2004 (6) TMI 605 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether coal briquettes prepared from coal dust are the same commodity as coal and thus exempt from additional tax.
2. Whether the manufacturing process of coal briquettes alters their commercial identity, making them a different taxable commodity.

Issue-wise Detailed Analysis:

1. Whether coal briquettes prepared from coal dust are the same commodity as coal and thus exempt from additional tax:

The assessee argued that coal briquettes, made by moulding coal dust with clay or molasses, should be considered the same commodity as coal, which has already been taxed. The assessee sought exemption/rebate of sales tax on this basis. However, the Tribunal and the appellate authorities rejected this claim, holding that coal briquettes are a different commercial commodity due to the manufacturing process involved.

2. Whether the manufacturing process of coal briquettes alters their commercial identity, making them a different taxable commodity:

The court examined the definitions and interpretations of "coal" and "manufacture" from various dictionaries and legal precedents. It was established that coal briquettes, created by a manufacturing process involving coal dust, clay, and molasses, are distinct from coal in terms of form, characteristics, and commercial identity. The manufacturing process alters the coal dust, resulting in a new product with different properties and uses.

The court referenced several legal precedents to support its decision:
- Devi Dass Gopal Krishnan v. State of Punjab: Edible oils produced from oil-seeds were held to be different from the oil-seeds and taxable as a new commercial commodity.
- Aspinwall & Co. Ltd. v. Commissioner of Income-tax: The transformation of raw coffee berries into coffee beans was considered a manufacturing activity resulting in a new and distinct commodity.
- Union of India v. Delhi Cloth and General Mills Co. Ltd.: The term "manufacture" was interpreted to mean bringing into existence a new substance with a distinctive name, character, or use.

The court concluded that coal briquettes, after manufacturing, cannot be considered the same as coal dust. The process of manufacturing changes the coal dust's identity, making coal briquettes a different commercial commodity. Therefore, coal briquettes are subject to tax, even if the coal dust used to make them has already been taxed.

Conclusion:

The petition was dismissed, and the interim order dated June 18, 2004, was vacated. The court upheld the Tribunal's decision that coal briquettes are a distinct commercial commodity from coal dust and are thus taxable. The findings of fact recorded by the Tribunal were not challenged effectively, and no material was produced to establish otherwise. The court emphasized that the artificial definition of "manufacture" in the Act must be interpreted strictly, and the legislative intent must be respected.