STATE OF JHARKHAND AND OTHERS versus LINDE INDIA LIMITED AND ANOTHER

Citation: [2022] 17 S.C.R. 858 · Decided: 02-12-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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858
SUPREME COURT REPORTS
[2022] 17 S.C.R.
[2022] 17 S.C.R. 858
858
STATE OF JHARKHAND AND OTHERS
v.
LINDE INDIA LIMITED AND ANOTHER
(Civil Appeal Nos. 8061-8064 of 2022)
DECEMBER 02, 2022
[M. R. SHAH AND M. M. SUNDRESH, JJ.]
Bihar Finance Act, 1981: s.13(1)(b) – Benefit of concessional
rate of tax under – Entitlement to – Oxygen gas sold by respondent
No.1-manufacturer to the respondent No.2, if can be said to be
used as “raw material” in the manufacturing process of steel and
would be taxed at the rate of 2% of the sales tax, which otherwise is
chargeable @ 3% on the sale thereof – Tribunal and the authorities
below held that the oxygen is used as goods other than “raw
material” in steel making and that it is a ‘refining agent’, ‘reducing
agent’ and that 3% tax is to be levied on oxygen –However, the
High Court held that the oxygen can be said to be a “raw material”
and thus, respondent No. 1 entitled to concessional rate of tax at
2% - On appeal, held: High Court ought to have appreciated the
findings by the committee consisting of expert members recorded in
the inspection report which was confirmed by the authorities below
that the oxygen gas is used as a ‘refining agent’ and its main function
is to reduce the carbon content as per the requirement, the oxygen
gas cannot be said to be a “raw material” used in the manufacture
of the end product-steel – High Court lacks the expertise on deciding
the disputed questions and more particularly the technical aspect
which could have been left to the Committee consisting of experts –
High Court in exercise of powers u/Art. 226 is not sitting as an
appellate court against the findings recorded on appreciation of
facts and the evidence on record – High Court has seriously erred
in holding contrary and by interfering with the concurrent findings
recorded by all the three authorities below – Thus, respondents not
entitled to the concessional rate of tax @ 2% treating the same as
“raw material” in the manufacture of the end product and are liable
to pay tax @ 3% on the sale thereof – Impugned judgment and
order passed by the High Court is unsustainable and set aside –
Constitution of India – Art. 226.
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859
Allowing the appeals, the Court
HELD: 1.1 It is required to be noted that an inspection
and enquiry was carried out by a six members expert committee
who submitted a detailed report wherein it was found that the
‘oxygen gas’ is not a direct ‘raw material” of steel product and
the work of the oxygen gas is only of a ‘refining agent.’ As per
the report, the function of the oxygen is to reduce the carbon
content as per the requirement and the same is not a direct “raw
material” of steel. By submitting a detailed report and after
considering the relevant documents/literature produced by
respondent Nos. 1 & 2, the Committee considered the detailed
process for manufacture of steel and the function of the oxygen
gas used. The Committee also considered the entire process of
steel manufacturing. That thereafter it was concluded that the
oxygen gas used is only a ‘refining agent’ and the main function
of it is to reduce the carbon content as per the requirement and
thus, the oxygen gas cannot be said to be a direct “raw material”
of steel. On the basis of the said inspection report by the
committee consisting of six expert members, the assessing officer
passed an assessment order holding that the respondents are
not entitled to concessional rate of tax at the rate of 2% and that
3% tax is to be levied on oxygen. The findings of fact recorded
by the assessing officer which were based upon a detailed
inspection report by a six members expert committee came to
be confirmed by the Deputy Commissioner and thereafter by the
Joint Commissioner-Revisional Authority. The findings of fact
recorded by the three authorities below have been upset by the
High Court in exercise of powers under Article 226 of the
Constitution of India. [Para 6][870-A-D; 872-C-E]
1.2 The High Court in exercise of powers under Article
226 of the Constitution of India is not sitting as an appellate court
against the findings recorded on appreciation of facts and the
evidence on record. The High Court ought to have appreciated
that there was a detailed inspection report by a six members
committee who after detailed enquiry and inspection and
considering the process of manufacture of steel specifically came
to the conclusion that the work of oxygen is only of a ‘refining
STATE OF JHARKHAND AN

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