Concessional purchase tax applies to goods essential for setting up and running a power project, not only direct generation inputs.

Goods used for the construction, establishment and effective running of a power project may qualify for concessional purchase tax under Section 4-B(2) of the U.P. Trade Tax Act even if they are not directly consumed in electricity generation. The provision and the linked notification covered materials, machinery, plant, equipment, spare parts, accessories, components, fuels, lubricants and packing material for notified goods. On the facts, the disputed items were essential for dams, tunnels, power houses, linked roads and the functional setup of the plant, so the assessee was entitled to the concessional benefit and the revision failed.

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Issues: Whether goods used in the construction, establishment, and effective running of a power project, though not directly used in generation of electricity, qualify for concessional purchase tax under Section 4-B(2) of the U.P. Trade Tax Act, 1948.

Analysis: Section 4-B(2) extends recognition certificate benefits to goods required for use in the manufacture of notified goods. The notification issued under the Act also covered raw materials, consumable stores, machinery, plant, equipment, spare parts, accessories, components, fuels, lubricants, and packing material for notified goods. On the facts, the disputed items were not confined to direct generation equipment but were essential for construction of dams, tunnels, power houses, linked roads, and the functional establishment of the plant. The requirement under the provision was therefore not limited to an immediate, direct nexus with generation, but included goods necessary for setting up and making the plant operational.

Conclusion: The assessee was entitled to the concessional benefit under Section 4-B(2) in respect of the disputed goods. The revision was rightly dismissed.

Ratio Decidendi: Goods indispensable for the establishment and effective running of a manufacturing or power-generating unit may qualify for concessional treatment under Section 4-B(2) even if they are not directly consumed in the actual process of generation.

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