2018 (8) TMI 1561

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.... read with section 2(ee) and section 2(e-1) of the U.P. Trade Tax Act 1948 (hereinafter referred as 'Act 1948') so as to be eligible for the benefit of exemption from payment of entry tax on capital goods or machinery brought into the local area from any place outside that local area for use in manufacturing of the aforesaid C.N.G. and P.N.G., under the Notification dated 18.2.2003 issued under section 4-B of the Act 2000 ?" The counsel for the revisionist as also the Standing Counsel for the State Sri Rohit Nandan Shukla have agreed to argue out the matter finally today itself, considering the question involved herein. It is not in dispute that the revisionist brought certain capital goods or machinery i.e. pipes, fittings, valves, compressors, cascades in the local area from outside the State. It is also not out of place to mention that on purchase of natural gas purchase-tax was paid by the revisionist, but, when a doubt arose as to whether it was liable for sales-tax on sale of C.N.G. and P.N.G. produced from the natural gas purchased by it after converting the same to C.N.G. and P.N.G., proceedings were initiated by the revisionist under section 35 of the Act 1948 and th....

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....o to do. Now, therefore, in exercise of the powers under section 4-B of the Uttar Pradesh Tax on Entry of Goods Act, 2000 (U.P. Act No.12 of 2000), the Governor is pleased to direct that with effect from February 18, 2003, no tax, under the said Act shall be levied and collected from all class of small, medium and large manufacturing dealers, on entry of capital goods, plant, machinery and spare parts into the local area from any place outside that local area, for use in their manufacturing." As would be evident from the aforesaid notification capital goods, plant, machinery and spare-parts are not liable to entry-tax on entry into the local area from any place outside that local area, for use in their manufacturing, thus, the key issue for being eligible for exemption under the said Notification is as to whether the goods in question were brought from outside the State into the local area and, secondly, whether this was for use in manufacturing by the revisionist or not. Regarding the first issue there is no dispute that the goods or machinery were brought into the local area from outside. As regards the second issue, section 2(2) of the Act 2000 reads as under: ....

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....Sonebhadra Fuels vs. Commr., Trade Tax, (2006) 7 SCC 322, in the following terms : (SCC pp.328-29, paras 22 and 25) "22. We may mention that, as noted above, decisions construing the word 'manufacture' in other statutes are not necessarily applicable when interpreting Section 2(e-I) of the U.P. Trade Tax Act. As stated above, the definition of 'manufacture' in Section 2(e-I) of the U.P. Trade Tax Act is very wide, which includes processing, treating or adapting any goods. Hence, in our opinion, the expression 'manufacture' covers within its sweep not only such activities which bring into existence a new commercial commodity different from the articles on which that activity was carried on, but also such activities which do not necessarily result in bringing into existence an article different from the articles on which such activity was carried on. For example, the activity of ornamenting of goods does not result in manufacturing any goods which are commercially different from the goods which had been subjected to ornamentation, but yet it will amount to manufacture within the meaning of Section 2(e-I) of the U.P. Trade Tax Act since an artificial meaning of 'manufacture' ....

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....lusion, firstly, for the reason some sanctity has to be attached to a determination under section 35 of the Act 1948 by the Commissioner as the very purpose of the said provision is to remove doubts in the mind of any person as to leviability of tax under the said Act and if in this process it has been already held that the revisionist is a 'Manufacturer' of C.N.G. and P.N.G., then another view could not have been taken in proceedings arising out of the Act 2000, firstly, by the First Appellate Authority and, thereafter, by the Tribunal in the context of payment of Entry Tax as the said Act 2000 does not define the term 'Manufacture' differently and in fact by virtue of section 2(2) thereof the definition in section 2(e-1) of the Act 1948 gets imported. The other reason which prevails upon this Court to take this view is that the definition of 'Manufacture' being so wide under section 2(e-1) of the Act 1948, and as it applies to the proceedings under the Act 2000 also by virtue of section 2(2) of the Act 2000, it is difficult to accept that natural gas which is purchased by the revisionist, on being converted into C.N.G. and P.N.G. by a process of compression as detailed in the ....

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.... different products being taxable at different rates of tax under the U.P. Value Added Tax Act 2008 and that the Trade Tax Authorities had passed an order in the case of the appellant before it in which it had been held that conversion of Natural Gas into C.N.G. amounts to manufacture. A similar view has been taken by a Coordinate Bench of this Court in Sales/Trade Tax Revision No.9 of 2017, M/s Bhushan Steel Ltd. v. The Commissioner, Commercial Taxes, in the context of leviability of sales tax on Re-Gassified Liquified Natural Gas. It is not the case of the opposite parties that the goods or machineries which were imported in the local area from outside the State by the revisionist, were not meant for making C.N.G. and P.N.G. or that they were meant for sale or for any other purpose. In view of what has been stated hereinabove the reasons given by the First Appellate Authority and the Tribunal cannot be sustained in the eyes of law. The revisionist did not dispute its liability to entry tax before the Assessing Authority as it was not aware of the correct legal position, but while filing the first appeal it disputed the same based on the Notification dated 18.2.2003 an....

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