TaxTMI 
TaxTMI 
2010 (2) TMI 1068
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....he ground of alleged breach of condition of exemption by the petitioners. It was further clarified that the petitioners in response thereto would be at liberty to lead evidence and make submissions before the authorities to establish that the goods used by them fall within the expression "used by him as raw material, processing material or consumable stores . . . in the manufacture of taxable goods." The petitioners would also be at liberty to raise before the authorities all available contentions including those raised in the petitions as well as the contention that the circular dated September 2, 2005 and the decision of the Sales Tax Tribunal in the case of Pandesara (supra) are bad in law. With regard to the alternative plea the court accepted the said plea and declared that the circular dated September 2, 2005 shall not operate with retrospective effect. The court further held that the respondents would not be entitled to reopen the completed assessments and notices issued for reassessment, which are impugned in the petitions, were quashed. The court further clarified that circular dated February 19, 2001 held the field till the same was withdrawn by circular dated September 2....
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....of proceedings and accordingly the court directed that the proceedings shall continue to remain pending till the Gujarat High Court gives its answers to the questions framed and no demands for sales tax will be raised on the assessees in respect of purchase of fuels during the period for which assessments have been completed on the basis of requisite forms furnished by the assessees under the exemption notification and where no issue in that regard is pending before the assessing officer/appellate authority. The court has also directed that regarding pending cases of assessments/appeals, no recovery shall be made for a period of six weeks after the judgment of the High Court answering the above questions. The apex court thereby stayed the pending proceedings till the High Court decides the above questions. It is in the above light of the directions and/or observations made by the apex court all these matters are taken up for hearing. All these petitions can be divided into two groups, viz., group one consisting of Special Civil Application Nos. 9169 to 9190 of 2006 and group two consisting of the remaining matters. In group one, the petitioners are engaged in purchasing furnace ....
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.... court on remand, vide judgment and order dated February 4, 2009 (State of Gujarat v. Ami Pigments Pvt. Ltd. [2009] 22 VST 615 (SC)): "Whether the fuels consumed, namely, natural gas, furnace oil, light diesel oil, naphtha, etc., by the industry to generate electricity which is then used in the manufacture of end-products, namely, caustic soda, industrial chemicals, etc., can be considered to be 'raw material' or 'processing material' or 'consumable stores' for the purposes of section 15B of the Gujarat Sales Tax Act, 1969 or for the purposes of rule 42 or for the purposes of exemption notification issued from time to time under the Act? Whether the tests laid down by this court in the case of Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 would apply for deciding the above question or whether the tests laid down by this court in the case of J.K. Cotton [1965] 16 STC 563 (SC) and in the case of Ballarpur Industries Ltd. [1990] 77 STC 282 (SC); [1989] 4 SCC 566; AIR 1990 SC 196 would apply? In other words, which line of decisions would apply, while deciding the above question, to the Gujarat law?" Before deciding these two questions, it is nece....
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....the apex court in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer [1965] 16 STC 563, interprets the expression "for use by him in the manufacture or processing of goods for sale" appearing in section 9(3)(b) of the Central Sales Tax Act. The apex court took the view that if the process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in rule 13 will qualify for special treatment. The court however, clarified that this is not to say that every category of goods in connection with manufacture of, or in relation to manufacture, or which facilitates the conduct of the business of manufacture will be included within rule 13. The Gujarat Sales Tax Act, 1969 came into force on March 13, 1969. The Division Bench of this court in Vasuki Carborundum Works v. State of Gujarat [1979] 43 STC 294, had an occasion to consider the expression, "goods purchased by him for use by him as raw or processing material or consumable stores in the manufacture of taxable goods for sale....
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....ption notification of the Finance Department dated April 29, 1970 issued under section 49(2) of the Gujarat Sales Tax Act. The said notification provided that sale of raw materials, processing materials, consumable stores or packing materials by a registered dealer who was specified manufacturer to the extent to which the amount of sales tax exceeds one fourth per cent and to the extent to which the amount of general sales tax exceeds one fourth per cent will be exempted. The condition being that the goods shall be used by the manufacturer as raw material, processing material or consumable stores in the industrial unit for which he has obtained eligibility certificate in the manufacture of goods. On June 25, 1987, the Government of Gujarat vide resolution No. INC1086-2236-I introduces the Composite Sales Tax Incentive Scheme, 1987 for Pioneer Units 1987. Clause 7 thereof states that the eligible unit will be entitled to purchase free of tax, the raw materials, processing materials, or consumable stores or packing materials for the purpose of use in the manufacture of goods or for packing of goods so manufactured. The goods manufactured out of such inputs shall be allowed to enjoy ....
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....ture of taxable goods under section 13(1)(b) of the Gujarat Sales Tax Act. The court however held that "ghan" and "hammer" being tools are not consumable stores. On March 5, 1992 exemption entry 255(2) was inserted by the exemption notification of the Finance Department dated March 5, 1992 issued under section 49(2) of the Gujarat Sales Tax Act. The said notification provided that the sale of raw materials, processing materials, consumable stores or packing materials by a registered dealer to an eligible unit to the extent to which the amount of sales tax exceeds one fourth per cent and to the extent to which the amount of general sales tax exceeds one fourth per cent will be exempted. The condition being that the goods shall be used by the manufacturer as raw material, processing material or consumable stores in its unit for which it has obtained the eligibility certificate in the manufacture of goods. On September 9, 1992 two references bearing Sales Tax Reference Nos. 10 of 1987 and 8 of 1988 in the case of Saurashtra Calcine Bauxite and Allied Industries v. State of Gujarat [1993] 91 STC 435 (Guj), came up for decision and this court held that furnace oil used in the process ....
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....not identifiable in the final product by reason of the fact that it got consumed therein. On February 19, 2001, in response to queries with regard to the applicability of the judgment of the apex court in the case of Coastal Chemicals Ltd. [2000] 117 STC 12; [1999] 8 SCC 465 to Gujarat, a circular was issued by the Commissioner of Sales Tax clarifying that the judgment of the apex court in the matter of Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465 could not be applied for determining the scope of the word "consumable stores" used in the Gujarat Sales Tax Act and Rules, since the language of both the provisions is absolutely different. On September 28, 2004, the Gujarat Sales Tax Tribunal in the case of Pandesara Industries Pvt. Ltd. v. State of Gujarat, took the view that the words "consumable stores" refer only to material which is utilized as an input in the manufacturing process but is not identifiable in the final produce and that natural gas used as fuel is not "raw material", "processing material" or "consumable stores" in the manufacture of dyes and chemicals and power project. While arriving at this conclusion, the Tribunal derived support from the deci....
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....Guj) and the decision of the apex court in the case of J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer [1965] 16 STC 563, when read together, lay down the propositions that "use in the manufacture" is not to be given a narrow and constricted meaning and that it would take in the entire process carried on by the manufacturer with a view to converting raw materials into finished goods and that if any particular process is so integrally connected with or related to the ultimate manufacture of goods that without that process or activity, manufacture, even if theoretically possible, would be commercially inexpedient, goods required in that process (as distinguished from the ultimate manufacture) would fall within the expression "goods" used in the manufacture. The Revenue's argument that "manufacture" in the Sales Tax Act has to be interpreted narrowly so as to not cover processing in view of the distinct language between the Central Sales Tax Act and the Gujarat Sales Tax Act, is inconsistent with the ratio of the Division Bench judgments of this court and cannot be accepted. It is also their submission that the above judgments also lay down the proposition that....
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....117 STC 12 (SC); [1999] 8 SCC 465 and the language of the statute as well as notification of this court are distinct, the principle of implied overruling will have no applicability. Alternatively, it is also contended that the Division Bench cannot even hold on the basis of Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 that the earlier judgments are impliedly overruled. For that, this Division Bench will have to refer the matter to the Larger Bench. For this purpose, reliance is placed on the decision of the apex court in the case of K. Sahadev v. Suresh Bir [1995] Supp. (3) SCC 668. It is further submitted that referring the matter to the Larger Bench is not at all necessary in facts of the case as the judgment of the apex court in Coastal Chemicals [2000] 117 STC 12; [1999] 8 SCC 465 neither expressly nor impliedly overruled the decisions of this court which are binding precedents and ought to be followed and the question be answered accordingly. It is further contended that in the case of Partap Steel Rolling Mills Ltd. v. State of Punjab [2007] 9 VST 629 (P&H), the court, after relying upon, inter alia, the decisions of this court in the case of Vasuki Carb....
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.... found in sections 13(B) and 15B of the Gujarat Sales Tax Act, 1969". The Tribunal has also completely erred in brushing aside these decisions by observing that this court applied irrelevant decisions of the Supreme Court in giving meaning to the words "consumable stores" used in the Gujarat Sales Tax Act and Rules framed thereunder, inspite of the fact that in two of the above decisions, this court had itself noticed the different language of the Kerala statute and the Gujarat statute and did not apply the decision of the Supreme Court in the case of Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) v. Thomas Stephen & Co. Ltd. [1988] 69 STC 320; [1988] 2 SCC 264 to the Gujarat statute. It is further contended that the Tribunal has completely erred in applying the decision of the Supreme Court in the case of Coastal Chemicals Ltd. v. Commercial Tax Officer, Andhra Pradesh [2000] 117 STC 12; [1999] 8 SCC 465, even when the language of the Gujarat Act and the Andhra Pradesh Act are completely distinct and an interpretation placed by the Supreme Court on one language cannot be lifted and applied even when the language of the statute under interpretation is completely d....
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.... where it is in doubt. In Sutherland on Statutes and Statutory Construction, the principle of noscitur a sociis (associated words) is explained as under: In case the legislative intent is not clear, the meaning of doubtful words may be determined by reference to their association with other associated words and phrases. Thus, when two or more words are grouped together, and ordinarily have a similar meaning, but are not equally comprehensive, the general word will be limited and qualified by the special word. But this is so, only if the result is consistent with the legislative intent, for the maxim noscitur a sociis is a mere guide to legislative intent. The rule will not be applied where there is no ambiguity, or to thwart the legislative intent, or to make general words meaningless. . . At the best the maxim merely represents a conclusion that considering the language of the entire Act, its subject-matter, and the available evidences of legislative intent, the interpretation of the court is consistent with the legislative purpose. It is submitted that the meaning of the words raw material, processing material or consumable stores is clear and unambiguous. The words "consumabl....
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.... them that they would not be liable to pay sales tax on all the purchases required in the manufacture of goods for sale. It is in this context that the words used are "raw material or processing material or consumable stores in the manufacture of goods for sale". The three words have a distinct connotation and together would encompass all revenue expenditure on purchases incurred by the manufactory for carrying on the manufacturing activity. There is no justification to construe any words on the basis of maxim noscitur a sociis, since neither the words "consumable stores" nor the word "processing material" on their own are of wide import or are of doubtful nature or are required to be construed narrowly. They are words which are understood by men of business having distinct meaning. In Shriram Vinyl & Chemical Industries v. Commissioner of Customs, Mumbai [2001] 4 SCC 286, while considering the question of exemption to parts requiring for initial setting up, or for the assembly or manufacture of articles specified in Notification No. 155/86-Cus dated March 1, 1986, the court held that the three expressions initial setting up, assembly and manufacture cannot be construed to mean t....
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....al process culminating in the emergence of the desired end-product, that having regard to its importance in and indispensability for the process, it could be said that its very consumption on burning-up is its quality and value as raw material. In such a case, the relevant test is not its absence in the end-product, but the dependence of the end-product for its essential presence at the delivery end of the process. This quality should coalesce with the requirement that its utilisation is in the manufacturing process as distinct from the manufacturing apparatus. While explaining the word "consumable stores", it is submitted that consumable stores is a composite word and must be construed as such and not as two individual words. Consumable stores cannot be equated to the word "consumables" which is generic in nature and could partake the colour of its neighbours and be given constricted meaning as was done in Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465. Construing it as a composite word, it has an ordinary meaning in business parlance and such meaning has to be accepted of the term "consumable stores". For this purpose, reliance is placed on section 634, Bennion Statu....
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....tion of it in the common parlance of the persons who deal with it. It is further held that the word raw material has no fixed meaning. It may vary with the use to which it is put. An item may be raw material for manufacturing goods A and the goods so produced may themselves be raw material for goods B, for instance, batteries, tyres and tubes are by themselves finished products. They on their own cannot be considered to be raw material. But when they are used for manufacture of a vehicle then they become raw material for it as they are essential and necessary for producing the goods in which they have been used. For explaining the term "processing material", it is submitted that to appreciate the meaning of the term "processing material", it would be necessary to understand what is processing in the context of manufacture. Whenever a commodity undergoes a change as a result of some operations performed on it or in regard to it such operation would amount to processing. The nature of change is not material. What is necessary in order to characterize an operation as processing is that the commodity must as a result of the operation experience such change. The apex court while dis....
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.... v. Rajasthan Taxchem Ltd. [2007] 5 VST 529 (SC), the question came up before the apex court whether diesel can be called raw material in the manufacture of polyester yarn. The apex court answered the question in affirmative, although fuel was being used for generation of electricity in view of the definition of raw material which included fuel and lubricants required for the process of manufacture. Based on the above judgments, it is strongly contended that the fuel used for generating power for running the machines is a processing material and consequently, a raw material or consumable stores within the expansive definition given in the said statute. Any material required for carrying on any activity or operation which is the essential requirement and is so related to further operations for the end result would be a processing material. Lastly, it is submitted that the interpretation to the above clause must be placed which has been consistently placed thereon by the Department for contemporaneo expositio. Reliance is placed on the decision of the apex court in the case of (1) Indian Metals and Ferro Alloys Limited v. Collector of Central Excise [1991] Supp. 1 SCC 125, (....
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..... In this view of the matter, the court may answer the question referred by the apex court in its order dated February 4, 2009 read with the order dated February 12, 2009 in the affirmative and decide question No. 2 by approving the tests laid down by the apex court in the decisions rendered in the case of J.K. Cotton [1965] 16 STC 563 and Ballarpur Industries [1990] 77 STC 282; [1989] 4 SCC 566; AIR 1990 SC 196. Mr. K. B. Trivedi, the learned Advocate-General appearing for the respondent, on the other hand, has strongly objected to grant of the relief prayed for by the petitioners in all these petitions and submitted that the questions referred by the apex court while remanding the matters to this court should be answered in favour of the Department and against the petitioners and this court should hold that fuel consumed, viz., natural gas, furnace oil, light diesel oil, naphtha, etc., by the industry to generate electricity which is used in the manufacture of end-products, namely, caustic soda, industrial chemicals, etc., cannot be considered to be "raw material" or "processing material" or "consumable stores" for the purposes of section 15B of the Gujarat Sales Tax Act, 1969 o....
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....d-product". (2) In Collector of Central Excise v. Ballarpur Industries Ltd. reported in [1990] 77 STC 282 (SC); [1989] 4 SCC 566; AIR 1990 SC 196, it is observed that "one of the valid tests . . . that its very consumption on burning-up is its quality and value as raw materials . . . The ingredient goes into the making of the end-product in the sense that without its absence, the presence of the end-product, as such, is rendered impossible. This quality should coalesce with the requirement that its utilization is in the manufacturing process as distinct from the manufacturing apparatus". (3) In Kerala Electric Lamp Works Ltd. v. Collector of Central Excise reported in [1994] 74 ELT 807 (Ker), it is observed that "hydrogen is used only as a fuel for the melting of quartz by a burner and when lead in wires are fixed in the quartz . . . Such use as fuel cannot be treated as raw material". (4) In Tata Engineering & Locomotive Company Ltd. v. State of Bihar reported in [1995] 96 STC 211 (SC); [1994] 6 SCC 479, it is observed that "an item to satisfy the test of raw material must be such as should coalesce with the requirement that its utilization is in the manufacturing proces....
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....he context. It is known by its associates. It is a rule laid down by Lord Bacon that the coupling of words together shows that they are to be understood in the same sense. And where the meaning of a particular word is doubtful or obscure, or where a particular expression when taken singly is inoperative, the intention of a party who used it may frequently be ascertained by looking at adjoining words, or at expressions occurring in other parts of the same instrument. One provision of an instrument must be construed by the bearing it will have upon another. (2) In K. Bhagirathi G. Shenoy v. K. P. Ballakuraya reported in [1999] 4 SCC 135, it is held that it is not a sound principle in interpretation of statutes to lay emphasis on one word disjuncted from its preceding and succeeding words. A word in a statutory provision is to be read in collocation with its companion words. The pristine principle based on the maxim noscitur a sociis (meaning of a word should be known from its accompanying or associating words) has much relevance in understanding the import of words in a statutory provision. (3) In Pardeep Aggarbatti v. State of Punjab reported in [1997] 107 STC 561 (SC); [1997] 8 S....
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..... State of Gujarat reported in [1992] 85 STC 258; 34 (1) GLR 143, wherein the logic behind the whole scheme of the Act and more particularly behind the provisions of section 15B of the Act has been discussed in the following words, taxable event under section 15B of the Act becomes complete when taxable goods, viz., raw materials, consumer stores, etc., are purchased in the State with the obvious intention of utilizing them in the manufacturing process as inputs and moment such intention gets fructified by such actual user. . . . It must, therefore, be held, that section 15B in pith and substance imposes purchase tax on purchase of concerned goods which are ultimately used in manufacturing process as inputs, and the later phraseology "used then in manufacture" as employed in section only deals with the description of charge goods and represent subsequent event. This decision of this court came to be confirmed by the apex court in the case of Hotel Balaji v. State of Andhra Pradesh reported in [1993] 88 STC 98; [1993] Suppl. 4 SCC 536. Mr. Trivedi further submitted that since the meanings of the words "processing material" and "consumable store" are not readily available in diction....
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....oritative exponents of the meanings of words used in taxing legislation. For this purpose he relied on the decision of Mahabir Singh Ram Babu v. Assistant Sales Tax Officer reported in [1962] 13 STC 248 (All), and State of Orissa v. Titaghur Paper Mills Co. Ltd. reported in [1985] 60 STC 213 (SC); AIR 1985 SC 1293. In this view of the matter reliance placed on behalf of the judgment of apex court in case of Ram Lal v. State of Rajasthan reported in [2001] 1 SCC 175, does not apply to the facts of the present case, more particularly when, in the said case the apex court referred to Encyclopedia Americana (International Edition) while interpreting not a taxing legislation but Prevention of Food Adulteration Rules, 1955. Mr. Trivedi further submitted that reliance on the affidavit dated April 9, 2007 filed by Arvind Mills Ltd., in Special Civil Application No. 11810 of 2006 for bringing on record documents/information indicating the meaning of the terms "consumable stores" and "stores" is totally misplaced inasmuch as what is sought to be relied from the documents annexed with the said affidavit, is the meaning of the aforesaid words from the view points of various accounting practic....
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...., reading as under: "2. (16) 'manufacture' with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing or otherwise processing, treating or adopting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." In this definition, the word "processing" is used with reference to the "goods", i.e., raw material, meaning thereby when any process is carried out with reference to the raw material for getting altogether a new commodity with distinctive name, character and use, then in that case the same would amount to "manufacture". The said highlighted expression cannot be equated with the words "in the manufacture or processing of goods" as used in section 8(3) of the Central Sales Tax Act read with rule 13, wherein the "goods" referred to are final taxable goods. Mr. Trivedi further submitted that the words "in the manufacture and processing of goods" used in the Central law, have wider meaning in comparison with that of the words "in the manufacture of goods" as used in the State Act. Since the facts and circumstances in the case of J.K. Cotton S....
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....ly inexpedient, then the goods required in that process would fall within the expression in the manufacture of goods. Mr. Trivedi further submitted that the above judgment came to be fully followed in the case of Commercial Taxes Officer v. Rajasthan Electricity Board reported in [1997] 104 STC 89 (SC); [1997] 10 SCC 330 on the wider interpretation of the words "goods intended for use in the manufacture or processing of goods". In this case it was held that the authority had rightly specified under section 8(3) of the Central Sales Tax Act, the goods, viz., tools, plants including vehicles and other transportable goods including their spare parts, tubes and tyres, attracting concessional rate of tax for the State Electricity Board engaged in the business of electricity. Mr. Trivedi further submitted that the same was the position in the case of Collector of Central Excise v. Rajasthan State Chemical Works reported in [1991] 4 SCC 473, wherein an exemption notification issued under the Central Excise Act came to be interpreted while keeping in mind the wider definition of the term "manufacture" under the Excise Act, which includes any processes incidental or ancillary to the compl....
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....ales Tax Act, 1948 which, in relation to business of buying or selling goods, included various aspects including "processing materials" as included within the definition of the term "business". It was held that coal used by the company as a fuel for the manufacture of refined oil would be "processing material". The Department's contention was to the effect that the company should have used the coal imported by it only in connection with its own business and since the same was also used in the job-work of the other parties, the same does not involve purchase or sale of goods and hence, form No. 31 cannot be issued. It was in light of the specific provision that the apex court negatived the said contention. However, in the present matter, the applicable provisions of law are totally different. Mr. Trivedi further submitted that in case of Commercial Taxation Officer v. Rajasthan Taxchem Ltd. reported in [2007] 5 VST 529, the apex court was concerned with section 10(1) of the Rajasthan Sales Tax Act, 1994 wherein it was held that diesel purchased by the company for being used as a fuel in the process of manufacturing by way of generation of power was held to be "raw material" und....
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....s and legal provisions involved in the present case. Mr. Trivedi further submitted that similarly, the judgment of the Allahabad High Court rendered in the case of Rama Paper Mills Limited v. State of Uttar Pradesh reported in [2003] 132 STC 8, will not apply to the instant matter since in the said case the High Court dealt with section 4B(2) of the U.P. Trade Tax Act, which is very much wider in nature as compared to the provisions of the State Act in question since section 4B(2) of the U.P. Trade Tax Act also includes fuels and lubricants at par with raw materials, processing materials, consumable stores, etc., and on that ground, it was held that benefit should be given to diesel oil purchased by the appellants for using the same in diesel generating set for generating electricity. Mr. Trivedi further submitted that the judgment of the apex court rendered in the case of Commissioner of Income-tax, Kerala v. Tara Agencies reported in [2007] 292 ITR 444; JT 2007 (9) SC, will not apply in the instant case since the same was dealing with the provisions of section 35B of the Income-tax Act. However, the said judgment, in fact, supports the viewpoint of the respondents since it was ....
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....able goods. While negativing the aforesaid contention, this court observed that, neither "ghan" nor "hammer" are being used in the process of manufacture of oil engine . . . "ghan" and "hammer" are being used to give shape to certain articles which may be used in the oil engine. By no stretch of reasoning can it be said that "ghan" and "hammer" at any stage become an integral part of the taxable goods so as to make the taxable goods marketable. Mr. Trivedi further submitted that similarly in the case of Saurashtra Calcine Bauxite reported in [1993] 91 STC 435, this court was dealing with "furnace oil" used to produce heat required in the processing of calcine bauxite. Sulphur and carbon of the furnace oil were admittedly found in the final product calcine bauxite. It was in this context that this court held that furnace oil is a processing material. Mr. Trivedi further submitted that in Commissioner of Sales Tax v. Vadilal Dairy Frozen Food Industries [2006] 146 STC 9, a question arose before this court as to whether dry ice used by the assessee for preserving its duly manufactured ice cream during the course of its transportation from the manufacturing centre to the selling cent....
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....expedient for the manufacturer to carry out his manufacturing activity. However, in the absence of the facts gathered, placed and co-related so as to justify the said conclusion this court held that it would not be possible to answer the question referred to it. Mr. Trivedi further submitted that in the case of Commissioner of Sales Tax v. Ajay Printery Ltd. [1964] GSTB 12, this court while dealing with section 12(b) of the Bombay Sales Tax Act, which is differently worded as compared to the provisions of the Act in the present case, held that the case in respect of which recognition can be granted with reference to section 12(b) of the Bombay Sales Tax Act, 1959 are not only the goods which, in the process of manufacture merged in or become integral part of the finished goods, but also include all the goods, such as consumable stores and non-consumable goods, which are required for use in the process of manufacture in the sense that they are necessary to be used for converting raw materials into finished goods by the process of the manufacture. In the said case, the language used under section 12(b) was of wide import so as to include all goods to be used in the manufacture of ta....
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....n conditions of service. Similarly, the judgment of the apex court in the case of MRF Ltd. v. Assistant Commissioner (Assessment), Sales Tax reported in [2006] 148 STC 225; [2006] 8 SCC 702, will not apply to the facts of the instant case inasmuch as in the said case, the assessee-manufacturers were granted exemption for the period of seven years from the payment of sales tax by statutory notifications and before the expiry of the said period, the State Government withdrew the said benefits by issuing subsequent notifications and in that context, the doctrine of promissory estoppel was pressed in service. It was in response to this position that the apex court held that in view of the earlier exemption notifications, a vested right was created in favour of the assessee-manufactures which cannot be taken away retrospectively since the same is hit by the principle of promissory estoppel. Mr. Trivedi further submitted that the petitioners have relied upon the following judgments in support of their submissions that exemption notifications ought to be construed liberally to cover all inputs: (i) Collector of Central Excise v. Andhra Sugar Ltd. reported in [1989] 73 STC 216 (SC); [198....
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....wrong and against the provisions of law and when it was so realized in view of the judgment of the apex court in case of Coastal Chemicals Ltd. [2000] 117 STC 12 (SC); [1999] 8 SCC 465, the same can very well be disturbed as held by the apex court in various cases: (i) Commissioner of Income-tax v. Firm Muar (P) reported in [1965] 56 ITR 67 (SC); AIR 1965 SC 1216. (ii) Plasmac Machine Manufacturing Co. Pvt. Ltd. v. Collector of Central Excise reported in [1992] 84 STC 107 (SC); [1991] Supp. 1 SCC 57. (iii) Bangalore Development Authority v. R. Hanumaiah reported in [2005] 12 SCC 508. Mr. Trivedi further submitted that the situation contemplated under one statute cannot, in the absence of any express or clear intendment, be made to apply or be given effect to while applying the provisions of another statute. For this purpose he relied on the decision of Vadilal Chemicals Ltd. v. State of Andhra Pradesh reported in [2005] 142 STC 76 (SC); AIR 2005 SC 3073 and Sneh Enterprises v. Commissioner of Customs reported in [2006] 7 SCC 714. Mr. Trivedi lastly submitted that the judgment dated September 28, 2004 passed by the Gujarat Sales Tax Tribunal in the case of Pandesara Industries d....
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....9] 4 SCC 566; AIR 1990 SC 196 squarely applies in the present matter so as to find out the correct meaning, scope and purview of the term "raw material" and on the basis thereof the correct meaning, scope and purview of the terms "processing material" and "consumable stores". (iv) Admittedly, the provisions contained in section 8(3)(b) of the Central Sales Tax Act, 1956 and rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957 being of wider import and expansive in nature as compared to the provisions in question under the Gujarat Sales Tax Act, 1969, goods which can be covered under the provisions of the Central law as being "goods intended for use in the manufacture or processing of final taxable goods", cannot be covered under the State legislation as "raw material or processing material or consumable stores in the manufacture of final taxable goods". (v) As against the provisions of the Central law referred to above, similar provisions contained in the sales tax legislations operating in the States of Andhra Pradesh, Tamil Nadu and Kerala are pari materia in nature with the provisions of section 15B of the Gujarat Sales Tax Act, 1969 and that therefore, it ....
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.... the case of Ballarpur Industries [1990] 77 STC 282 (SC); [1989] 4 SCC 566; AIR 1990 SC 196 would apply, while deciding the above question, to the Gujarat law. For arriving at the above conclusion, we have also considered the relevant provisions of section 15B of the Gujarat Sales Tax Act, 1969, rule 42 and entry Nos. 118 and 255 of the notifications issued under section 49(2) of the Act. The relevant statutory provisions are as under: "15B. Purchase tax on raw or processing materials or consumable stores used in manufacture of goods.-Where a dealer who being liable to pay tax under this Act purchases either directly or through a commission agent any taxable goods (not being declared goods) and uses them as raw or processing materials or consumable stores, in the manufacture of taxable goods, then there shall be levied in addition to any tax levied under the other provisions of this Act, a purchase tax at the rate of. . . R. 42. Drawback, set off, or refund of tax for the goods purchased by a manufacturer.-In assessing the tax payable by a manufacturer (hereinafter referred to as 'the assessee'), the Commissioner shall, subject to the general conditions of rule 47....
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....w materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would fall within the expression "in the manufacture of goods". In this case, the issue was whether amongst others drawing and photographic materials required for preparing designs in a textile mill can be considered to have been used in the manufacture of goods or not. The honourable Supreme Court held that the process of designing might be distinct from the actual process of turning out of the finished goods. But there is no warrant for limiting the meaning of the expression "in the manufacture of goods" to the process of production of goods only. The expression "in the manufacture" takes in within its compass, all processes which are directly related to the actual production. The honourable Supreme Court concluded that drawing and photographic materials falling within the description of goods intended for use as "equipment" in the process of designing, which is directly related to the actual production of goods and without whic....
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....at, but for that process, manufacture or processing of paper would be commercially inexpedient. The sodium sulphate used in this process, therefore, was raw material for the manufacture of paper within the meaning of Notification No. 105/82-CE dated February 28, 1982. (iii) Deputy Commissioner of Sales Tax (Law) v. Thomas Stephen Co. Ltd. [1988] 69 STC 320 (SC); [1988] 2 SCC 264. In this case, section 5A of the Kerala General Sales Tax Act provided for the levy of purchase tax amongst others on goods consumed in the manufacture of other goods. The question was whether purchase tax was attracted on purchases of cashew shells used as fuel in the manufacture of goods. The honourable Supreme Court held that since cashew shells had been used only as fuel and did not get transformed into the end-product and were not used as raw material in the manufacture of other goods, they did not fall within section 5A(1)(a) of the Kerala General Sales Tax Act and did not attract the purchase tax. The court also held that consumption as contemplated by section 5A(1)(a) must be in the manufacture as raw material or of other components which go into the making of the end-product. The court concluded th....
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....f manufacture. (ii) Vasuki Carborundum Works v. State of Gujarat [1979] 43 STC 294 (Guj). In this case, following the decision of the honourable Supreme Court in J.K. Cotton Spinning & Weaving Mills case [1965] 16 STC 563, this court held that kathi (jute twine) purchased and used for packing of goods for sale would fall within the expression "goods purchased by him for use by him as raw or processing material or consumable stores in the manufacture of taxable goods for sale by him" as provided in section 13(1)(B) of the Gujarat Sales Tax Act, 1969. This was so held inspite of the fact that the words "packing material" were not used therein. This court held that a process or an activity must not be necessary theoretically for the production of finished goods, but if it is such an integral part of the ultimate manufacture of goods that in its absence the manufacture may not be commercially expedient, that activity or process must be considered to be manufacturing activity itself and the goods intended for use in that process or activity should be considered to be goods required in the manufacture of taxable goods for sale. Under section 13(1)(B) articles which can be purchased tax-....
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....dient. Therefore, wooden strips, cellac glue, hose pipes, hardware, packing material and timber were all used in the manufacture of oil engines and set-off claimed in respect thereof was rightly allowed. (v) M. N. Khambhatwala v. State of Gujarat [1992] 87 STC 170 (Guj). This court held that wooden boxes used as packing materials are consumable stores used in manufacture of goods. (vi) Vadilal Dairy Frozen Food [2006] 146 STC 9 (Guj). This court by applying the decision of the honourable Supreme Court in the case of J.K. Cotton Mills [1965] 16 STC 563 and its earlier decision in the case of Vasuki Carborundum [1979] 43 STC 294 (Guj) held that ice-cream manufactured by the assessee has to be kept in containers and preserved at a certain temperature so as to ensure that ice-cream retains its characteristic as ice-cream does not lose the form in which it was manufactured. It was concluded that dry ice, which was utilised by the assessee for preserving ice-cream after the process of manufacturing ice-cream was completed for transporting ice-cream from the manufacturing centre to the selling centre was used as consumable store on application of the principles of commercial expediency.....
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.... the honourable Supreme Court has followed Thomas Stephen [1988] 69 STC 320 (SC); [1988] 2 SCC 264. This court in K. Rasiklal [1992] 86 STC 238 (Guj) and Saurashtra Calcine Bauxite's case [1993] 91 STC 435 (Guj) held that Thomas Stephen [1988] 69 STC 320 (SC); [1988] 2 SCC 264 is not applicable to the Gujarat Act in view of different provisions. It is, therefore, by implication required to be held that the Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 decided on the basis of Thomas Stephen [1988] 69 STC 320 (SC); [1988] 2 SCC 264 is not applicable to the Gujarat provisions. We have also taken into consideration the fact that subsequent to Coastal Chemicals' decision [2000] 117 STC 12 (SC); [1999] 8 SCC 465, determining fuel as consumables, various High Courts have taken the view that the goods used as fuel were used as consumable stores in the manufacture of goods. Some of them are as under: (a) Partap Steel Rolling Mills Ltd. v. State of Punjab [2007] 9 VST 629 (P&H). In this case, the court held that furnace oil purchased by the dealer was one of the primary and essential commodities used by the dealer in the process of manufacture of iron and steel and wit....
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.... STC 563 (SC) on the other hand would apply to the Gujarat provisions, would itself indicate that the honourable Supreme Court was aware of the fact that both the judgments are valid and operate in different fields. This means that Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 has not changed the legal principles laid down in J.K. Cotton [1965] 16 STC 563 (SC) or has not overruled J.K. Cotton's judgment [1965] 16 STC 563. Thus, both the lines of judgments are mutually exclusive. The honourable Supreme Court in the case of Coastal Chemicals [2000] 117 STC 12; [1999] 8 SCC 465 had pointed out that the court therein had discussed J.K. Cotton [1965] 16 STC 563 (SC) and distinguished the same as being not applicable in that case. Thus, where J.K. Cotton's [1965] 16 STC 563 (SC) judgment applies, Coastal Chemicals [2000] 117 STC 12; [1999] 8 SCC 465 would have no application. This court has already in the case of K. Rasiklal & Co. v. State of Gujarat [1992] 86 STC 238 (Guj) distinguished the decision in the case of Thomas Stephen & Co. Ltd. [1988] 69 STC 320 (SC); [1988] 2 SCC 264 which was followed in Coastal Chemicals [2000] 117 STC 12 (SC); [1999] 8 SCC 465 on t....
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....s are consumable stores as they are necessary for the marketing of the product, then fuel which is integrally required for the manufacture of goods and without which finished goods will not emerge would certainly be considered as being used as consumable stores. In Vadilal Dairy Frozen Food [2006] 146 STC 9 (Guj), dry ice used for the transportation of ice-cream to maintain the quality of ice-cream was treated to be consumable stores. In this case also, dry ice was used independently after the ice-cream was manufactured and yet it was held as being used as consumable stores in the manufacture of ice-cream. Thus, use of fuel stands on a stronger footing and certainly qualifies as either consumable stores or processing material. The term used in the provisions of the Act are "raw materials", "processing materials " and "consumable stores". If the goods were to form part of the finished goods, then they would qualify as raw materials themselves and the other terms, viz., processing materials and consumable stores would become meaningless. A provision cannot be interpreted which would render any part of it as redundant. Thus, processing materials and consumable stores as such would i....
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....fuel in the manufacture of goods. The very fact that section 11(3)(b) of the VAT Act provides for reduction of input-tax credit by four per cent means that input-tax credit is admissible of tax paid on purchase of goods used as fuel in excess of four per cent. Such input-tax credit for the manufacturer is only of raw materials and, therefore, it is clearly accepted by the Legislature that goods used as fuel are used as processing materials or consumable stores in the manufacture of goods. Thus the legislative history prior to the incorporation of the Act and subsequent to its repeal clearly establishes that all those goods which play some role in the manufacture and marketing of goods without which the manufacture of goods would be commercially inexpedient will have to be treated as being used either as processing materials or consumable stores in the manufacture of goods. Even with regard to the State Government's contention regarding applicability of the principle of noscitur a sociis, on which heavy reliance was placed, it is necessary to observe that in the decision of the honourable Supreme Court in the case of Coastal Chemicals [2000] 117 STC 12; [1999] 8 SCC 465, vario....
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....vernment. The honourable Supreme Court while remanding the matters back to this court restrained the assessees to plead promissory estoppel in relation to the circulars before this court and directed that the matter be decided only by considering the specific questions referred by it to this court. This action of the honourable Supreme Court in effect restrains the petitioners from pleading a valid ground available to them in law and restrains them from pursuing a valid legal remedy. According to the petitioners, it is a settled legal principle that no court can take away the right to pursue a valid right or remedy available to any person. In support of this submission, reliance was placed on the decision of the apex court in the case of Neeraj Munjal v. Atul Grover [2005] 5 SCC 404, wherein the appellants had contended that they had a valid legal right and remedy to challenge an arbitral award and such a right could not have been curtailed by the order of remand of the honourable Supreme Court, laid down the following propositions of law: "12. . . . This court did not have any jurisdiction to direct that the award should be enforced in terms of the provisions of the 1996 Act whic....