2017 (3) TMI 535 - HC - VAT and Sales Tax

Works Contract - the supply of machine crushed track ballast would come within the fold of works contract or not? - deduction of 85% towards labour and service charges - Whether the ballast or boulder or chips is exigible to tax at the rate of 4% or 12% of the taxable list? - Held that - although the ballasts supplied at Serial No.1 are also required to be loaded to the Railway wagons. It is needless to opine that the loading of ballasts supplied is a labour charge and the same cannot be termed as a sale after going through the contents of the deed of contract. On the other hand, the supply and delivery of stacks including all other nature of works as agreed to between the parties as per Serial No.1 is a sale. The order of the Tribunal is correct for deducting the loading charges while computing the sales tax. Whether the sale of ballasts or boulders or chips including all incidental charges as per Serial No.1 of the tender schedule stated above mineral or not? - Held that - the word mineral is a word of common parlance used in various way but cannot be used in narrow sense. Similarly, it appears from the aforesaid decision that entries in the schedules of sales tax and excise statutes draws colour from the other words therein because of the principle of noscitur a sociis. Thus depending on the aforesaid doctrine in the present context, we have to see whether the ballast is a mineral even if it is not to be defined as mineral under the Act, 1957 or Rules made thereunder. Since the facts are clear in this case to show that the ballast has been prepared from the spalls which are extracted from the quarry taken by the opposite parties on payment of royalty and it has not been defined separately in the tax list, it is to be understood with common parlance - taking the common parlance test without going to the reasons by the Tribunal, the result is same to the effect that the ballasts, boulders or chips are nothing but mineral under Sales Tax Act exigible to tax at the rate of 4% as per Entry 117 of the taxable list. Whether such fresh plea can be raised in the second appeal without the same being raised in the forums below? - applicable rate of tax - Held that - there it is question of law as interpreted by parties - It is trite in law that the question of law can be raised at any stage. Moreover, the contention of the State that such plea of exigibility to tax at the rate of 4% of the taxable list before the Tribunal is barred by limitation is not acceptable as the said being question of law can be raised at any stage. Revision dismissed - decided against revisionist.

Summary

Issues Involved:
1. Whether ballast, boulder, or chips are exigible to tax at the rate of 4% or 12% of the taxable list.
2. Whether a fresh plea can be raised in the second appeal without the same being raised in the forums below.

Detailed Analysis:

Issue 1: Tax Rate Applicability on Ballast, Boulder, or Chips

The primary issue revolves around the tax rate applicable to ballast, boulder, or chips. The Tribunal reversed the concurrent findings of the First Appellate Authority and the Assessing Officer, who had taxed these materials at 12%.

Facts and Arguments:
- The opposite parties (assessees) supplied machine-crushed track ballast to the South Eastern Railway, claiming it should be taxed as a works contract with a deduction of 85% towards labor and service charges, and the rest taxed at 8%.
- The Assessing Officer and the First Appellate Authority treated these transactions as sales of chattel qua chattel and taxed them at 12%.
- The Tribunal, however, held that the ballast supplied to the Railway falls within the ambit of "mineral" and is exigible to tax at 4% as per Entry 117 of the taxable list.

Legal Reasoning:
- The Tribunal considered the definition of "mineral" under the Mines and Minerals (Regulation and Development) Act, 1957, and the Orissa Minor Mineral Concession Rules, 2004.
- The Tribunal concluded that ballast, being derived from spalls extracted from a quarry, qualifies as a mineral and is thus taxable at 4%.
- The High Court upheld this interpretation, emphasizing the common parlance test, which dictates that terms in taxing statutes must be construed in their commercial or trade understanding unless a contrary legislative intention is expressed.

Conclusion:
The High Court confirmed that ballast, boulders, and chips, being minerals, are exigible to tax at the rate of 4% under Entry 117 of the taxable list.

Issue 2: Raising Fresh Plea in Second Appeal

The second issue pertains to whether a new plea regarding the taxability of ballast as a mineral could be raised for the first time in the second appeal before the Tribunal.

Facts and Arguments:
- The State contended that the Tribunal erred by considering the claim that ballast is a mineral exigible to tax at 4%, as this plea was not raised before the lower authorities.
- The Tribunal allowed this plea, leading to the State's argument that it violated principles of natural justice and procedural fairness.

Legal Reasoning:
- The High Court noted that the Tribunal, as a court of fact and law, has the authority to consider new issues raised before it.
- The Court emphasized that questions of law can be raised at any stage of the proceedings, and the State had the opportunity to rebut the new plea by filing cross-objections.
- The Court found no procedural irregularity in the Tribunal's decision to entertain the fresh plea regarding the tax rate applicable to ballast.

Conclusion:
The High Court held that the Tribunal acted within its jurisdiction in considering the new plea, and there was no procedural defect in raising such an issue in the second appeal.

Final Judgment:
The High Court dismissed the revisions, confirming the Tribunal's orders that ballast, boulders, and chips are minerals exigible to tax at the rate of 4%. The Court also upheld the Tribunal's decision to deduct loading charges from the computation of sales tax.