1969 (4) TMI 93 - HC - VAT and Sales Tax

Summary

Issues:
1. Determination of whether burnt cinders are classified as "coal" or "coke" under the Andhra Pradesh General Sales Tax Act.

Analysis:
The case revolved around the classification of burnt cinders as either "coal" or "coke" under the Andhra Pradesh General Sales Tax Act. The central question was whether burnt cinders fall within the definition of "coal" as stated in item 1 of Schedule IV of the Act, which includes coke in all its forms. The assessee, a purchaser of cinders from the refuse of railway engines, faced assessment by the sales tax authorities as "general goods" under section 5(1) of the Act. The Tribunal relied on the decision of the Allahabad High Court in Mahabir Singh Ram Babu v. Assistant Sales Tax Officer, where it was held that cinder is distinct from coal. However, the revision petitioner argued that cinders should be considered as coal based on the Supreme Court's decision in State of Gujarat v. Raipur Manufacturing Co., which classified cinders as a by-product of coal. The petitioner also referenced the Supreme Court decision in Sales Tax Commissioner, Indore v. Jaswant Singh, which determined that "coal" included charcoal. Nevertheless, the Court emphasized that the common parlance understanding of cinders as coal is pivotal, rather than relying solely on dictionary definitions or scientific explanations.

The Court examined previous judgments from the Madras and Allahabad High Courts, which concluded that cinders are neither coke nor a form of coke. In Fletcher v. Fields, it was argued that if cinders are not coal, then neither is coke. The Court highlighted that the Supreme Court's decision in State of Gujarat v. Raipur Manufacturing Co. did not support the contention that cinders are coal. The Supreme Court's ruling clarified that cinders are a subsidiary product of coal and, when regularly sold, indicate an intention to engage in the business of selling cinders. The Court also referenced the decision in Aryodaya Spinning and Weaving Co., Ltd. v. State of Bombay, which held that the sale of subsidiary products, like cotton waste, was subject to tax. The Court concluded that cinders cannot be classified as coal in the popular sense, as they are the end-products of coal after significant energy has been expended. Unlike coke, which is a distinct product obtained through intentional distillation of coal, cinders do not undergo the same process and, therefore, do not fall under the definition of "coke" or any form of it. Consequently, the Court upheld the Tribunal's decision, dismissing the revision petition with costs.