Supreme Court Clarifies Tax on Petroleum Coke Sales

Indian Carbon Ltd. Versus Superintendent of Taxes, Gauhati and Others  

Indian Carbon Ltd. Versus Superintendent of Taxes, Gauhati and Others   - [1971] 28 STC 603 (SC), 1972 AIR 154, 1972 SCR (1) 316, 1971 (3) SCC 612 Issues:
Interpretation of the Central Sales Tax Act, 1956 regarding the tax rate applicable to petroleum coke sales under the Assam Sales Tax Act, 1947.

Analysis:
The case involved an appeal by a company incorporated under the Indian Companies Act, challenging the levy of sales tax on petroleum coke sales under the Assam Sales Tax Act, 1947. The company contended that the tax rate should be 2 paise per rupee based on the Central Sales Tax Act, 1956, while the State imposed a rate of 5 paise per rupee. The dispute centered around whether petroleum coke fell under the category of "coal including coke in all its forms" as per the Central Act.

The Central Act declared coal including coke as goods of special importance in inter-State trade or commerce. The relevant section limited the tax rate imposed by States on declared goods, initially at 2 percent. The contention was that if petroleum coke fell under the category of coal including coke, the State could not levy tax exceeding the rate specified in the Central Act. The High Court held that petroleum coke must be derived from coal to fall under the Central Act's provision, excluding petroleum coke from its scope.

The Supreme Court disagreed with the High Court's interpretation, emphasizing that the language of the Central Act was broad, including coke in all its forms under the definition of coal. The Court highlighted that petroleum coke was a form of coke and should not be excluded based on the word "coal." The Court referred to various definitions and sources to support the inclusion of petroleum coke under the Central Act's ambit. Consequently, the appeal was allowed, setting aside the High Court's judgment and permitting the State to levy tax under the Assam Act not exceeding the rate specified in the Central Act.

In conclusion, the Supreme Court's decision clarified that petroleum coke should be considered within the scope of "coal including coke in all its forms" under the Central Sales Tax Act, allowing the State to impose tax within the limits prescribed by the Act. The judgment provided clarity on the tax rate applicable to petroleum coke sales, resolving the dispute in favor of the appellant company.