1975 (8) TMI 70 - AT - Income Tax

Summary

Issues Involved:

1. Levy of tax on charcoal.
2. Addition of Rs. 428.09 received from boatmen.
3. Levy of tax on sales of Loco (carbonised lignite briquettes).

Issue-wise Detailed Analysis:

1. Levy of Tax on Charcoal:

The appellant disputed the levy of tax on charcoal at three and a half per cent up to 3rd March 1974 and 5 per cent after 3rd March 1974, arguing that charcoal is coal within the meaning of Section 14(i) of the CST Act, 1956. They contended that the tax rate should not exceed 3 per cent as prescribed under Section 15(a) of the CST Act. The appellant cited the Supreme Court and Madras High Court rulings which held that in popular parlance, coal included charcoal. However, the Tribunal noted that the amendment to Section 14(i) specifically excluded charcoal from 1st April 1973. The Tribunal confirmed that charcoal is not governed by the limitations under Section 15 of the Act and upheld the higher rate of tax. Consequently, the appeal on this point failed.

2. Addition of Rs. 428.09 Received from Boatmen:

The appellant contested the addition of Rs. 428.09 received from boatmen for alleged shortages, which was treated as sales by the assessing authority. The Tribunal found that no evidence or facts were presented before the authorities or the Tribunal to judge the nature of the receipts. Therefore, the Tribunal had no option but to confirm the addition. The appeal on this point also failed.

3. Levy of Tax on Sales of Loco:

The appellant contended that Loco (carbonised lignite briquettes) should be classified as coal and therefore be exempt from higher tax rates. The authorities had considered Loco as charcoal based on a Madras High Court decision. The appellant argued that lignite is a form of coal, not charcoal, and cited various sources and government clarifications to support this claim. The Tribunal reviewed extensive materials and definitions, concluding that lignite is indeed coal and not charcoal. The Tribunal found no basis for excluding lignite from the category of declared goods under Section 14(i) of the CST Act. The Tribunal rejected the authorities' view that lignite was excluded along with charcoal after the amendment. Consequently, the Tribunal allowed relief on the turnover of Rs. 2,52,446.10 at three and a half per cent, as these were second sales in the appellant's hands.

Conclusion:

The appeal was partly allowed. The appellant was granted relief on the turnover of Rs. 2,52,446.10 at three and a half per cent, confirming that Loco is declared goods under Section 14(i) and should not be taxed at a higher rate. The Tribunal upheld the higher tax rate on charcoal and confirmed the addition of Rs. 428.09 received from boatmen.