1987 (4) TMI 459 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of briquettes prepared from coal-dust as "unspecified goods" or as "declared goods" under Section 14(ia) of the Central Sales Tax Act, 1956.
2. Applicability of the tax rate and restrictions under Section 15(a) of the Central Sales Tax Act, 1956.
3. Maintainability of the writ applications.

Detailed Analysis:

1. Classification of Briquettes:
The primary issue is whether briquettes prepared from coal-dust, soil, and molasses should be classified as "unspecified goods" or as "declared goods" under Section 14(ia) of the Central Sales Tax Act, 1956. The petitioners argued that these briquettes should be considered as "declared goods" since they are prepared from coal-dust, and thus, sales tax should not exceed 4% as per Section 15(a) of the Act. The respondents contended that these briquettes are neither coal nor coke but a separate product, thus classifying them as "unspecified goods" subject to 8% sales tax.

2. Applicability of Section 14(ia) and Section 15(a):
Section 14(ia) of the Act includes "coal, including coke in all its forms, but excluding charcoal." Section 15(a) restricts the tax on declared goods to not exceed 4%. The court examined various precedents, including the Supreme Court's interpretation in India Carbon Ltd. v. Superintendent of Taxes, Gauhati, which held that the term "coal, including coke in all its forms" should be given a broad interpretation. The court also referred to judgments from other High Courts that had considered similar products and concluded that briquettes made from coal-dust should be considered a form of coke.

The court found that the briquettes prepared by the petitioners have a direct connection with coal or coke, especially since coal-dust is the main ingredient. Therefore, these briquettes should be classified under Section 14(ia) as a form of coke, making them subject to the tax restrictions under Section 15(a).

3. Maintainability of the Writ Applications:
The respondents argued that the petitioners should address their grievances before the Sales Tax Officers during the assessment proceedings rather than invoking the writ jurisdiction of the High Court. The court acknowledged that typically, tax-related grievances should first be addressed by the taxing officer and appellate authorities. However, in this case, the Deputy Commissioner had issued a directive to treat the briquettes as "unspecified goods," which indicated that the taxing officers might not apply their independent judgment. Therefore, the court decided to entertain the writ applications to avoid futile litigation at multiple forums.

Conclusion:
The court quashed the communication issued by the Deputy Commissioner, Commercial Taxes, which directed treating the briquettes as "unspecified goods." The court held that briquettes prepared by mixing coal-dust, soil, and molasses should be treated as "goods specified in entry 14(ia)," being a form of coke, during the assessment proceedings. Consequently, the tax on these briquettes cannot exceed 4% as per Section 15(a) of the Central Sales Tax Act, 1956. The court also quashed the assessment order based on the Deputy Commissioner's directive. The writ applications were allowed, and each party was directed to bear its own costs.