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(iv) Section 4-B(2) read with explanation clearly indicates that fuel may be used in the manufacture of notified goods under the Recognition Certificate granted for concessional rate of tax on purchase of fuel. Undisputedly, diesel is fuel.

(v) The Assessing Authority merely used the term 'raw material', whereas, the explanation to Section 4-B(2) of the Act provides for goods required for use in the manufacture to mean raw materials, processing materials, machinery, plant, equipment, consumable stores, spare parts, accessories, components, sub-assemblies, fuels or lubricants.

29. Even if it is assumed that the use of diesel oil is indirectly connected with the manufacture of the notified goods yet there is no denial of the fact by the Assessing Authority that the use of diesel oil in generator sets was essential for manufacture of the notified goods of the petitioners and the manufacturing itself is dependent on such use of diesel oil.

30. The only ground taken by Assessing Authority in the impugned orders to delete the entry of "diesel oil" from the Recognition Certificate is that diesel oil is not a raw material for manufacture of the notified final products of the petitioners rather it is raw material to produce electricity. While doing so, the assessing authority completely lost sight of the Explanation (a) to Section 4-B(2) of the Act which defines the expression "goods required for use in the manufacture" to mean not only raw materials but also processing materials, machinery, plant, equipment, consumable stores, spare parts, accessories, components, sub-assemblies, fuels or lubricants. Thus the goods which qualify for concessional rate of tax on purchases under Section 4-B(2) of the Act are not only raw material but also other classes of goods including Fuels which includes diesel oil.

Explanation:

For the purpose of this sub-section-

(a) goods required for use in the manufacture shall mean raw materials, processing materials, machinery, plant, equipment, consumable stores, spare parts, accessories, components, sub-assemblies, fuels or lubricants; and

(b) 'notified goods' means such goods as may, from time to time, be notified by the State Government in that behalf.

(2-A) Where any recognition certificate issued under this section in respect of any notified goods is in force on the commencement of the Uttar Pradesh Trade Tax (Second Amendment) Act, 2000 and the notification by which such goods has been notified is made effective from a date prior to the date of such notification, the recognition certificate in respect of such goods shall be deemed to be valid with effect from the date of such notification has been made effective.

41. In the case of State of Gujarat and another Vs. AMI Pigments Private Limited and others (2009) 11 SCC 240, Hon'ble Supreme Court considered the "test of essentiality" or the "test of dependency" in the matter of eligibility of sales tax exemption on the controversy whether fuel consumed for electricity generation which was used to manufacture the end products would qualify for exemption as raw material, processing material or consumable stores and observed as under:

"8. In our view, one of the important tests applied by this Court in J.K. Cotton, AIR 1965 SC 1310 and Ballarpur Industries, 1989(4) SCC 566 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 stores" would cover various fuels like naphta, liquid diesel oil, natural gas, etc. 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."