Oxygen not a 'Raw-Material' for Manufacture of Steel, not Eligible for Concessional Sales Tax Rate

Last updated: 09 December 2022

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Quick Summary

The Supreme Court has ruled that oxygen used in steel manufacturing is a refining agent, not a raw material. To qualify as raw material, a product must be found in the final product. As oxygen's primary function is to reduce carbon content and it doesn't become part of the steel, it does not meet this definition. Consequently, the concessional sales tax rate for raw materials is not applicable to oxygen.

Court :
Supreme Court of India

Brief :
The Hon'ble Supreme Court of India ("the Supreme Court") in the case of State of Jharkhand and Others v. Linde India Limited and Another (Civil Appeal Nos. 8061-8064 of 2022) dated December 02, 2022, held that to qualify as raw material the product must go into and to be found into the end product, goods which are used for ancillary purposes for manufacturing of an end product are not considered as 'raw material', the main function of oxygen in manufacturing steel was to reduce the carbon content, therefore, it can be considered as refining agent but not as raw material. Hence, concessional rate of tax not available on oxygen.

Citation :
Civil Appeal Nos. 8061-8064 of 2022

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