2023-VIL-315-MP
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VAT High Court Cases

Madhya Pradesh Entry Tax Act, 1976 - Expressions “in the course of business”, “raw material” and “manufacture” - Eligibility to exemption from Entry Tax on import of coal for generation of electricity - Whether coal imported for generation of electricity by Thermal Power Plants is exempt from levy of Entry Tax in terms of notification dated 13.12.2010 by virtue of being raw material purchased in the course of business of generation of electricity i.e. whether coal can be termed as raw material as defined in Section 2(g) of M.P. Entry Tax Act – HELD - The State is vested with power to exempt certain goods from levy of entry tax subject to such restrictions and conditions and on such terms and conditions as it thinks fit. In the instant case, the State by notification dated 13.12.2010 exempted in whole payment of Entry Tax on coal which is brought by dealers into the local area as raw material in the manufacture of goods. Petitioners or all dealers bring coal into local area for being consumed by their thermal power stations for generation of electricity - in absence of coal which is the very primary source for generation of heat leading to creation of steam resulting in turning of turbines, no electricity can be produced by any thermal power station - expression “raw material” defined under Section 2(g) of M.P. Entry Tax Act is not only generic in nature but wide enough to include all articles used as ingredients in the process of manufacturing of goods or articles consumed in the process of manufacturing including fuel required for the process of manufacture - Merely because coal gets burnt out in the initial process of creation of heat and thus coal is not found in any physical form in the finished product i.e. electricity, does not mean that coal cannot be treated as raw material for generation / manufacture of electricity - coal is raw material required for the process of manufacturing/generation of electricity. More so coal is also one of the items mentioned in Schedule II appended to the Entry Tax Act - Once it is held that coal is raw material for generating electricity and thus is exigible to Entry Tax Act, the exemption / concession notification issued by the State u/s 10 of M.P. Entry Tax Act are available to be availed by petitioners exempting them from payment of Entry Tax on coal brought into local area where the thermal power station of petitioners are situated on such terms and conditions as mentioned in the notification – writ petitions with regard to exemption as well as concession are allowed
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