1999 INSC 0812
                                        SUPREME COURT OF INDIA

                                            Coastal Chemicals Ltd. Etc.

                                                           Vs.

                                           Commercial Tax Officer, A.P.

                                  (S Bharucha, V Khare and D Mohapatra JJ.)

                                                      14.10.1999

                                                       ORDER
S.P. BHARUCHA, J.
C.A. No. 2379/91:
1. On the application of learned Counsel for the appellant, the appeal is dismissed as withdrawn.
C.A. No. 3440/91:
2. The order under challenge was passed by a Division Bench of the High Court of Andhra Pradesh
on a writ petition filed by the appellant. The writ petition was dismissed and the appellant is here by
way of special leave to appeal.
3. The appellant purchased natural gas from the first respondent, the Oil and Natural Gas
Commission. It used the natural gas as fuel for the manufacture of paper and paper products. It
claimed that it was entitled to the concessional rate of tax that was provided for under Section 5-
B(1) of the Andhra Pradesh General Sales Tax Act, 1957. Originally this was permitted and, when it
was not, the appellants filed the writ petition aforestated.
4. Section 5-B (1) reads thus:
Notwithstanding anything in this Act, every dealer shall pay, in respect of any sale of goods to
another dealer for use by the latter as raw material, component part, sub-assembly part,
intermediate, consumables and packing material of any other goods which he intends to
manufacture inside the State, a tax at the rate of four paise in the rupee or the rates specified in
Sections 5, 5A and 6B in respect of goods other than declared goods, or Sections 6, 5A and 6B in
respect of declared goods, whichever is lower on the turnover relating to such sale:

Provided that the provisions of this sub-section shall not apply to any sale unless the dealer selling
the goods furnished to the assessing authority in the prescribed manner a declaration duty filled in
and signed by the dealer to whom the goods are sold containing the prescribed particulars in the
prescribed form obtained from the prescribed authority on payment of prescribed fee.

5. The argument on behalf of the appellant is that the natural gas is a 'consumable' within the
meaning of the aforesaid provision and, therefore, entitled to the concessional rate of tax. The High
Court relied upon this Court's judgment in Deputy Commissioner of Sales Tax (Law), Board of
Revenue (Taxes), Ernakulam v. Thomas Stephen & Co. Ltd., Quilon , to come to the conclusion that
the natural gas fell outside the meaning of the word 'consumables' in the said provision.

6. Our attention was drawn to several judgments of this Court (M/s. J.K. Cotton Spinning &
Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur and Anr. , Indian Fanners Fertiliser
Cooperative Ltd. v. Collector of Central Excise, Ahmedabad , Collector of Central Excise, New
Delhi v. Bullarpur Industries Ltd. and Commercial Taxes Officer, Circle D., Jaipur v. Rajasthan
Electricity Board, Jaipur , none of which, in our view, has any relevance to the specific point at
issue. No judgment has been referred to by the learned Counsel for the appellant which deals with
the meaning of the word 'consumables'.

7. The word 'consumables' in the said provision takes colour from and must be read in the light of
the words that are its neighbours, namely, 'raw material', 'component part', 'sub-assembly part' and
'intermediate part' so read, it is clear that the word 'consumables' therein refers only to material
which is utilised as an input in the manufacturing process but is not identifiable in the final product
by reason of the fact that it has got consumed therein. It is for this reason that 'consumables' have
been expressly referred to in the said provision, though they would fall within the broader scope of
the words 'raw material'.

8. In the case of Thomas Stephen & Co., relied upon in the impugned judgment, it was held that
cashew shells used as fuel did not get consumed in the manufacture of other goods and that
"consumption must be in the manufacture as raw material".

9. To use the words of Thomas Stephen & Co. the natural gas used by the appellant does "not tend
to the making of the end- product". It is not a 'consumable'.

10. The appeal is dismissed, with costs.

CA. No. 2697/91:

11. In the light of the order passed in C.A. No. 3440 of 1991, this appeal is dismissed.