing process, and the materials on record showed that high speed diesel and L.D. oil were purchased for running generators. The electricity so generated was used in manufacturing activity. The fact that the oil was used to generate heat, which in turn produced electricity for manufacture, brought it within the concept of fuel for the purpose of section 4B. The conclusion reached by the authorities below that such oil was not fuel was therefore unsustainable.

Conclusion: High speed diesel and L.D. oil used for running generators were fuel used for manufacture, and the assessee was entitled to exemption.

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