1994 (8) TMI 248 - SC - VAT and Sales Tax

Supreme Court affirms Calcined Petroleum Coke as Raw Petroleum Coke under tax law

The Supreme Court affirmed the High Court's decision that Calcined Petroleum Coke (C.P.C.) is a form of Raw Petroleum Coke (R.P.C.) and falls under the ... Whether the entry under section 14(ia) of the Act says 'coal, including coke in all its forms, but excluding charcoal' Held that:- Appeal dismissed. There is no such phrase under section 14(ia) of the Act. In the case of 'oil-seeds' occurring under section 14(iv) of the Act, similar phraseology, namely, 'that is to say' occurs. This Court in Sait Rikhaji Furtarnal v. State of Andhra Pradesh [1990 (8) TMI 344 - SUPREME COURT OF INDIA] wherein held that is difficult for us to accept the submission that after the Act has been amended reliance is available to be placed on the circular. Thus we must hold that the expression 'that is to say' employed in the definition in the statute with reference to oil-seeds is exhaustive and is not illustrative. Since on amendment these five items are no more included in oil-seeds, the appellant is not entitled to claim the benefit. Issues Involved:1. Entitlement to refund under Section 15(b) of the Central Sales Tax Act.2. Classification of Raw Petroleum Coke (R.P.C.) and Calcined Petroleum Coke (C.P.C.) as 'declared goods'.3. Interpretation of Section 14(ia) of the Central Sales Tax Act regarding 'coal, including coke in all its forms'.4. Applicability of the ruling in State of Tamil Nadu v. Pyare Lal Malhotra.Issue-wise Detailed Analysis:1. Entitlement to Refund under Section 15(b) of the Central Sales Tax Act:The respondent, a private company, missed claiming the adjustment of sales tax paid on the purchase of raw materials in the returns filed for July and August 1990. The respondent sought a refund of Rs. 5,22,728, intending to adjust this against the admitted tax of Rs. 1,96,072 for September 1990, with the balance to be refunded. The Assistant Commissioner dismissed the refund application, citing it as against the law, and imposed a penalty. The respondent filed multiple writ petitions challenging this decision. The High Court directed the Joint Commissioner to reconsider the refund claim, which was ultimately rejected, leading to further litigation.2. Classification of Raw Petroleum Coke (R.P.C.) and Calcined Petroleum Coke (C.P.C.) as 'Declared Goods':The Joint Commissioner held that although R.P.C. and C.P.C. are different commercial commodities, both are 'declared goods' under Section 14(ia) of the Act. However, he concluded that R.P.C., after undergoing a manufacturing process to become C.P.C., loses its original identity, thus disqualifying it from the benefits under Section 15(b) of the Act. The High Court, however, held that C.P.C. is a form of R.P.C. and thus eligible for exemption/reimbursement under Section 15(b).3. Interpretation of Section 14(ia) of the Central Sales Tax Act Regarding 'Coal, Including Coke in All Its Forms':Section 14 of the Act lists goods of special importance in inter-State trade or commerce, termed 'declared goods'. Item (ia) includes 'coal, including coke in all its forms, but excluding charcoal'. The High Court interpreted this to mean that all forms of coke, including C.P.C., fall under this entry, making them eligible for the benefits under Section 15(b). The Supreme Court upheld this interpretation, stating that the phrase 'coke in all its forms' includes both R.P.C. and C.P.C., irrespective of any manufacturing process.4. Applicability of the Ruling in State of Tamil Nadu v. Pyare Lal Malhotra:The State of Bihar argued that based on the ruling in Pyare Lal Malhotra, if R.P.C. undergoes a manufacturing process to become C.P.C., it becomes a different product for taxation purposes. The Supreme Court differentiated this case, stating that Pyare Lal Malhotra dealt with the phrase 'that is to say' under Section 14(iv) of the Act, which is not present in Section 14(ia). The Court referenced similar cases, including India Carbon Ltd. and Mahi Traders, to support the view that C.P.C. remains within the scope of 'coke in all its forms' under Section 14(ia).Conclusion:The Supreme Court upheld the High Court's decision, affirming that C.P.C. is a form of R.P.C. and thus falls under the entry 'coal, including coke in all its forms' in Section 14(ia) of the Central Sales Tax Act. Consequently, the respondent is entitled to the benefits under Section 15(b) of the Act. The appeal by the State of Bihar was dismissed, with no orders as to costs.