IMPORTANT POINT
Rate of sales tax on Industrial Oxygen – Only in a case where oxygen gas is used as “raw material”, same would be taxed at the rate of 2% of sales tax, which otherwise is chargeable @ 3% on sale thereof.

JUDGMENT :

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 03.08.2015 passed by the High Court of Jharkhand at Ranchi in Writ Petition Nos. 1929 of 2015 and other allied writ petitions, preferred by the respondents, by which the High Court has allowed the said writ petitions and has quashed and set aside the order dated 30.03.2015 passed by the Commercial Taxes Tribunal, Ranchi and has also interfered with the concurrent findings of fact recorded by the three authorities and has also quashed the demand notice, holding that the respondents are entitled to benefit of concessional rate of duty at 2% as the use of oxygen can be said to be a “raw material” for the purpose of end product of steel, the State of Jharkhand and other authorities have preferred the present appeals.

2. The facts leading to the present appeals in nutshell are as under:

A certificate (Form VI-B) under Section 6 of the Bihar Finance Act, 1957 was issued in the name of erstwhile India Oxygen Limited, which was subsequently re-named as Linde India Limited. The State Government vide notification dated 12.04.1982 under Section 13(1)(b) of the Bihar Finance Act, 1981, notified a special rate of tax at 1% for “raw material inputs”. However, the rate of tax for other than “raw material inputs” continued at 3%. A certificate (Form VI-B) under Section 8 of the Bihar Finance Act, 1981 was issued in the name of respondent No.2 herein -M/s Tata Iron and Steel Company (for short, ‘Tata Steel’). As per Annexure-B of the certificate, “oxygen gas” was to be taxed at 3%, which respondent No.2 herein – Tata Steel continued to pay at 3%.

2.1 The State Government issued a fresh notification dated 9.9.1983 directing that the rate of tax payable under section 13(1)(b) on raw materials for use in the manufacture or processing of goods for sale in the State or in course of Inter-State trade or commerce excluding such raw materials which have already undergone any manufacturing or production process and which are required for further assembly, shall be at the rate of 2%. Vide notification dated 3.2.1986, the State Government deleted the term “or in the course of interstate trade or commerce”.

2.2 Respondent No.1 herein, who is a manufacturer of pure oxygen sold the oxygen to respondent No.2 – Tata Steel. Respondent No.1 raised a dispute with respect to the rate of concessional rate of tax. According to respondent No.1, the pure oxygen sold to respondent No.2 – Tata Steel was used as a “raw material” in production of steel through basic oxygen steelmaking (BOS method). The Assessing Authority disputed the sale of oxygen by respondent No.1 in favour of respondent No.2 at 2% on the ground that such sale is not of “raw material” but of goods other than raw materials and as such the concessional rate of tax applicable to such sale under Section 13(1)(b) would be 3%, rather than 2%.

2.3 In a writ petition preferred by respondent No.1, the High Court of Jharkhand dismissed Writ Petition No. 4963/2005 by holding that respondent No.1 has no locus to file the writ petition as the tax was payable by respondent No.2 – Tata Steel, who is the purchaser of oxygen produced by respondent No.1. The judgment and order passed by the High Court was the subject matter of Civil Appeal Nos. 1538/2009 and 1540/2009 before this Court. The said appeals came to be allowed by this Court vide reported judgment and order in the case of BOC India Limited v. State of Jharkhand and Others, (2009) 15 SCC 590. This Court remanded the matter to hold an enquiry and consider, whether the oxygen sold by respondent No.1 to respondent No.2 can be said to be “raw material” for the manufacture of steel. The matter came to be remanded to the assessing authority. That thereafter, a six member committee was constituted to enquire into whether the pure oxygen sold can be said to