2017 (10) TMI 950 - HC - VAT and Sales Tax

Manufacture - coal briquettes - case of assessee is that since there was no distinction between coal and coal briquettes, there could have been no levy of tax on coal briquettes on their sale within the State of U.P - Whether coal briquettes are as same as coal and hence no liability of tax can be fastened on the sale of coal briquettes? - Held that - Admittedly the expression manufacture as defined under the Act, brings within its ambit various processes including the adaptation, treating and processing of goods - reliance placed in the decision in the case of Sonebhadra Fuels Versus Commissioner, Trade Tax, UP., 2006 (8) TMI 304 - SUPREME COURT OF INDIA , where it was held that the process of making coal briquettes will amount to a manufacture as it is processing, treating or adapting coal - revision application dismissed.

Summary

Issues:
Exigibility to tax of coal briquettes manufactured by the assessee during different assessment years.

Analysis:
The judgment dealt with three revisions concerning the taxability of coal briquettes manufactured by the assessee in Uttar Pradesh. The counsel for the revisionists argued that since there was no distinction between coal and coal briquettes, no tax should be levied on the sale of coal briquettes within the state. However, the court referred to the definition of "manufacture" under the 1948 Act, which includes processes like adaptation, treating, and processing of goods. Citing the Supreme Court's decision in Sonebhadra Fuels Vs. Commr. Trade Tax (2006) 7 SCC 322, the court emphasized that the definition of "manufacture" under the U.P. Trade Tax Act is broad and encompasses activities that may not necessarily result in a new commercial commodity. The court highlighted that even activities like ornamenting goods can fall under the definition of "manufacture" as per the Act.

The court further examined the process of making coal briquettes, which involves grinding coal, mixing with binders, pressing in a briquetting press, and carbonizing in a carbonizer. The court concluded that this process constitutes processing, treating, or adapting the coal, thereby meeting the criteria of "manufacture" as per the Act. Consequently, the court dismissed the revisions, finding no merit in the argument that coal briquettes should not be subject to tax within the state of Uttar Pradesh.

In conclusion, the judgment clarified the taxability of coal briquettes manufactured by the assessee, emphasizing the broad definition of "manufacture" under the U.P. Trade Tax Act and how the process of making coal briquettes falls within this definition, making them liable for taxation within the state.