Indian Oil Corporation Limited Vs. State of Punjab and anr. - Court Judgment

Excerpt:
sales tax - value added tax - sections 13 (1) and 85 of the punjab value added tax act, 2005 - appellant company is owned by government of india and registered under act - section 13(1) of act entitled taxable person to input tax credit (itc) in respect of taxable goods including capital goods purchased by him from taxable person within state of punjab during tax period - appellant filed application under section 85 of act before respondent no. 2 for determination said tax - respondent no.2 passed an order holding that lpg cylinders are taxable at rate of 12.5% as same does not fall in item 202 of list appended to entry 58 of schedule b of act - against order, two appeals were filed before tribunal - tribunal clubbed both appeals - tribunal upheld order of respondent no.2 and dismissed appeal - hence, present second appeal - whether lpg cylinders are for use in packing of taxable goods for sale within state and therefore itc is admissible to purchaser who has purchased goods from appellant? - held, appellants would be entitled to itc because capital goods are considered as plant by virtue of definition of expression 'plant' used in section 2(d) read with section 13(1) of act - in absence of transfer of property in goods like gas cylinders, itc can be claimed by appellants - therefore, order of tribunal to that extent is erroneous sales tax - rate - stock in trade - whether lpg cylinders are covered by entry 58 of schedule b appended to act read with item 202 of list attached with that entry and therefore taxable @ 4%? - held, material purchased by manufacturer and producer of empty gas cylinders is eligible for itc under act - court agree with view expressed by tribunal that empty lpg cylinders are not their 'capital goods' but stock in trade - accordingly, clarify that in so far as manufacturers and producers of empty gas cylinders are concerned, appellant cannot claim that lpg cylinder is either packing material and covered by item 202 of list appended to entry 58 of schedule-b of act - therefore, answer to question is liable to be given in favour of revenue and against appellants sales tax - locus standi - aggrieved party - whether appellant has requisite locus standi to move application before respondent no.2 for determination of questions under section 85? - held, appellant is sufficiently aggrieved if purchaser of its product are given benefit of itc or not granted that benefit - appellant company would be directly affected by any such decision - therefore, hold that it has locus standi to file application under section 85 of act - therefore, question is answered in favour of appellant company and against revenue - these appeals are accordingly disposed of - sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply communication of a copy of the written order itself, a party who knows about the making of an order cannot ignore the same and allow grass to grow under its feet and do nothing except waiting for a formal communication of the order or to choose a tenuous plea that even though he knew about the order, he was waiting for its formal communication to seek redress against the same in appeal. if a party does not know about the making of the order either actually or constructively it may claim that the period of limitation would start running from the date it acquires knowledge of the making of an order but one cannot understand how a party, who has acquired knowledge of the making an order either directly or constructively can ignore the same and belatedly seek redress just because the authority making the order had made a default in formally communicating the order to him. allowing a party to do so would amount to placing a premium on the lack of diligence of a party, who is remiss in seeking a remedy that was available to it. therefore, knowledge whether actual or construction of the order passed by the state or regional transport authority should result in commencement of the period of limitation. thus,. in cases where the state or regional transport authority has not communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - indian oil corporation of india, iocl, bpcl and hpcl) would get input tax credit (itc) on the purchase of empty gas cylinders purchased against original vat invoices for the purpose of bottling of gas from gas cylinders manufacturing units like gas cylinders company. in the light of the provisions of the punjab vat tax act and reasons detailed above, arguments of the appellant to not hold good. according to the learned counsel the use of expression 'plastic container, tin containers and glass containers would clearly indicate that iron and steel containers like the gas cylinders are not liable to be included in such like definitions. she has also submitted that the judgment of madhya pradesh high court has used the expression 'empty barrels',which is clearly indicative of iron and steel container whereas no such expression has been used by the legislature in item no. goyal, learned counsel for the appellant has submitted that once the entire material like empty lpg cylinder manufactured by them (empty lpg cylinders) is sold to the oil companies for packing and supply of lpg to the consumer then such goods have to be regarded as 'capital goods' in the hands of the purchaser company like indian oil corporation. therefore, processing of taxable goods for sale may be regarded as 'capital goods'.the definition further suggests that the 'capital good' is to mean any plant and machinery. therefore, we are of the view that gas cylinders may be considered as an equipment to process the gas which is taxable good for sale. [1989]175itr154(ap) ,a division bench of the andhra pradesh high court dealt with the question as to whether, on the facts and circumstances of the case, the bottles and shells constitute 'plant' and depreciation is admissible thereon under section 32(1)(ii) of the income tax act, 1961. after noticing various foreign as well as indian decisions the division bench has, inter alia, held that the bottles are essential tools of the trade for it is through them that the soft drinks are passed on from the assessee to the customers. without these bottles the soft drinks cannot be effectively transported. , in a bathroom is one of the essential amenities or conveniences which are normally provided in any good hotel in the present times and, as such, they constitute 'plant' within the meaning of the act. the basic reasoning is that without bottles the soft drink could not be passed on from the assessee to the customers, which is a easy and hygienic way of effectively transporting the taxable goods. in the absence of transfer of property in the goods like gas cylinders, itc can be claimed by the dealer-appellants. according to the learned counsel, if the rate of tax is 4% as against 121/2 % as claimed by the revenue, then it would have cascading effect on the subsequent purchaser like the oil companies. merely because they are manufacturer of empty gas cylinders, which is neither 'capital good' in their hands nor a packing material.m.m. kumar, j.1. this order shall dispose of vatap nos. 16 of 2007 and 5 of 2008 as common question of law and facts are involved. the dealer appellant( s) have approached this court by filing these appeals under section 68 of the punjab value added tax act, 2005 (for brevity, 'the vat act') against the common order dated 20.9.2007 passed by the value added tax tribunal, punjab, chandigarh (for brevity, 'the tribunal') in appeal (vat) nos. 148 and 142 of 2006-07 respectively. it is pertinent to point out that the punjab gas cylinders pvt. ltd. (appellant in vatap no. 5 of 2008) is manufacturer and seller of empty lpg cylinders to the indian oil corporation who is the purchaser of such cylinders. they have filed vat appeal no. 16 of 2007. they supply gas to its consumers in those gas cylinders. for the sake of clarity they are to be referred as 'indian oil corporation' and 'gas cylinder company'. the dealer appellant( s) have claimed that the following common questions of law would arise for determination of this court:(i) whether lpg cylinders are covered by entry 58 of schedule b appended to the punjab vat act 2005 read with item 202 of list attached with that entry and therefore taxable @ 4%?(ii) whether on the facts and in the circumstances of the case, lpg cylinders being used for supply of gas to the consumers are capital goods in the hands of the purchaser company?(iii) whether the lpg cylinders are for use in the packing of taxable goods for sale within the state and therefore itc is admissible to the purchaser who has purchased goods from appellant?besides above common questions of law, the following additional question has also been raised in vatap no. 5 of 2008:iv) whether the appellant has requisite locus standi to move an application before the excise and taxation commissioner for determination of questions under section 85?2. facts in brief are being referred from vatap no. 16 of 2007. the appellant-indian oil corporation is a company owned by the government of india and registered under the provisions of the vat act. during the normal course of its business it makes sales of liquefied petroleum gas (lpg) to its dealers for onward supply to the consumers. the cylinders filled with lpg are purchased from local suppliers in punjab state on payment of tax under the vat act. section 13(1) of the vat act entitled a taxable person to the input tax credit (for brevity, 'itc') in respect of taxable goods including capital goods purchased by him from a taxable person within the state of punjab during the tax period. however, first proviso of section 13(1) stipulates that itc would be available if such goods are for sale or for use in manufacture, processing or packing of taxable goods for sale within the state or in the course of inter-state trade or commerce or in the course of export.3. on 30.3.2006 (a-1), the appellant-indian oil corporation filed an application under section 85 of the vat act before the commissioner, excise and taxation department, punjab-respondent no. 2 for determination of the following questions:(i) what is the rate of tax applicable on empty lpg cylinders; and(ii) whether input tax credit shall be available on vat amount paid on the purchase of empty lpg cylinders from local suppliers (within the state of punjab).4. a similar application was also filed by the appellant-gas cylinders company raising the question as to whether the gas bottling units of oil companies (viz. indian oil corporation of india, iocl, bpcl and hpcl) would get input tax credit (itc) on the purchase of empty gas cylinders purchased against original vat invoices for the purpose of bottling of gas from gas cylinders manufacturing units like gas cylinders company.5. on 12.4.2006, the excise and taxation commissionerrespondent no. 2 passed an order holding that lpg cylinders are taxable at the rate of 12.5% as the same does not fall in item 202 of the list appended to entry 58 of schedule b of the vat act. with regard to other issue it has been held by the commissioner-respondent no. 2 that itc is not available against lpg cylinders purchased from within the state of punjab because such lpg cylinders are never sold by the appellant-indian oil corporation. such cylinders continue to remain its property and are only used as a mode of transportation of gas to the consumers (a-2). the application filed by the appellant-gas cylinders company was also decided in terms of order dated 12.4.2006, vide order dated 18.7.2006 (a-2 with vatap no. 5 of 2008).6. against the orders dated 12.4.2006 and 18.7.2006, two appeals were filed before the tribunal. the tribunal clubbed both the appeals and after referring to the provisions of entry no. 202 of the list of industrial inputs & packing material read with entry 58 of schedule-b, sections 2(d) and 13(1) of the vat act upheld the orders passed by the commissioner and dismissed the appeals by holding as under:the collective reading of the above provisions reveals (that?) packing material which is used in the manufacturing, processing or packing material of taxable goods for sale is covered under the provisions. the word is 'used in' the packing of the taxable goods. cost of such packed commodity is inclusive of packing material used in its packing and it goes with the commodity sold. but in the present case it is not so. the lpg cylinder is returnable and only lpg filled in the cylinder, is sold. these are 'used for' for supply of gas to the consumer and are not 'used in' the packing of lpg as envisaged in the punjab vat act. one has to read statue in it stands. we cannot add, subtract or change any word of the enacted provision. lpg cylinder is used for packing of the lpg for supply to the consumers on returnable basis and cannot be construed that it is 'used in' the packing of lpg. in view of this legal position, lpg cylinders are not covered under the definition of packing material as it stands in the punjab vat act. the judgment of the karnataka high court and the kerala high court cited on packing material was entirely on different facts and is not applicable to the present case. the second judgment of the hon'ble patna high court referred, holds that the empty bottles and crates used for supply of soft drink were covered under item 'plant' and were therefore eligible for exemption. on the same analogy, it was pleaded that empty lpg cylinders are capital goods of oil companies and therefore, eligible for itc. judgment of the patna high court was on different facts and in different context. so far as facts of the present case and provisions of the punjab vat act are concerned, the ratio of judgment is not applicable. in the light of the provisions of the punjab vat tax act and reasons detailed above, arguments of the appellant to not hold good. order of the etc are upheld and appeals are dismissed. re: question no. (i)7. mr. k.l. goyal, learned counsel for the appellant has vehemently argued that the tax on empty lpg cylinders is liable to be assessed at the rate of 4% and not at the rate of 121/2%. in support of his submission learned counsel has drawn our attention to item list 202 appended to entry 58 of schedule-b of the vat act and argued that the expression 'all packing material' used therein must be considered to have covered lpg cylinders, as empty lpg cylinder is concededly a packing material. he has further submitted that item 202 of the list appended to entry 58 of schedule-b uses the expression 'including', which is illustrative and not exhaustive. in support of his submission, learned counsel has placed reliance on a division bench judgment of kerala high court rendered in the case of state of kerala v. vazhakkala agencies (2006) 148 stc 576. he has maintained that the kerala high court interpreted the word 'including' to mean that it would rope in all packing materials and the low density poly ethylene was held to be packing material and was not regarded as plastic or any other articles of plastic although it was not specifically mentioned in the entry. he has then placed reliance on a division bench judgment of madhya pradesh high court in the case of eastern air products (p) limited v. commissioner of sales tax, m.p. (1995) m.p.l.j. 14 (mp), and argued that cylinders are packing material and it was found to be covered by the inclusive definition which uses the phrase 'empty barrels'.8. ms. sudeepti sharma, learned state counsel has, however, contended that the language of item 202 of the list appended to entry 58 of schedule-b cannot be read to include empty lpg gas cylinder as it is not packing material. according to the learned counsel the use of expression 'plastic container, tin containers and glass containers would clearly indicate that iron and steel containers like the gas cylinders are not liable to be included in such like definitions. answering the argument based on the judgment relied upon by the learned counsel for the appellant, ms. sharma has submitted that the provisions which were subject matter of consideration in those cases are not pari materia with the one under consideration in the present case. she has also submitted that the judgment of madhya pradesh high court has used the expression 'empty barrels', which is clearly indicative of iron and steel container whereas no such expression has been used by the legislature in item no. 202 of entry 58 schedule-b. therefore, she has prayed that the view taken by the tribunal is the correct view and it deserves to be upheld.9. after hearing learned counsel we are of the view that it would be necessary to consider whether item 202 of the list appended to entry 58 of schedule-b of the vat act could be interpreted to include the lpg cylinders. it would be necessary to read the aforesaid entry, which reads thus:all packing material including the plastic containers tin containers and the glass containers.' a perusal of the aforesaid entry shows that it covers all packing material. the entry has been illustrated by examples of the plastic containers, tin containers and the glass containers. the lpg gas cylinder cannot be regarded as packing material because it is neither a plastic container or tin container or glass container. in our view the tribunal is correct in its approach when it has held that the gas cylinders company is manufacturer and seller of empty gas cylinders to the oil companies and their entire sale of empty gas cylinders is to such companies. the gas cylinders company do not use such cylinders for packing nor these cylinders are their 'capital goods'. the material purchased by the manufacturer and producer of the empty gas cylinders is eligible for itc as per the provisions of the vat act. we are also in agreement with the view expressed by the tribunal that empty lpg cylinders are not their 'capital goods' but stock in trade. accordingly we may clarify that in so far as the manufacturers and producers of the empty gas cylinders are concerned, they cannot claim that the lpg cylinder is either packing material and covered by item 202 of the list appended to entry 58 of schedule-b of the vat act or that in their hands the lpg cylinders are the 'capital goods'. the position of the indian oil corporation would be the same and the lpg cylinders cannot be considered as packing material in their hands. however, whether the lpg cylinders in their hands would be considered as 'capital goods', has to be ascertained from the answer to question no. (ii). therefore, answer to the first question is liable to be given in favour of the revenue and against the dealer-appellants. 10. the judgment of the division bench of madhya pradesh high court in the case of eastern air products (p) ltd. (supra) would not be applicable to the facts of the present case because there the entry 6 of part- iv of schedule-ii appended to the madhya pradesh general sales tax act, 1958, has specifically used the expression 'empty barrels' while talking of packing material. the expression 'empty tins' and 'empty barrels' have come up for consideration of their lordships' of the division bench and accordingly it was held that the gas cylinders for packing natural gas by the manufacturer of natural gas are barrels and as such packing material which is covered by entry 6 of part-iv of schedule-ii of the madhya pradesh general sales tax act, 1958. the language of the entry before the division bench of madhya pradesh high court is entirely different in its content and in material particulars. likewise, the judgment of the division bench of kerala high court in the case of vazhakkala agencies (supra) could also not been attracted to the facts of this case because in that case the language of the section was also entirely different than the one in hand. the low density poly ethylene (ldpe) is transparent film, which is used for packing, sold by the dealer. such a film would certainly be covered by the entry 101 of the kerala general sales tax act, 1963, which provided that plastic and articles of plastics including pvc pipes, plastic paper, cellophane, polythene, polyurethane, polythelene, polyster, whether expanded or not, polysterene foamated sheet, sun control polyster film, polyster tracing and drafting film, polyster self adhesive insulation tapes, fibre reinforced plastics, were to be taken as plastic and articles of plastic. in the present case, the question is entirely different and the division bench judgment of kerala high court would have no application. therefore, we have no hesitation to reject the argument advanced by the learned counsel for the dealer-appellants on the basis of aforesaid two division bench judgments.re: question no. (ii)11. mr. k.l. goyal, learned counsel for the appellant has submitted that once the entire material like empty lpg cylinder manufactured by them (empty lpg cylinders) is sold to the oil companies for packing and supply of lpg to the consumer then such goods have to be regarded as 'capital goods' in the hands of the purchaser company like indian oil corporation. according to the learned counsel such goods would be eligible for itc as per the provisions of section 2(a) and section 13(1) of the vat act. it has been submitted that after the determination of the question by the excise and taxation commissioner, vide his order dated 12.4.2006, the oil companies have stopped making purchases of empty lpg cylinders from gas cylinders company resulting in closure of their business. for the aforesaid submission learned counsel has placed reliance on a division bench judgment of patna high court rendered in the case of steel city beverages ltd. v. state of bihar (1996) 101 stc 510.12. ms. sudeepti sharma, learned counsel for the revenue has argued that the fallacy in the argument of the counsel for the appellant is that the appellant-gas cylinders company does not use the cylinders for packing nor could these cylinders be regarded as their 'capital goods'. she has pointed out that whatever material is locally purchased and used by them in the manufacture of empty cylinders would be eligible for itc as per the provisions of the vat act. the empty lpg cylinders are not their 'capital goods' but stock in trade. she has tried to justify the order passed by the tribunal and the excise and taxation commissioner under section 85 of the vat act.13. having heard learned counsel on the aforesaid issue, we are of the considered view that it would be necessary to first read section 13(1) of the vat act, which reads thus:input tax credit- a taxable person shall be entitled to the input tax credit, in such manner and subject to such conditions, as may be prescribed, in respect of input tax on taxable goods, including capital goods, purchased by him from a taxable person within the state during the tax period:provided that such goods are for sale in the state or in the course of inter-state trade or commerce or in the course of export or for use in the manufacture, processing or packing of taxable goods for sale within the state or in the course of inter-state trade or commerce or in the course of export:provided further **not relevant**provided further **not relevant**provided further **not relevant**a perusal of the aforesaid section shows entitlement of a taxable person to the itc in respect of input tax on taxable goods including 'capital goods' purchased by him from a taxable person within the state of punjab during the tax period provided that such goods are, inter alia, for sale in the state of punjab. the answer to the question would be dependent whether the gas cylinders are 'capital goods' purchased by the oil companies for filling gas in it.14. it is pertinent to notice that section 2(d) of the vat act defines 'capital goods' in the following language:2(d) capital goods means any plant, machinery or equipment including equipment for pollution control, quality control, laboratory and cold storage, used in manufacturing, processing and packing of taxable goods for sale; a perusal of the aforesaid definition shows that plant, machinery or equipments includes equipment for pollution control, quality control, laboratory and cold storage used in manufacturing, processing and packing of taxable goods for sale. we have already held that the sale of gas by filling it in the gas cylinder cannot be regarded as using the empty gas cylinders as packing material. however, it may be regarded as processing the taxable goods for sale in order to make the gas saleable. the empty gas cylinders are not sold along with the lpg gas and are taken back by the oil company for the purpose of re-filling. therefore, such cylinders are re-used till a gas cylinder outlived its life. therefore, processing of taxable goods for sale may be regarded as 'capital goods'. the definition further suggests that the 'capital good' is to mean any plant and machinery. therefore, we are of the view that gas cylinders may be considered as an equipment to process the gas which is taxable good for sale.15. a division bench of patna high court in the case of steel city beverages ltd. (supra) has held that bottles and crates are plants and were to qualify for deferred payment on the investment made by the petitioner. there the division bench was considering an order rejecting an application for grant of eligibility certificate for benefit of the deferment scheme of the sales tax in respect of the investment by the petitioner by way of bottles and crates etc. and as to whether such bottles and crates would constitute plants and machinery. answering the question in favour of the dealer-assessee, the division bench placed reliance on a judgment of the supreme court and various high courts, which is discernible from the following paras 10 and 11:10. in the case of commissioner of income-tax, andhra pradesh v. taj mahal hotel : [1971]82itr44(sc) , the apex court has observed that 'where the definition of a word has not been given, it must be construed in its popular sense if it is a word of every day use. popular sense means 'that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it'.in the case of commissioner of income-tax v. sri krishna bottlers pvt. ltd. : [1989]175itr154(ap) , a division bench of the andhra pradesh high court dealt with the question as to whether, on the facts and circumstances of the case, the bottles and shells constitute 'plant' and depreciation is admissible thereon under section 32(1)(ii) of the income tax act, 1961. after noticing various foreign as well as indian decisions the division bench has, inter alia, held that the bottles are essential tools of the trade for it is through them that the soft drinks are passed on from the assessee to the customers. without these bottles the soft drinks cannot be effectively transported. according to their lordships, the bottles and shells also satisfy the durability test for it is nobody's case that their life is too transitory or negligible to warrant an inference that they have no function to play in the assessee's trade. the division bench has agreed with the decision of the rajasthan high court in the case of commissioner of income-tax v. jai drinks (pvt.) ltd. .in the case of commissioner of income-tax v. taj mahal hotel : [1971]82itr44(sc) , a question was posed before the supreme court as to whether sanitary and pipeline fittings in a building which is run as a hotel would fall within the meaning of word 'plant' in section 10(2)(vib) of the indian income-tax act, 1922. their lordships held that sanitary fittings, etc., in a bathroom is one of the essential amenities or conveniences which are normally provided in any good hotel in the present times and, as such, they constitute 'plant' within the meaning of the act.11. in the premises of the aforesaid authoritative pronouncement, in my considered opinion, having regard to the business of the petitioners of manufacturing soft drinks, it must be held that bottles and crates are plant for which the petitioners are entitled for grant of deferment payment in respect of bottles and crates.16. the aforesaid observations made by the division bench by placing reliance on various judgments, it has been held that bottles and crates are plant for which dealer-assessee was entitled for grant of benefit of deferment payment scheme. the basic reasoning is that without bottles the soft drink could not be passed on from the assessee to the customers, which is a easy and hygienic way of effectively transporting the taxable goods. it was also found that the price of the bottles was not included in the price of the soft drink. the aforesaid observations of the division bench are fully applicable to the question posed before us and, therefore, the question deserves to be answered in favour of the dealer-appellants and against the revenue. accordingly, it is held that lpg gas cylinders in the hands of indian oil corporation and other corporations have to be treated as 'capital goods' and assessable according to the rate of tax as per the provisions of the vat act.17. as a sequel to the above discussion, on precedent and principle, the second question is answered in favour of the dealer appellants and against the revenue.re: question no. (iii)18. on question no. (iii) mr. k.l. goyal, learned counsel for the appellant has submitted that the appellant is entitled for itc by virtue of the provisions of section 13(1) of the vat act. according to the learned counsel it has been specifically provided that itc would be available in respect of input tax of taxable goods including 'capital goods' used for packing of taxable goods for sale.19. however, the aforesaid argument has been countered by the learned state counsel by submitting that the itc is not available to the appellant-indian oil corporation against lpg cylinders purchased from within the state of punjab on the ground that these lpg cylinders are never sold by the appellant which continues to be the property of the appellant. according to her, the lpg cylinders are only used as a mode of transportation of gas to the consumer. she has submitted that the orders passed by the tribunal and the excise and taxation commissioner do not suffer from any legal infirmity.20. while discussing question no. (ii) we have found that the property in the goods is not transferred when gas cylinders are used for supply of gas to the customers. in the absence of transfer of property in the goods like gas cylinders, itc can be claimed by the dealer-appellants. the view of the tribunal by refusing to apply the judgment of the division bench of patna high court is wholly unwarranted and cannot be accepted. therefore, order of the tribunal to that extent is erroneous. the dealer appellants would be entitled to itc once the capital goods are considered as plant by virtue of definition of expression 'plant' used in section 2(d) read with section 13(1) of the vat actre: additional question no. (iv)21. the gas cylinders company has claimed an additional question concerning its locus standi to move an application before the excise and taxation commissioner for determination of question under section 85 of the vat act. on the aforesaid issue the tribunal has taken the view that a manufacturer and seller of empty lpg cylinders had no locus standi to pose the question of entitlement of itc to the excise and taxation commissioner as it does not relate to them.22. mr. k.l. goyal, learned counsel for the appellant has argued that the locus standi of the appellant would be evident on account of determination of the rate of tax. according to the learned counsel, if the rate of tax is 4% as against 121/2 % as claimed by the revenue, then it would have cascading effect on the subsequent purchaser like the oil companies. he has maintained that the tribunal has committed a grave error by following the reasoning that the question of entitlement of itc cannot be posed by the appellant as the issue does not relate to them.23. however, learned state counsel has submitted that the gas cylinders company is merely manufacturer of empty gas cylinders, which are supplied to the oil companies. these cylinders are neither used by them for packing nor are these treated as 'capital goods'. the material used for manufacturing of those cylinders, purchased and used, is eligible for itc. ms. sharma has supported the view taken by the tribunal in the impugned order.24. having heard learned counsel we find that the gas cylinders company is sufficiently aggrieved if the purchaser of its product, namely, empty gas cylinders, are given the benefit of itc or not granted that benefit. the gas cylinders company would be directly affected by any such decision. therefore, we hold that it has locus standi to file application under section 85 of the vat act. its locus standi cannot be doubted. merely because they are manufacturer of empty gas cylinders, which is neither 'capital good' in their hands nor a packing material. therefore, the question is answered in favour of the gas cylinders company and against the revenue.25. these appeals alongwith the miscellaneous applications are accordingly disposed of.