Hon'ble Bachchoo Lal, J.
The petitioner is a Public Limited Company incorporated under the Indian Companies Act, 1956. The petitioner is a civil work contractor and is engaged in the business of construction, namely, highways, bridges, etc. According to the petitioner, he has been awarded several contracts by the National Highway Authority of India for construction of roads in several parts of the State. One such contract relates to the construction of the National Highway between Garhmukteshwar to Moradabad in the State of U.P. For the construction of the highway, the petitioner requires cement, diesel oil, furnace oil and lubricants for the manufacture of Hot Mix materials. Under the U.P. Trade Tax Act, the petitioner has been granted a recognition certificate under Section 4-B(2) of the U.P. Trade Tax Act for the manufacture of Hot Mix material and, on that basis, the petitioner is authorized to purchase raw materials at a concessional rate of tax under Rule 25-B(1) of the U.P. Trade Tax Rules, 1948, which provides that where a dealer holding a recognition certificate purchases any goods referred to in Clause (b) of sub section (1) of Section 4-B for use as raw material, he shall, if he wishes to avail the concessional rate of tax, furnish to the selling dealer, a certificate in Form- III-B, which is called a Declaration Form.
U.P. Trade Tax Act was superseded by the U.P. VAT Act w.e.f. 1st January, 2008 (hereinafter referred to as the Act). The levy of tax on the turnover of sale under Section 4(1)(c) of the Act is on the goods named or described in Column-2 of Schedule IV at the point of sale mentioned in Column-3 and at the rate mentioned in Column-4 of the Schedule against such goods. Under clause-(c) of sub-clause (1) of Section 4, diesel oil as defined under United Provinces Sale of Motor Spirit Diesel Oil and Alcohol Taxation Act, 1939 was liable to tax at the hand of manufacturer or importer at the rate of 21%.
The State Government issued a notification dated 10th January, 2008 under sub-Section(4) of Section 4 whereby diesel oil sold to a registered dealer for use in the process of manufacture of any taxable goods, against a certificate prescribed by the Commissioner was made liable to tax in the hand of the manufacturer or importer at the rate of 4%. Pursuant to the said notification dated 10th January, 2008, the Commissioner, Commercial Taxes, U.P. issued a prescribed certificate in Form-D to be issued by the purchaser of a diesel oil to its seller.
Since the petitioner is engaged in the manufacture of Hot Mix material, which is used in the construction of roads, hence the petitioner made an application dated 14th May, 2008 for issuance and for authenticating Form-D as per the circular of the Commissioner dated 14th January, 2008. Instead of issuing Form-D, the petitioner was issued a show cause notice dated 5th June, 2008 to show cause as to why his application should not be rejected on the ground that in view of Explanation-I to Section 13(1) of the U.P. VAT Act the petitioner, not being a manufacturer was not entitled for Form-D. According to the petitioner, this notice was presumably issued pursuant to an order dated 12th March, 2008 passed by the Commissioner under Section 59 of the Act in the application of Gammon India Ltd. holding that transfer of property involved in the execution of a works contract was a resale under Section 13(1)(e) of the Act and, therefore, a person involved in the execution of a works contract was not entitled for issuance of Form-D. The petitioner, being aggrieved by the issuance of the show cause notice dated 5th June, 2008 as well as aggrieved by the issuance of the order of the Commissioner dated 12th March, 2008, has filed the present writ petition praying for its quashing and for issuance of a mandamus to respondent no.3 to issue and authenticate adequate number of certificates in Form-D to the petitioner for purchase of diesel oil and furnace oil for the purpose of manufacturing of Hot Mix material.
We have heard at length Sri Bharat Ji Agarwal, the learned Senior Counsel assisted by Sri Shubham Agrawal, the learned counsel for the petitioner and Sri C.B. Tripathi, the learned Special Counsel for the respondents.
Admittedly, the petitioner has been granted a recognition certificate under Section 4-B(2) of the U.P. Trade Tax Act and in view of Rule 25-B(1) of the U.P. Trade Rules, the petitioner is entitled to avail concessional rate of tax provided he furnishes a certificate, which is called a declaration form to the selling dealer. Such provision is, however, non-existent under the U.P. VAT Act but concessional rate of tax is provided through notifications issued under Section 4 of the U.P. VAT Act. For facility, the charging section, namely, Section 4 is extracted hereunder:-
" Section 4. Levy of tax on turnover of sale.--
(1) The tax, payable on sale of goods under this Act, shall be levied and paid on the taxable turnover of sale of -
(a) goods named or described in column (2) of the Schedule II, at every point of sale and at the rate of four percent;
(b) goods named or described in column (2) of the Schedule III at every point of sale and at the rate of one percent;
(c) goods named or described in column (2) of the Schedule IV at the point of sale mentioned in column (3) and at the rate of tax mentioned in column (4) of the Schedule against such goods.
(d) goods named or described in column (2) of the Schedule V at every point of sale and at the rate of twelve and half percent:
PROVIDED that in respect of goods mentioned in column (2) of Schedule IV, the State Government may, by notification, declare different rates of tax, not exceeding fifty percent, in respect of different goods or class of goods:
PROVIDED FURTHER that turnover of sale of textile and sugar except khandsari sugar, mentioned or described in column (2) of Schedule II, shall be liable to tax from such date and at such rate, not exceeding four percent, as may be notified by the State Government.
(2) In respect of any entry of any Schedule of this Act, explanation or clarification, if any, given in footnotes of such Schedule, shall be deemed to be a part of such entry of such Schedule.
(3) Where a dealer, selling any goods, is not entitled to realize or has not realized if entitled amount of tax, payable by him on the turnover of sale of such goods, separately on tax invoice, sale invoice, cash memo or bill from the purchaser of the goods, amount of tax payable by him on the turnover of such sale shall be computed using the formula-
Amount of tax payable = Rate of tax X Aggregate of sale prices 100 + Rate of tax (4) The State Government may, by notification in the Gazette, amend any entry of any Schedule, add any new entry in any of the Schedule and in the like manner omit any entry of any Schedule.
(5) Every notification made under this section shall, as soon as may be after it is made, be laid before each House of the State Legislature, while it is in session, for a total period of not less than fourteen day, extending in its one session or more than one successive sessions, and shall, unless some later date is appointed take effect from the date of its publication in Gazette subject to such modifications or annulments as the two Houses of the Legislature may during the said period agree to make, so however, that any such modification or annulment shall be without prejudice to the validity of anything previously done thereunder except that any imposition, assessment, levy or collection of tax or penalty shall be subject to the said modification or annulment."
Under Section 4(1)(c) of the Act, the tax payable on sales of goods shall be levied and paid on the taxable turnover on sale of goods named or described in Column-2 of Schedule-4 at the point of sale mentioned at Column-3 and at the rate of tax mentioned in Column-4 of the Schedule against such goods. The rate of tax as specified for purchase of diesel oil is 21%. However, under sub-clause (4) of Section 4 the State Government issued a notification dated 10th January, 2008 whereby diesel oil when sold to a registered dealer for use in the process of manufacture of any taxable goods was made liable to tax in the hands of manufacturer at the rate of 4% on production of such certificate as prescribed by the Commissioner. The Commissioner by a circular dated 14th January, 2008 prescribed a certificate in Form-D to be issued by the purchaser of diesel oil to its seller. The petitioner applied and in view of the decision of the Commissioner in "Gammon India", a show cause notice was issued to the petitioner contending that Form-D could not be issued as he was not a manufacturer.
Before proceeding further, it would be essential to consider the definition of "manufacture" and "manufacturer" as defined under Section 2(e-1) and Section 2(ee) of the U.P. Trade Tax Act and Section 2(t) and 2(u of the U.P. VAT Act are extracted hereunder:-
"2(e-1). 'Manufacture' means producing, making, mining, collecting, extracting, altering, ornamenting, finishing, or otherwise processing, treating or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed;
2(ee). 'Manufacturer' in relation to any goods means the dealer who makes the first sale of such goods in the State after their manufacture and includes:-
(i) a dealer who sells bicycles in completely knocked down form;
(ii) a dealer who makes purchases from any other dealer not liable to tax on his sale under the Act other than sales exempted under Sections 4, 4A and 4-AAA.
2(t). 'Manufacture' means producing, making mining collecting, extracting, mixing, blending, altering, ornamenting, finishing, or otherwise processing, treating or adapting any goods; but does not include such manufacture or manufacturing processes as may be prescribed.
2(u). 'Manufacturer' in relation to any goods mentioned or described in column (2) of Schedule IV of this Act, means a dealer who, by application of any process of manufacture, after manufacture of a new commercial commodity inside the State, makes first sale of such new commercial commodity within the State, whether directly or otherwise; and includes a selling agent who makes sale of such new commodity on behalf of the person who has manufactured it."
A perusal of the definition of "manufacture" and "manufacturer" under the aforesaid two Acts clearly indicates that it is more or less identical. In PNC Construction Com. Ltd. Vs. State of U.P. and others, 2002 UPTC 262, this Court held that the petitioner in the said case, being engaged in the activity of manufacturing of Hot Mix material out of different materials was entitled to issue a recognition certificate under Section 4B(2) of the U.P. Trade Tax Act. The aforesaid decision was affirmed by the Supreme Court in State of U.P. and others. Vs. PNC Construction Com. Ltd. and others, 2007 NTN (35) 451. The Supreme Court held:-
"Hot Mix fell in the category of notified goods. Under Section 4-B(2) of the Act the recognition certificate enabled the assessee to buy the above raw materials at concessional rate of duty provided they were used in the manufacture of notified goods and such notified goods were intended to be sold by the assessees in the State or in the course of inter-State trade or commerce or in the course of export out of India. Raw materials came in the category of "goods" for the purposes of Section 4-B(2) of the Act. In the present case, the assessee has used cement, sand, bitumen, furnace oil, HSD, Lubricant etc. as raw materials in the manufacture of Hot Mix. The show cause notice dated 9.5.01 impugned in the writ petition (before the High Court) proceeded on the basis that roads are not capable of being sold; that roads were not goods; and that roads were not moveables and, therefore, according to the Department the assessee was not entitled to the concessional rate of duty on purchase of raw materials. In our view, the impugned show cause notice dated 9.5.01 was based on complete misreading of the provisions of the said Act. Under Section 2(h) of the Act and word "Sale" is defined to mean any transfer jof property in goods for cash or deferred payment or for value consideration. The definition of the word "Sale" includes transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. These words flow from the definition of the word "Sale" in the Act to Article 366(29A)(b) of the Constitution. The said words have been interpreted by this Court, as stated above, in the second Gannon Dunkerley's case (Supra) in following words vide para 36:
"36. If the legal fiction introduced by Article 366(29A) is carried to its logical end it follows that even in a single and indivisible works contract there is a deemed sale of the goods which are involved in the execution of a works contract where the contract is divisible into one for sale of goods and the other for supply of labour and services."
The Supreme Court while dismissing the appeals filed by the State found that Hot Mix was a notified goods, which was used for construction of roads and if the raw material was utilized for construction of roads, the contractor was entitled to the benefit of Section 4-B of the Act. The Supreme Court found that the word "sale" would be a deemed sale as defined under Article 366(29A)(b) of the Constitution as interpreted by the Supreme Court in the case of State of Madras Vs. Gannon Dunkerley & Co. (Madras) Ltd., AIR 1958 SC 560.
In the light of the aforesaid decision, the Commissioner committed a manifest error in its order issued under Section 59 of the Act in holding that a person engaged in the construction of roads was not a manufacturer. The Commissioner further erred in holding that under the Explanation to Section 13(1)(e), the transfer of property in goods involved in the execution of a works contract amounts to a resale of goods and, therefore, the assessee was entitled to the benefit of input tax credit under Section 13 of the Act and cannot be called a manufacturer. The issuance of a show cause notice to the petitioner by the Deputy Commissioner (Assessment), based on this decision of the Commissioner, is also erroneous. The definition of the word "manufacturer" as defined under Section 2(u) of the U.P. VAT Act is solely relevant for the purpose of giving the benefit of the notification dated 10th January, 2008 issued under Section 4(4) of the U.P. VAT Act. Explanation to Section 13(1)(e) does not in any manner override the definition of the word "manufacturer" as defined under Section 2(u) of the Act .
The Court is of the view that in view of the language of Section 4(1)(c) of the Act and in view of the decision of the Supreme Court in the case of PNC Construction Company (supra) the petitioner, being a manufacturer of a taxable goods, namely, Hot Mix material, the Deputy Commissioner (Assessment) could not legally refuse to issue and authenticate Form-D pursuant to the notification issued by the Government dated 10th January, 2008 and circular issued by the Commissioner dated 14th January, 2008 for the purchase of diesel oil and furnace oil.
There is another aspect of the matter. Section 13(1)(a) clearly indicates that input tax credit is not available in respect of non-VAT goods. Diesel oil and furnace oil are non-VAT goods. Consequently, the application of Section 13 in so far as the petitioner is concerned is totally misplaced. An attempt was made by the learned Standing Counsel that the petitioner has a remedy of filing an appeal before the Tribunal. Section 59 (5) of the Act provides that the decision of the Commissioner shall, subject to the provisions of Section 57 and 58, be final and binding on the applicant, the Assessing Authority as well as to the Appellate Authority.
In the instant case, the order of the Commissioner was not passed in the case of the petitioner and, consequently, the petitioner could not file an appeal. However, the order of the Commissioner is binding on the Assessing Authority pursuant to which the show cause notice was issued to the petitioner. The Court is of the view that rule of alternative remedy is one of discretion and is not one of compulsion. In Harbanslal Sahnia Vs. Indian Oil Corporation Ltd., 2003 (2) SCC 107, the Supreme Court held that the rule of exclusion of a writ jurisdiction by availability of an alternative remedy was a rule of discretion and not one of compulsion and that the Court must consider the pros and cons of the case and only then may interfere, if it comes to the conclusion that the petitioner sought enforcement of any fundamental rights of where there was a failure of the principles of natural justice or where the orders were wholly without jurisdiction or where the vires of an Act was challenged. The same view was reiterated by the Supreme Court in Whirlpool Corporation Vs. Registrar of Trade Marks, 1998 (8) SCC 1, State of H.P. Vs. Gujrat Ambuja Cement Ltd., 2005 (6) SCC 499 and Sanjana M. Wig Vs. Hindustan Petroleum Corporation Ltd., 2008 (8) SCC 242. The Court finds that the writ petition was entertained in the year 2008 and an interim order was issued directing the authorities to issue Form-D. Affidavits have been exchanged and, consequently, it would not be appropriate to delegate the petitioner at this stage to avail the alternative remedy. The submission of the learned Standing Counsel on this aspect is, consequently, rejected.
For the reasons stated aforesaid, the impugned order of the Commissioner of Commercial Taxes, U.P. Lucknow dated 12th March, 2008 and the notice dated 5th June, 2008 issued by Deputy Commissioner (Assessment), Commercial Taxes, Agra are quashed. The writ petition is allowed and a writ of mandamus is issued directing the Deputy Commissioner (Assessment), Commercial Taxes, Agra to issue and authenticate adequate number of certificates in Form-D to the petitioner for purchase of diesel oil and furnace oil for the purposes of manufacturing of Hot Mix materials.