Inclusive definition of raw material protected concessional tax treatment for diesel used in manufacturing power generation.

Diesel used to generate electricity for manufacturing polyester yarn was treated as raw material under the Rajasthan Sales Tax Act because the statutory definition of raw material expressly included fuel required for manufacture. The diesel was also entered in the registration certificate as raw material, and that entry bound the dealer and the department until lawfully cancelled, modified, or revised. The assessing authority could not recharacterise the commodity in collateral assessment proceedings to deny concessional tax treatment. The concession was therefore available, and the assessment orders disallowing it were set aside.

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Issues: Whether diesel used for generating electricity through DG sets in the manufacture of polyester yarn constitutes raw material so as to qualify for concessional tax under the Rajasthan Sales Tax Act, 1994, and whether the entry in the registration certificate binding the dealer and the department could be ignored.

Analysis: The concession under Section 10(1) applies to raw material used for manufacture, and the statutory definition in Section 2(34) expressly includes fuel required for the process of manufacture. Diesel was recorded in the registration certificate as raw material and was used to generate electricity for operating the plant and machinery engaged in manufacture of yarn. The inclusive statutory definition enlarged the scope of raw material, and the department could not, in collateral assessment proceedings, disregard the existing registration entry unless it was first cancelled, modified, or revised in accordance with the Act. The Court also noted that the conditions for the concessional rate were satisfied and that no basis existed to invoke differential tax on the footing that diesel was merely a processing material.

Conclusion: Diesel used to generate power for manufacturing polyester yarn is raw material within the meaning of the Act, and the assessee was entitled to the concessional rate of tax.

Final Conclusion: The State's challenge failed, and the assessment orders denying the concession were set aside in favour of the assessee.

Ratio Decidendi: Where the statute uses an inclusive definition that expressly covers fuel required for manufacture, and the commodity is entered in the registration certificate as raw material, the assessing authority cannot deny concessional treatment by recharacterising that commodity in collateral proceedings absent lawful cancellation or modification of the certificate.

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