ORDER

1. Leave granted.

2. These Civil Appeals are filed by the State of Gujarat against the judgment and order of the Gujarat High Court, dated 23rd-25th & 30th April, 2007 and 28th June, 2007 in Special Civil Application Nos. 9169, 9170 to 9190, 11809, 11810, 12032, 12195, 12197, 13498, 13554, 12104, 12103, 18729, 12033, 12034, 12106 of 2006 and 8158 of 2007.

Introduction

3. Respondent-assessees have received the benefit of exemption during the period 2001-2005. They got that benefit under the Circular dated 19th February, 2001, which Circular was sought to be superseded by the impugned Circular dated 2nd September, 2005. The 2005 Circular was challenged before the Gujarat High Court in number of writ petitions filed by respondent-assessees.

4. The controversy before us is whether the Commissioner on the administrative side under the Gujarat Sales Tax Act, 1969 had the authority/competence to issue the 2001 Circular? The matter was argued before us at length. In the course of the arguments, we were taken through the judgments of this Court in the case of Coastal Chemicals Ltd. v. Commercial Tax Officer, A.P. and Ors. reported in: 1999 (8) SCC 465, on one hand and, on the other hand, numerous judgments of the Gujarat High Court following the judgment of this Court in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer reported in AIR 1965 SC 1350, and Collector of Central Excise v. Ballarpur Industires Ltd. reported in 77 STC 282 (SC). It appears that the Gujarat High Court has followed the decision in J.K. Cotton and Ballarpur (supra) in numerous cases, including the case of Saurashtra Calcine Bauxite & Allied Industries v. State of Gujarat 91 STC 435. There is a dichotomy in the controversy canvassed by the parties before us. On one hand, the State of Gujarat's argument is basically confined to the question that the Commissioner had no authority to issue the 2001 Circular and, consequently, by the impugned 2005 Circular the earlier Circular came to be superseded. As against that, what was argued on behalf of the assessees was that the Gujarat Sales Tax Act, 1969 was not similar to the A.P. General Sales Tax Act, 1957. According to the assessees, the scheme of the two Acts was quite different and distinct. According to the assessees, the principle laid down in the judgment of this Court in the cases of J.K. Cotton and Ballarpur Industries (supra) followed by the Gujarat High Court in the case of Saurashtra Calcine (supra) is one line of decisions, which, according to the assessees, is based on the interpretation of Gujarat Law whereas the judgment of this Court in Coastal Chemicals (supra) was confined to the interpretation of the A.P. Law. On the other hand, it is the case of the State of Gujarat that the impugned 2005 Circular came to be issued because the controversy in hand stood decided by the test laid down by this Court in the case of Coastal Chemicals (supra).

5. In our view, one of the important tests applied by this Court in J.K. Cotton and Ballarpur Industries is the "test of essentiality" or the "test of dependency" in deciding the question as to whether the expression 'raw materials' or 'processing materials' or 'consumable sources' would cover various fuels like naphtha, liquid diesel oil, natural gas etc.

6. We may reiterate for the sake of clarity that in this case, the fuels consumed are natural gas, furnace oil, diesel oil and naphtha. Broadly, these fuels are used by the industry for carrying on its manufacturing process. In most cases, these fuels are used to generate electricity which is then used in the manufacture of end products like caustic soda, industrial chemicals etc.

7. The point which arises for consideration is whether the above-mentioned fuels would come within the meaning of the expression 'raw materials' 'processing materials' or 'consumable sources'. For that purpose, it is the case of the assessees that the tests laid down in Ballarpur Industries and in J.K. Cotton should be applie