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2017 Supreme(Jhk) 933
IN THE HIGH COURT OF JHARKHAND AT RANCHI
D.N. PATEL, RATNAKER BHENGRA, JJ.
Linde India Limited - Petitioner
Vs.
The State of Jharkhand and Ors. - Respondents
W.P.(T) No. 1917 of 2015
Decided On : 04-01-2017
For the Petitioner: Mrs. A.R. Choudhary
For Respondents: Mr. Ajit Kumar
For the Tata Steel : Mr. Biren Poddar
Oxygen gas used in manufacturing of steel through BOS method is a basic raw material and not a refining agent or goods used in manufacturing process.
Headnote:
OXYGEN USED IN MANUFACTURING OF STEEL THROUGH BOS METHOD IS A RAW MATERIAL - SALES TAX @ 2% - NOT REFINING AGENT - NOT GOODS USED IN MANUFACTURING PROCESS - NOT REPLACABLE BY ANY OTHER ELEMENT - HUGE QUANTITY USED - INEVITABLE USAGE - OXYGEN CONVERTED INTO CO AND CO2 - PIG IRON CONVERTED INTO STEEL - OXYGEN IS A BASIC RAW MATERIAL - NOT A CATALYST - CATALYST NEVER CHANGES BY ITSELF - OXYGEN CHANGES ITSELF - OXYGEN IS A REAGENT - OXYGEN IS A REACTANT - OXYGEN IS USED IN A HUGE AND LARGE QUANTITY - OXYGEN IS INEVITABLE - OXYGEN CANNOT BE REPLACED BY ANY OTHER ELEMENT - OXYGEN IS A BASIC RAW MATERIAL FOR MANUFACTURING OF STEEL THROUGH BOS METHOD - NOTIFICATION DATED 3.2.1986 BEARING SO NO. 154 - SALES TAX LEVIABLE IS ONLY AT THE RATE OF 2% AND NOT @ 3%.
Fact of the Case:
Petitioner, a supplier of oxygen gas to respondent Tata Steel Ltd., challenged the orders passed by the Commercial Taxes Tribunal, Ranchi, the Joint Commissioner of Commercial Taxes (Appeal), Jamshedpur, and the Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur, which held that oxygen gas sold by the petitioner was not used by respondent Tata Steel Ltd. as a 'raw material' for manufacturing steel through BOS method, but was merely used as a 'refining agent' to reduce carbon. The petitioner contended that oxygen gas is an essential raw material for manufacturing steel through BOS method and that the authorities under the Bihar Finance Act, 1981, had not properly appreciated the manufacturing process of steel.
Finding of the Court:
The Court held that oxygen gas sold by the petitioner and purchased by respondent Tata Steel Ltd. is used as a basic raw material in manufacturing process of steel through Basic Oxygen Steel Method. The Court found that oxygen is used in a huge and large quantity in the second chemical reaction for manufacturing of steel through BOS method, which is also known as L.D. Vessel Operation. The Court also found that the usage of oxygen is inevitable and that oxygen cannot be replaced by any other element. The Court further found that oxygen is a reagent and a reactant, and that it changes its own physical and chemical properties while reacting with the reactants, converting not only by itself, but also converting Pig Iron into steel. The Court concluded that oxygen is a basic raw material for manufacturing of steel through BOS method and that the sales tax leviable is only at the rate of 2% as per Section 13(1) (b) of the Bihar Finance Act, 1981 r/w Notification bearing S.O. 154 dated 3.2.1986.
Issues: Whether oxygen gas sold by the petitioner and purchased by respondent Tata Steel Ltd. is used as a basic raw material in manufacturing process of steel through Basic Oxygen Steel Method.
Ratio Decidendi: The Court held that oxygen gas sold by the petitioner and purchased by respondent Tata Steel Ltd. is used as a basic raw material in manufacturing process of steel through Basic Oxygen Steel Method. The Court found that oxygen is used in a huge and large quantity in the second chemical reaction for manufacturing of steel through BOS method, which is also known as L.D. Vessel Operation. The Court also found that the usage of oxygen is inevitable and that oxygen cannot be replaced by any other element. The Court further found that oxygen is a reagent and a reactant, and that it changes its own physical and chemical properties while reacting with the reactants, converting not only by itself, but also converting Pig Iron into steel. The Court concluded that oxygen is a basic raw material for manufacturing of steel through BOS method and that the sales tax leviable is only at the rate of 2% as per Section 13(1) (b) of the Bihar Finance Act, 1981 r/w Notification bearing S.O. 154 dated 3.2.1986.
Final Decision: The Court allowed the writ petition and quashed and set aside the orders passed by the Commercial Taxes Tribunal, Ranchi, the Joint Commissioner of Commercial Taxes (Appeal), Jamshedpur, and the Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur. The Court also held that oxygen gas sold by the petitioner and purchased by respondent Tata Steel Ltd. is used as a basic raw material in manufacturing process of steel through Basic Oxygen Steel Method and that the sales tax leviable is only at the rate of 2% as per Section 13(1) (b) of the Bihar Finance Act, 1981 r/w Notification bearing S.O. 154 dated 3.2.1986.
D.N. Patel, J.
1. Writ petition has been preferred challenging the judgment and order dated 30.3.2015 passed by the Commercial Taxes Tribunal, Ranchi in Revision Case No. 130 of 2013 for the period 2001-02 as well as Appellate order passed by the Joint Commissioner, Commercial Taxes (Appeal), Jamshedpur dated 7.6.2013 and also the order dated 1.10.2011, passed by the Deputy Commissioner of Commercial Taxes, Jamshedpur Circle, Jamshedpur. This petitioner has also challenged the Demand Notice dated 10.10.2011, issued by the Deputy Commissioner, Commercial Taxes, Jamshedpur Circle, Jamshedpur, which is a consequential order of the earlier three orders, passed by the Assessing officer, Appellate authority and Revisional Authority. The petitioner is also seeking a declaration that the Oxygen Gas used by Tata Steel Ltd., which is being supplied by this petitioner for the purposes of manufacturing of Steel through Basic Oxygen Steel Method (a method of steel making) is a raw material, required directly for use in manufacturing or processing of Steel.
2. FACTUAL MATRIX :
This petitioner who was previously known as B.O.C. India Ltd. is supplying oxygen gas to respondent no.11-M/s Tata Steel Ltd. This oxygen gas, if used as a material in manufacturing process of Steel, the petitioner has to pay 3% of Sales Tax on the sale price of oxygen and if this oxygen which is sold by this petitioner to M/s Tata Steel Ltd. is used as one of the raw materials in manufacturing process of Steel then the rate of Sales Tax will be 2% of the sale price of oxygen and this was the bone of contention in the previous round of litigation, which has reached upto Hon’ble the Supreme Court and now in this writ petition the issue involved is whether oxygen sold by this petitioner to respondent no.11-Tata Steel Ltd. is used as a material in manufacturing process of steel or is used as a raw material in manufacturing process of Steel.
In the previous round of litigation this very petitioner which was known as B.O.C. India Ltd., at the relevant time in the year 2008 preferred a writ petition bearing W.P.(T) No. 4693 of 2005.
In the said writ petition assessment order passed by the Assessing Officer under Bihar Finance Act, 1981 was challenged on the basis of certain notifications, which are as under:
a. Notification dated 15th December, 1976;
b. Notification bearing SO No. 604 dated 12th April, 1982
c. Notification bearing SO No. 1096 dated 9.9.1983 and
d. Notification bearing SO No. 154 dated 3rd February, 1986.
Declaration was made by respondent no.11-M/s Tata Steel Ltd. under Rule 6 of the Bihar Sales Tax Rules, 1983, annexed as Annexure A and B. In Annexure A the goods which are used as a raw material in manufacturing process of Steel through Basic Oxygen Steel Method (hereinafter referred to as “BOS method”) have been mentioned whereas in Annexure B other materials which are used in manufacturing process of Steel through BOS method have been mentioned. In an application preferred by respondent no. 11-M/s Tata Steel Ltd. having a declaration as required under Rule 6 of Bihar Sales Tax Rules, 1983, oxygen gas is referred in Annexure B. This declaration has been read and reread by the counsels for both sides, repeatedly.
In earlier round of litigation a writ petition was preferred by this petitioner in the name and style of M/s B.O.C. India Ltd., which was dismissed by this Hon'ble Court vide order dated 2nd November, 2007, as reported in (2008)1 JCR 473 (Jhr) (M/s B.O.C. India Ltd. Vs. State of Jharkhand & Ors.), mainly on the following grounds:
(a) This petitioner has no locus standi;
(b) The goods viz. Oxygen Gas, as referred at Annexure B to the declaration, which is annexed with an application preferred by M/s Tata Steel Ltd. under Rule 6 of Bihar Sales Tax Rules, 1983 reveals that Oxygen is not a raw material for manufacturing of Steel, through BOS method, but, the oxygen which is mentioned in Annexure B, simply states that it is one of the materials or goods,
