Quick Summary: The Bombay High Court decided against Borosil Glass Works Ltd., ruling that they can't get a full tax break on furnace oil used in making products that are sent to their branches outside Maharashtra. The court agreed with the Sales Tax Department, which said a 6% tax reduction should apply.
Borosil Glass Works Ltd. argued that furnace oil used in manufacturing should get a full tax break. They believed that the oil, being something that gets used up, should not be treated like equipment, which has tax reductions. Borosil's lawyer, Mr. Ishaan Patkar, said the earlier decision was wrong and didn't match past decisions.
"Furnace oil is something that gets used up, not equipment. It shouldn't have a 6% reduction," argued Mr. Patkar.
The Sales Tax Department, represented by Ms. Jyoti Chavan, responded that the rules clearly require a 6% reduction on such items when products are sent outside the state. They insisted that the difference between items that get used up and equipment was clear and backed by past decisions.
"The law is clear. Furnace oil is something that gets used up, and the tax reduction applies," Ms. Chavan stated.
Judges M.S. Sonak and Advait M. Sethna decided in favor of the Sales Tax Department. They emphasized that the law required a 6% reduction on furnace oil used in products sent to branches outside Maharashtra. The court found no reason to change this interpretation.
"The rule is straightforward. Furnace oil used in products sent to branches outside must face the reduction," the court concluded.
Borosil will have to accept the 6% reduction in their tax break for furnace oil. This decision reinforces the idea that items like furnace oil are different from equipment and must follow the reduction rule when products are sent out of state.
