2006 (2) TMI 604 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether sales tax on coal ash between specific dates was charged correctly.
2. Whether sales tax on coal ash is payable when sales tax on coal has already been paid.
3. Whether the petitioner is entitled to a refund of the sales tax charged on coal ash.
4. Interpretation of the law regarding the taxation of coal ash as a separate commodity.
5. Application of previous judgments and legislative enactments to the current case.

Analysis:
1. The petitioner sought a refund of sales tax on coal ash charged between specific dates, alleging that it was in contravention of the law as sales tax is not payable on coal ash. The respondent, a registered mill, claimed exemption on the sales tax amount and opposed the refund, citing that sales tax on coal is levied at the first point of purchase and coal ash is a residue of burnt coal, thus liable to tax at the residuary rate. The court noted the respondent's entitlement to recover tax from the buyer of coal ash and dismissed the petition based on the Full Bench decision in Hukumchand Mills Ltd. v. Commissioner of Sales Tax, M.P. [1988] 71 STC 101 (MP).

2. The petitioner argued that if sales tax had already been paid on coal used for fuel purposes, no sales tax should be levied on the resulting coal ash. However, the court held that coal ash is considered a different commodity than coal, based on the Full Bench decision, and can be taxed separately. The court found no grounds to interfere in the matter, as per the precedent set by the Full Bench, and dismissed the petition.

3. The petitioner contended that the sales tax collected on coal ash was illegal and sought a refund, claiming that the amount had been retained unauthorizedly by the respondent. The respondent justified the tax collection based on legislative enactments and circulars issued by the Sales Tax Commissioner. The court upheld the respondent's actions, stating that the tax collected was part of the sale price and the burden was rightly passed on to the buyer, as per the circular issued by the Commissioner, Sales Tax.

4. The court referred to the Full Bench decision in Hukumchand Mills Ltd. v. Commissioner of Sales Tax, M.P. [1988] 71 STC 101 (MP) to settle the controversy regarding the classification of coal ash as a separate commodity subject to sales tax. The court reiterated that coal ash is distinct from coal and can be taxed separately, leading to the dismissal of the petition seeking a refund of the sales tax charged on coal ash.

5. The court highlighted the applicability of previous judgments, specifically mentioning the decision in State of Gujarat v. Raipur Manufacturing Co. Ltd. [1967] 19 STC 1, which was deemed superseded by legislative enactments. The court emphasized that the respondent had collected tax in accordance with the law, passing on the burden to the buyer as per the circular issued by the Commissioner, Sales Tax. The petition was ultimately dismissed, with no costs awarded.