CASE NO.: Appeal (civil) 2379 of 1991 PETITIONER: COASTAL CHEMICALS LTD. ETC. RESPONDENT: COMMERCIAL TAX OFFICER, A.P. AND ORS. ETC. DATE OF JUDGMENT: 14/10/1999 BENCH: S.P. BHARUCHA & V.N. KHARE & D.P. MOHAPATRA JUDGMENT:
JUDGMENT
1999 Supp(3) SCR 694
The Judgment of the Court was delivered by BHARUCHA, J. CA No. 2379/91 :
On the application of learned counsel for the appellant, the appeal is
dismissed as withdrawn.
C.A. No. 3440/91 :
The order under challenge was passed by a Division Bench of the High Court
of Andhra Pradesh on a writ petition filed by the appellant. The writ
petition was dismissed and the appellant is here by way of special leave to
appeal.
The appellant purchased natural gas from the first respondent, the Oil and
Natural Gas Commission. It used the natural gas as fuel for the manufacture
of paper and paper products. It claimed that it was entitled to the
concessional rate of tax that was provided for under Section 5-B(l) of the
Andhra Pradesh General Sales Tax Act, 1957. Originally this was permitted
and, when it was not, the appellants filed the writ petition aforestated.
Section 5-B (1) reads thus :
“Notwithstanding anything in this Act, every dealer shall pay, in respect
of any sale of goods to another dealer for use by the latter as raw
material, component part, sub-assembly part, intermediate, consumables and
packing material of any other goods which he intends to manufacture inside
the State, a tax at the rate of four paise in the rupee or the rates
specified in Sections 5, 5A and 6B in respect of goods other than declared
goods, or Sections 6, 5A and 6B in respect of declared goods, whichever is
lower on the turnover relating to such sale :
Provided that the provisions of this sub-section shall not apply to any
sale unless the dealer selling the goods furnished to the assessing
authority in the prescribed manner a declaration duty filled in and signed
by the dealer to whom the goods are sold containing the prescribed
particulars in the prescribed form obtained from the prescribed authority
on payment of prescribed fee.”
The argument on behalf of the appellant is that the natural gas is a
`consumable’ within the meaning of the aforesaid provision and, therefore,
entitled to the concessional rate of tax. The High Court relied upon this
Court’s judgment in Deputy Commissioner of Sales Tax (Law), Board of
Revenue (Taxes), Emakulam v. M/s Thomas Stephen & Co, Ltd., Quilon, [1988]
2 SCC 264, to come to the conclusion that the natural gas fell outside the
meaning of the word `consumables’ in the said provision.
Our attention was drawn to several judgments of this Court (M/s. J.K.
Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur and
Anr., [1965] 1 SCR 900, Indian Farmers Fertiliser Cooperative Ltd. v.
Collector of Central Excise, Ahmedabad, [1996] 5 SCC 488, Collector of
Central Excise, New Delhi v. M/s. Ballarpur Industries Ltd., [1989] 4 SCC
566 and Commercial Taxes Officer, Circle D., Jaipur v, Rajasthan
Electricity Board, Jaipur, [1997] 10 SCC 330, none of which, in our view,
has any relevance to the specific point at issue. No judgment has been
referred to by the learned counsel for the appellant which deals with the
meaning of the word `consumables’.
The word `consumables’ in the said provision takes colour from and must be
read in the light of the words that are its neighbours, namely, `raw
material’, `component part’, `sub-assembly part’ and `intermediate part’ so
read, it is clear that the word `consumables’ therein refers only to
material which is utilised as an input in the manufacturing process but is
not identifiable in the final product by reason of the fact that it has got
consumed therein. It is for this reason that `consumables’ have been
expressly referred to in the said provision, though they would fall within
the broader scope of the words `raw material’.
In the case of Thomas Stephen & Co., relied upon in the impugned judgment,
it was held that cashew shells used as fuel did not get consumed in the
manufacture of other goods and that “consumption must be in the manufacture
as raw material”.
To use the words of Thomas Stephen & Co. the natural gas used by the
appellant does “not tend to the making of the end- product”. It is not a
`consumable’.
The appeal is dismissed, with costs. CA. No. 2697191:
In the light of the order passed in C.A. No. 3440 of 1991, this appeal is
dismissed.