TaxTMI 
TaxTMI 
1993 (2) TMI 289
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..... Indequip Chem Dyes Limited for reference in view of the judgment and order passed by the Tribunal in Revision Applications Nos. 32, 33 and 34 of 1980, on January 27, 1983, as well as in Second Appeal No. 286 of 1980, on August 1, 1983. The Tribunal decided the aforesaid revision applications by a common judgment and order as they involved common question of law for its determination. In Second Appeal No. 286 of 1980, decided by the Tribunal also same question was involved. Therefore, these two references are decided by a common judgment. 4.. It is admitted that M/s. Indequip Chem Dyes Limited and M/s. Atlas Petro Chemicals are registered dealers under the Sales Tax Act. They purchased "condensate" from Oil and Natural Gas Commission. They were initially paying the sales tax as per residuary entry 13 of Schedule III of the Act. At the time of assessment, they claimed set-off under the relevant rules for initial use in the manufacture of goods for sale. The Sales Tax Officer, at the time of making the assessment, granted set-off. Subsequently, in view of the decision of the Tribunal that condensate would be covered by entry 54 of Schedule II, the assessments were revised and set....
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....ough it is a petroleum, it is obtained after undergoing some process or treatment and, therefore, it would not be covered by entry 54. The emphasis of the argument of the learned counsel is on the treatment of the product, which is known as "condensate", before it is obtained. It is his contention that, for obtaining condensate from the wet gas, it is required to be treated and, therefore, it would not be covered by the said entry. As against this, the learned Assistant Government Pleader vehemently contended that the finding recorded by the Tribunal is just and legal and that, there is no question of giving any treatment to the petroleum in its natural state, which, in the market is known as "condensate" and which is obtained mainly from the gas fields. It is his submission that, for obtaining either crude oil or condensate, high technical process is involved. But after obtaining the said crude oil or condensate, it is not treated. 7.. At the outset, we make it clear that the finding given by the Tribunal is mainly on appreciation of the evidence, which was produced before it and on the basis of the affidavits and various dictionary meanings of the words "condensate" and "petro....
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.... wells, crude oil in its unpurified form along with traces of gas is obtained. The crude oil so obtained is subjected to the process of separation and de-emulsification. The gas is, thereafter, separated from the oil with help of a separator. 10.. From the aforesaid averments in the petition filed by the applicants and the discussion by the Tribunal, it is clear that, there are two categories of wells, one oil bearing wells and the other gas bearing wells. This aspect is further borne by the meaning of the word "natural gas" given in the Oil Industry (Development) Act, 1974. Under section 2(i) "natural gas" is defined to mean gas consisting primarily of hydrocarbons obtained from oil wells or gas wells. Even the learned advocate for the applicants has not disputed this aspect. From the gas wells, a major portion of the gas is mixed with some portion of liquid, which after separation from the gas and other impurities, is known as "condensate", i.e., a substance produced by condensation. From the oil wells, for obtaining crude oil also, a process of separating gas is required to be performed. Hence, it is apparent that from the oil wells as well as gas wells, crude oil o....
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....rude oil" given from the book "American Standard of Testing Materials", 1951, wherein "crude oil" is given the meaning as under "A naturally occurring mixture, consisting predominantly of hydrocarbons, and/or oxygen derivates of hydrocarbons, which is removed from the earth in liquid state or is capable of being removed. Crude petroleum is commonly accompanied by varying quantities of extraneous substances such as water, inorganic matter and gas. The removal of such extraneous substances alone does not change the status of the mixture as crude petroleum. If such removal appreciably affects the composition of the oil mixture then the resulting product is no longer crude petroleum." He has also quoted from the book "Petroleum process Hand Book" by Brand and Davidson, wherein "condensate" is given the following meaning; "'Condensate' 1. The liquid product coming from condenser. 2. A light hydrocarbon mixture product as liquid product in a gas-recycling plant through expansion and cooling of the gas. Condenser-ordinarily, a water cooled heat exchanger used for cooling and liquidifying oil vapours. Where the cooling medium used is air, the condenser is called an ai....
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....from gas condensate wells, from which the gas is separated and the liquid remaining being shipped with the crude oil in pipe-lines to refineries or is a liquid material coining from the condenser in the refinery. Therefore, there is no difference between crude oil and condensate. However, it is the contention of the learned advocate for the applicants that for obtaining the product, which is known as "condensate", the natural gas, which itself is a petroleum, is required to be treated and, therefore, it would not be covered by entry 54 which provides for levy of sales tax on crude oil, i.e., petroleum in its natural state before it has been refined or otherwise treated. In our view, this argument is fallacious mainly because the produce "condensate" is not at all treated before its sale. From the gas well, gas along with condensate and other impurities comes out. Gas, condensate and other impurities are separated. Therefore, at that stage, neither the gas nor the condensate is treated. Once it is not disputed that condensate is petroleum in its natural state and that is equivalent to crude oil, it would be difficult to hold that it is refined or otherwise treated before its sale. A....