TaxTMI 
TaxTMI 
2008 (7) TMI 876
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....e Bench was constituted to consider the said question, but the Bench on being apprised that the question also involves the legality of the decision of the Full Bench in Hukumchand Mills Ltd. v. Commissioner of Sales Tax [1988] 71 STC 101 (MP), on being requested by the Full Bench of three judges, the honourable Chief Justice has constituted this Bench comprising five judges. The appeal before the Division Bench was filed assailing the interpretation of entry No. 22 in Part V of Schedule II of the M.P. Commercial Tax Act, 1994. Vide judgment impugned, the learned single judge held that the rate of tax on the sale of coal ash would be the same as that of coal and not the rate prescribed under the residuary entry. Since the said judgment militated against the ratio of the judgment of Hukumchand Mills [1988] 71 STC 101 (MP)[FB], the State has preferred this appeal in which, for authentic enunciation of the legal position, the case has been referred to this fivejudge Bench. For better grasp of the facts, it is necessary to refer to the order passed by the Division Bench seeking opinion of the larger Bench on the question aforesaid. The respondent is a trader who deals in sale and ....
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.... 71 STC 101 (MP). It was stated that in view of the decision of the Full Bench which clinches the issue, there was no room for speculation about the position of the coal ash and its taxability under the residuary entry. It was also pointed out that the decision in S. Kumar Ltd. [2007] 6 VST 412 (MP); [2004] 4 STJ 785 (MP) was that of a single Bench which cannot prevail over the decision of the Full Bench. Attention was also invited to the case of Commissioner of Sales Tax v. Samrathmal Dhoolchand (Miscellaneous Civil Case No. 253 of 1967) decided on December 23, 1969 [1972] 29 STC 418 (MP) [App] and Binod Mills Co. Ltd., Ujjain v. Commissioner of Sales Tax M.P. [1972] 29 STC 413 (MP). We may emphasise that prior to the bringing into force of the Commercial Tax Act, the entry 22 in Part V of Schedule II of the M.P. General Sales Tax Act read as under: "(1) Coal including coke in all its form, but excluding charcoal". The entry, however, was modified in the M.P. Commercial Tax Act ("the Act", for brevity) to the following effect: "(1) Coal including coke in all its form and charcoal". It was in this context that it was stated by the Division Bench that since the entry in ....
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....tems of stores which comprised discarded assets like scrap, dyes, chemicals, broken iron hoops, obsolete machinery, coal ash, etc., were exigible to tax? It is, therefore, clear that the judges dealing with the matter in the Full Bench had no occasion to focus attention on the question whether the coal ash was included within the entry of coal, indeed, even the entry has not been adverted to. It is only in paragraph No. 28 that it has been observed as follows: (page 112) "28. As regards coal ash, in our opinion, the Tribunal has rightly held that coal is converted into coal ash after it is burnt in boilers and that in this way, coal undergoes a manufacturing process before becoming coal ash and is in fact a by-product of coal so that coal and coal ash cannot be treated as exactly the same goods." We may clarify that the principal question which the Bench was addressing itself to was only with regard to the exigibility to tax of the items stated in the question including coal. We are, therefore, of the view that since the observations contained in paragraph 28 of the Report of the judgment of the Full Bench in Hukumchand Mills [1988] 71 STC 101 (MP) related only to the exigibilit....
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.... matter to the statute. The meaning given to the same word occurring in a social security measure or a regulating enactment may not be apposite or appropriate when the same word is interpreted with reference to a taxing statute. The Cess Act is a fiscal enactment. In the context in which the word 'vegetable' is used in entry 15 'vegetable product' means product of or made of or out of vegetable. 'Vegetables' as understood in common parlance are not products of manufacture unless we say that agriculture is an industry for certain purposes and vegetables are products of that industry. In order to bring an industry within any of the entries in Schedule I it has to be seen what is the end-product produced by that industry. Sugarcane is not a vegetable though it may be an agricultural product. If the botanic meaning of vegetable as referring to any and every kind of plant life is to be given then some of the industries listed in Schedule I like paper industry and textile industry and even chemical industry which are covered by other entries could also be brought within entry 15. The word vegetable in the context does not attract the botanical meaning. The sugar m....
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....ct, 1958 and the M.P. Commercial Tax Act, 1994. In order to appreciate the legal position, we may refer to the case of the Full Bench of this court in Hukumchand Mills [1988] 71 STC 101. As already pointed out, Hukumchand Mills [1988] 71 STC 101 (MP)[FB] has not taken into consideration the earlier cases, namely, Commissioner of Sales Tax v. Samrathmal Dhoolchand (Miscellaneous Civil Case No. 253 of 1967) decided on December 23, 1969 See [1972] 29 STC 418 (MP) [App]. and Binod Mills Co. Ltd., Ujjain v. Commissioner of Sales Tax, M.P. [1972] 29 STC 413 (MP). A three-judge Bench of the Supreme Court has ruled in State of Maharashtra v. Bradma of India Ltd. [2005] 140 STC 17 (SC) that a special entry in the Schedule overrides the general entry and, therefore, resort to the residuary entry can be only when a liberal construction cannot cover the goods in question. The discussion contained in paragraph 7 of the report reads as extracted below: "7. We are of the opinion that the High Court was wrong. Both the Tribunal and the High Court commonly enunciated the principle that a specific entry would override a general entry. In addition we would add, and as has been held in Collector of....
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....m mines. This will be clear from any standard dictionary. The Board has referred to the Blackies' Concise Dictionary. We may mention the Chamber's Twentieth Century Dictionary which gives the meaning of coal as 'a firm, brittle, generally black combustible carbonaceous rock derived from vegetable matter (the usual sense now)'. But in India the English word 'coal' as used in commerce includes charcoal. It is now well established that the word 'coal' occurring in a fiscal statute has to be understood in its popular and commercial sense: His Majesty the King v. Planters Nut and Chocolate Company Limited [1951] CLR (E.C.) 122 at page 123, K.V. Varkey v. Agricultural Income-tax and Rural Sales Tax Officer [1954] 5 STC 348 (Travancore-Cochin) and Madhya Pradesh Pan Merchants Association, Santra Market Nagpur v. State of Madhya Pradesh (Sales Tax Department) [1956] 7 STC 99 (Nag). We derive further support for this view from the fact that sales of both coal and firewood have been taxed at two per cent and there does not appear to us to be any good reason for treating charcoal differently. In our opinion, charcoal is covered by entry No. 1 of Part III of ....
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....fuel and did not make a separate entry in regard to charcoal as it must be aware that coal, as understood in ordinary and commercial sense, would include charcoal. Had that not been so, instead of leaving it to be dealt with under the residuary item, it would have enacted a separate entry just as it did in the case of firewood which it knew would not in its ordinary meaning fall under the term 'coal'. In this view, the contention of counsel for the State must be rejected." From the above decisions it is luculent that what is intended by coal and its forms is the combustible and burning article. It is clear that when a distant cousin like charcoal has been treated as coal, it would be a travesty to deprive cinder (coal ash) of the lower marginal tax by treating it otherwise, especially when it is a part of the coal which comes out of the boiler on account of having become less combustible and unfit for use in the boiler, but retaining all properties of coal. It has not been denied that insofar as cinder is concerned, it contains sufficiently large pieces of coal and, therefore, there is no transformation or a manufacturing process. We may now hasten to consider the argume....
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....the Revenue that the petitioner-company was purchasing kiln and using it as raw material for its manufacturing activity but not as fuel which had found favour with the Tribunal against which revision was filed. Use as raw material of a particular commodity is distinct and separate from what is obtained by use of coal in boilers. Thus, we are of the view that the ratio of the case, heavily relied upon by the learned Advocate-General, does not help the Revenue. The learned Advocate-General has further submitted that the said decision of the High Court was considered by the Supreme Court in ITC Bhadrachalam Paper Boards Ltd. v. State of A.P. [2002] 126 STC 541. We have considered the argument of the learned Advocate-General and gone through the said judgment. Apropos of question No. 1, their Lordships observed that insofar as the "coal" and "coal ash" were concerned, they were commercially two distinct commodities and, therefore, the sale of "coal ash" amounted to first sale in the hands of the petitioner-company. It was in this context that the sale of coal ash by the petitioner-company was treated as first sale at the hands of the petitioner-company treating coal ash as a differe....
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....lled in commercial world and in common parlance, being smaller pieces of coal, retaining the properties of the coal and used as coal in other commercial activities, cannot be denuded of its original properties and birth marks and classified as an article different from the parent article. The status of cinder was further pronounced upon in Union of India v. Ahemdabad Electricity Co. Ltd. [2004] 134 STC 24 (SC); [2003] 11 SCC 129. The commodity cinder was described as follows: (para 3 in page 28 of STC) "5. Cinder is obtained as a result of burning coal in boilers and furnaces in factories. When coal is fully burnt it is reduced to ash. When it is not fully burnt, it leaves pieces behind. Such pieces of unburnt or partly burnt coal are called cinder. Cinder loses its capacity to produce flame. That is why it is of no use in the boiler and is left out. Since it is left with some combustible value, it is described as inferior quality coal." (emphasis Here italicised. supplied) We, therefore, hold that the "coal ash" is "cinder" and covered by the term "coal" in entry No. 22 in Part V of Schedule II of the Commercial Tax Act and, therefore, it is not exigible to tax under entry N....