TaxTMI 
TaxTMI 
2009 (5) TMI 866
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.... gas to their consumers in those gas cylinders. For the sake of clarity they are to be referred as "Indian Oil Corporation" and "Gas Cylinder Company". The dealer-appellant(s) have claimed that the following common questions of law would arise for determination of this court: "(i) Whether LPG cylinders are covered by entry 58 of Schedule B appended to the Punjab VAT Act, 2005 read with item 202 of List attached with that entry and therefore taxable at four per cent? (ii) Whether, on the facts and in the circumstances of the case, LPG cylinders being used for supply of gas to the consumers are capital goods in the hands of the purchaser-company? (iii) Whether the LPG cylinders are for use in the packing of taxable goods for sale within the State and therefore ITC is admissible to the purchaser who has purchased goods from the appellant?" Besides above common questions of law, the following additional question has also been raised in VATAP No. 5 of 2008: "(iv) Whether the appellant has requisite locus standi to move an application before the Excise and Taxation Commissioner for determination of questions under section 85?" Facts in brief are being referred from VATAP N....
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....and are only used as a mode of transportation of gas to the consumers (A2). The application filed by the appellant-gas cylinders company was also decided in terms of order dated April 12, 2006, vide order dated July 18, 2006 (A2 with VATAP No. 5 of 2008). Against the orders dated April 12, 2006 and July 18, 2006, two appeals were filed before the Tribunal. The Tribunal clubbed both the appeals and after referring to the provisions of entry No. 202 of the List of industrial inputs and packing material read with entry 58 of Schedule B, sections 2(d) and 13(1) of the VAT Act upheld the orders passed by the Commissioner and dismissed the appeals by holding as under: "The collective reading of the above provisions reveals (that ?) packing material which is used in the manufacturing, processing or packing material of taxable goods for sale is covered under the provisions. The word is 'used in' the packing of the taxable goods. Cost of such packed commodity is inclusive of packing material used in its packing and it goes with the commodity sold. But in the present case it is not so. The LPG cylinder is returnable and only LPG filled in the cylinder, is sold. These are ....
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.... Kerala High Court interpreted the word "including" to mean that it would rope in all packing materials and the low density poly ethylene was held to be packing material and was not regarded as plastic or any other articles of plastic although it was not specifically mentioned in the entry. He has then placed reliance on a Division Bench judgment of the Madhya Pradesh High Court in the case of Eastern Air Products (P) Limited v. Commissioner of Sales Tax, M.P. [1997] 107 STC 90; [1995] MPLJ 14, and argued that cylinders are packing material and it was found to be covered by the inclusive definition which uses the phrase "empty barrels". Ms. Sudeepti Sharma, learned State Counsel has, however, contended that the language of item No. 202 of the List appended to entry 58 of Schedule B cannot be read to include empty LPG gas cylinder as it is not packing material. According to the learned counsel the use of expression "plastic container, tin containers and glass containers" would clearly indicate that iron and steel containers like gas cylinders are not liable to be included in such like definitions. Answering the argument based on the judgment relied upon by the learned counsel for....
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....ial in their hands. However, whether the LPG cylinders in their hands would be considered as "capital goods", has to be ascertained from the answer to question No. (ii). Therefore, answer to the first question is liable to be given in favour of the Revenue and against the dealer-appellants. The judgment of the Division Bench of the Madhya Pradesh High Court in the case of Eastern Air Products (P) Limited [1997] 107 STC 90; [1995] MPLJ 14 would not be applicable to the facts of the present case because there entry 6 of Part IV of Schedule II appended to the Madhya Pradesh General Sales Tax Act, 1958, has specifically used the expression "empty barrels" while talking of packing material. The expression "empty tins" and "empty barrels" have come up for consideration of their Lordships of the Division Bench and accordingly it was held that the gas cylinders for packing natural gas by the manufacturer of natural gas are barrels and as such packing material which is covered by entry 6 of Part IV of Schedule II of the Madhya Pradesh General Sales Tax Act, 1958. The language of the entry before the Division Bench of the Madhya Pradesh High Court is entirely different in its conte....
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.... cylinders company does not use the cylinders for packing nor could these cylinders be regarded as their "capital goods". She has pointed out that whatever material is locally purchased and used by them in the manufacture of empty cylinders would be eligible for ITC as per the provisions of the VAT Act. The empty LPG cylinders are not their "capital goods" but stock-in-trade. She has tried to justify the order passed by the Tribunal and the Excise and Taxation Commissioner under section 85 of the VAT Act. Having heard learned counsel on the aforesaid issue, we are of the considered view that it would be necessary to first read section 13(1) of the VAT Act, which reads thus: "Input-tax credit-A taxable person shall be entitled to the inputtax credit, in such manner and subject to such conditions, as may be prescribed, in respect of input tax on taxable goods, including capital goods, purchased by him from a taxable person within the State during the tax period: Provided that such goods are for sale in the State or in the course of inter-State trade or commerce or in the course of export or for use in the manufacture, processing or packing of taxable goods for sale within th....
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....in respect of the investment by the petitioner by way of bottles and crates, etc., and as to whether such bottles and crates would constitute plants and machinery. Answering the question in favour of the dealer-assessee, the Division Bench placed reliance on a judgment of the Supreme Court and various High Courts, which is discernible from the following paras 10 and 11: "10. In the case of Commissioner of Income-tax, Andhra Pradesh v. Taj Mahal Hotel [1971] 82 ITR 44, the apex court has observed that 'where the definition of a word has not been given, it must be construed in its popular sense if it is a word of everyday use. Popular sense means "that sense which people conversant with the subjectmatter with which the statute is dealing, would attribute to it"'. In the case of Commissioner of Income-tax v. Sri Krishna Bottlers Pvt. Ltd. [1989] 175 ITR 154, a Division Bench of the Andhra Pradesh High Court dealt with the question as to whether, on the facts and circumstances of the case, the bottles and shells constitute 'plant' and depreciation is admissible thereon under section 32(1)(ii) of the Income-tax Act, 1961. After noticing various foreign as well as I....
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....the hands of Indian Oil Corporation and other corporations have to be treated as "capital goods" and assessable according to the rate of tax as per the provisions of the VAT Act. As a sequel to the above discussion, on precedent and principle, the second question is answered in favour of the dealer-appellants and against the Revenue. Re: Question No. (iii) On question No. (iii) Mr. K.L. Goyal, learned counsel for the appellant, has submitted that the appellant is entitled for ITC by virtue of the provisions of section 13(1) of the VAT Act. According to the learned counsel it has been specifically provided that ITC would be available in respect of input tax of taxable goods including "capital goods" used for packing of taxable goods for sale. However, the aforesaid argument has been countered by the learned State counsel by submitting that the ITC is not available to the appellantIndian Oil Corporation against LPG cylinders purchased from within the State of Punjab on the ground that these LPG cylinders are never sold by the appellant but continue to be the property of the appellant. According to her, the LPG cylinders are only used as a mode of transportation of ....