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2016 (5) TMI 827 - MADHYA PRADESH HIGH COURT

2016 (5) TMI 827 - MADHYA PRADESH HIGH COURT - TMI - Whether levy of tax under M.P. Commercial Tax Act, 1994, as per entry 22 of Part V of Schedule II on smokeless coke obtained from processing of coal purchased from registered dealer after paying full tax @ 4% is justified under law or not - Appellant engaged in conversion of coal into smokeless soft fuel, ie., smokeless coke by application of mechanized plants.

Held that:- there was no need to list the coal and coke in other forms s .....

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ercial Tax Act, 1994 is clear on this point and the Department has levied tax, in accordance with the aforesaid provision and has not levied double taxes, because it is levying only on difference of sale price and purchase price.

Therefore, manufactured smokeless soft fuel i.e. smokeless coke out of coal is distinct commodity and also understood in common parlance different from coal, therefore, commodity manufactured is liable to tax under Section 9 of the Madhya Pradesh Commercial .....

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12. 2. The petitioner is registered dealer under Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 up to 31.3.2006 and w.e.f. 1.4.2006, is registered dealer under the M.P. VAT Act, 2002, as well as under the provisions of Central Sales Tax Act, 1956. 3. The petitioner company is engaged in processing of Smokeless coke in a mechanized plant. The smokeless coke is derived from steam coal purchased from registered dealers by paying full tax, i.e., 4%. After processing the steam coal smokeless coke is obt .....

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refore, sales of SSF Coke has been claimed as tax paid sales, on the ground that even after processing, it remains the same and no new commercial commodity comes into existence. In substance coke is refined form of coal and it cannot be treated as different commodity for commercial tax purposes. 'Coke is nothing but Coal' due to the phraseology used by legislature in Section 14(ia) of Central Sales Tax Act and vide entry No.22 of Part - V of Schedule II of the M.P. Commercial Tac Act, 19 .....

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skins, we do not find anything in the language of Section 14 of the Central Sales tax Act which can lead us to the conclusion that these two different commodities were to be regarded as constituting a single commodity for the purpose of taxation. and does not apply in case of the petitioner company. 7. Against the order of assessment, the petitioner preferred a revision before the respondent No.2. According to the petitioner, respondent No.2 misinterpreted the restrictions and conditions laid do .....

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Central Sales Tax of 1956 will be taxed @ of 4%. It means Coal, Coke, Coal Ash and Cinder, which are the forms of coal are taxable @ of 4%. The stand of the department before the revisional authority is that the Higher Court has not said that, if tax is paid on coal then, after burning the coal, remained cinder or coal ash will not be taxed again. Because after burning the coal, the remainder coal or coal ash, which can again be used for the purpose of burning is a form of coal, but it become di .....

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ned counsel He submitted that the coke is refined form of coal and it cannot be treated as different commodity for commercial tax purpose and placed reliance on the decision of the full Bench of M.P. High Court in the case of Commissioner V/s. Manoj Kumar Agrawal reported as 13 STJ 228 (MP) (FB), two decisions of the Apex Court in the case of India Carbon V/s. State of Assam, reported as (1995) 96 STC 636 (Gauh) & 28 STC 603 (SC) and Universal Hydrocarbons V/s. State of Bihar reported as (19 .....

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submits that no separate commercial commodity emerges or comes into existence and even after processing of the coal, there is no change in the identity or use of the goods and, therefore, such goods cannot be taxed again during sale within the State or enter State. 10. The decision of Ms. K.A.K Anwar & Co. V/s. State of Tamil Nadu, (supra) is related to the entry 'Hides and Skins' whether in a raw or dressed state while the petitioner's case relates to the entry of coal including .....

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ifferent commodities. The entry simpliciter says coal including coke in all its form which means all forms of coke are coal covered under the same entry. The assessing authority as well as learned revisional authority have erred in not considering the above factual and legal position and further erred in not considering the two judgments of the Hon'ble Supreme Court and only basing it's order on the judgment delivered by the M.P. Commercial Tax Appeal Board, Bhopal on 12.6.2012 in variou .....

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under Entry No.39 in Part IV. The larger Bench also held that the decision in Mansingh Ka Oil Mills Pvt. Ltd. , V/s. Addl. Regional Asstt. Commissioner of Sales Tax, Khandwa & Anr. (M.P. No.1891/1983, decided on 8.9.1992), takes the correct view, though it is based on concession and approved the view taken in Commissioner of Sales Tax V/s. Samathmal Dhoolchand (Misceelaneous Civil Case No. 253 of 1967) decided on 23.12.1969 and Binod Mills Co. Ltd., Ujjain V/s. Commissioner of Sales Tax, M.P .....

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expressed the view that the coal dust and coal briquette falls under the same entry and taxable under the same entry, but manufacture of briquette out of coal dust involves process of manufacture. Therefore, the coal briquette manufactured out of tax paid coal dust is taxable. The coal dust and briquette are two different commercial commodities. The aforesaid view has been approved by the Apex Court in the case of Sonebhadra Fules V/s. Commissioner Trade Tax, U.P. Lucknow reported (2011) 46 TLD .....

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as under :- (o) manufacture includes any process or manner of producing, collecting, extracting, preparing or making any goods, but does not include such manufacture or manufacturing process as may be notified. No. A-5-1-94-ST-V (18) Dated 1st April 1995 - In exercise of the powers conferred by Clause (o) of Section 2 of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No.5 of 1995), and in supersession of this department Notification: (1) No.A-5-11-78(4)-ST-V, dated 1st October, 1978. (2) No.A .....

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f coal into coke, excluding mechanized plant is mentioned as nonmanufacture process. It means though the conversion of coal into coke is process and manufactured, but the State Government has excluded this activity of conversion of coal into coke carried out in the way of other than mechanised plants from the purview of the terms manufacture. 17. The petitioner is engaged in the business of conversion of coal into smokeless soft fuel, ie., smokeless coke by application of mechanized plants. Ther .....

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ons (c) and (d) were inserted in Section 15 of the Central Sales Tax Act. With the introduction of Section 15 (d) each of the pulses referred to in Clause (via-a) of Section 14, whether whole or separated and, whether with or without husk, were to be treated as a single commodity for the purposes of levy of tax under that law. If the intention of the legislature had been that the various commodities mentioned in the same clauses in Section 14 were to be regarded as a single commodity, it would h .....

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eing treated as a single commodity for the purposes of levy of tax. 19. In the case of Sonebhadra Fules V/s. Commissioner Trade Tax, U.P. Lucknow, the Apex Court held that the coal is a raw material for making coal briquettes. The method of manufacturing coal briquettes is a processing, treating or adapting the coal. The appellant therein manufactures coal briquettes by compiling the hard coke breeze mechanically with the help of cinders which is usually 5% of the total hard coke breeze. In the .....

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change. We regret, we cannot agree with his submission. Firstly, we do not agree that the coal briquettes are the same commercial commodity as coal. In our opinion, coal is a raw material for making coal briquettes. The method of manufacturing coal briquettes has been stated above, and this certainly is a processing, treating or adapting the coal. The appellant manufactures coal briquettes by compiling the hard coke breeze mechanically with the help of cinders which is usually 5% of the total h .....

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ng of coal to make coal briquette, the coal dust loses its identity. Coal briquettes and coal dust are two different commodities in substance as well as in characteristics. The coal briquettes are altogether in different shape, form and moisture as well as characteristics, as compared to coal dust. 20. In the case of Samathmal Dhoolchand, (supra), the question considered by the Divsion Bench was to whether Coal Ash is coal and comes under Entry No.1 Part III of Schedule II of the Act or whether .....

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o.22 in Part V of Schedule II of the Commercial Tax Act and, therefore, it is not exigible to tax under Entry No.39 in Part IV. The corresponding entry in the repealed Act shall be construed accordingly in relation to the matters pending under the said Act. The Larger Bench held the following:- That the decision rendered by the Full Bench of this High Court in Humumchand Mills (supra) is de hors the earlier decisions and the finding has been arrived at without the cogent and relevant material be .....

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2 deals only with the taxability which has now been rendered redundant. The decision in Mansingh Ka Oil Mills Pvt. Ltd (supra) takes the correct view, though it is based on concession. The view expressed in Samarthmal and Binod Mills (supra) is accordingly, approved . 22. The process involved in obtaining smokeless soft fuel i.e. smokeless coke is a process of manufacture as defined under Section 2 (o) of the Madhya Pradesh Commercial Tax Act, 1994 and such process has not been excluded from the .....

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