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TMI Blog1975 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... s amendment by Act 61/ 72 with effect from 1st April, 1973. If it is declared goods, the appellant s sales "would be second sales and therefore exempt. In respect of charcoal, it was the appellant s plea that even after its specific exclusion from the Entry under s. 14(1) of the CST Act, it continues to be coal in the popular sense and that it could not be excluded in view of long line of judicial authorities. The assessing authority declined to grant both the exemptions. He also made an addition of Rs. 428.09 being the amount received from boatmen for alleged shortages as sales. The AAC confirmed the assessment. The appellant is therefore before us. Since three issue are involved, we consider it convenient to discuss each issue separately. 3. The appellant disputes the levy of tax on charcoal at three and a half per cent upto 3rd March, 1974 and 5 per cent after 3rd March, 1974 on the ground that charcoal is coal within the meaning of s. 14(i) of the CST Act, 1956 and that therefore the tax rate cannot exceed 3 per cent as prescribed under s. 15(a) of the CST Act. It is contended that charcoal has been declared and understood as one of the declared goods and the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h unamended is governed by title to Second Schedule which shows Second Schedule is for declared goods and s. 4 which makes the Second Schedule applicable to declared goods. Sec. 2(h) defines declared goods to mean goods declared by s. 14 of the CST Act, 1956 (Central Act 74 of 1956) to be of special importance in inter-State trade or Commerce. Hence an amendment of s. 14 of the Central Act deleting any goods from s. 14 has automatically the effect of excluding it from Second Schedule. In fact the corresponding entry is First Schedule was also retrospectively amended by Act 39 of 73 dt. 20th Dec., 1973. Hence, in this sense, the view of the authorities that it is taxable at three and half percent on multi point basis from 1st April, 1973 upto 3rd March, 1974 and at 5 per cent from 4th March, 1974 under Entry 82 of Sch. I introduced from that date has to be confirmed. The appeal on this point therefore fails. 5. As regards the claim for exclusion of Rs. 428.09 the amount received from Boatmen allegedly for shortages and treated as sales by the assessing authority we find that no evidence or facts have been placed before the authorities below or before us. Even before us, the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cool, coke, lignite and charcoal. He pointed out that lignite has always been considered as one of the items of coal. If at all, the technical view was that charcoal was not coal. But the Supreme Court found that even charcoal could be included in coal in the popular sense. But, it was nobody s case at any stage that lignite which is coal was a variety of charcoal. Such a contention he claimed, would be absurd. He pointed out that the decision of the Madras High Court in 27 STC 167 merely laid down that Loco cannot be understood as "anything otherwise than as domestic fuel". He claimed that even this conclusion was result of concession was result of concession by the parties. According to him, it is not correct to say that it is domestic fuel. He gave a list of purchases of lignite from Neyveli Lignite Corporation which showed that Loco is being used by lot of industries. Even when sold on semi-whole sale basis, it is consumed mainly in hotel industry. The consumption as domestic fuel, according to him is limited though Neyveli Lignite Corporation tried to promote such sales initially, when they were not sure of the market for all their production. In spite of all their attempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed as charcoal under the authority of Madras High Court decision in 27 STC 167, is no justification for the single point levy at the enhanced rate if 5 per cent. Accordingly to him, such a levy was outside the competence of the State Legislature and hence the question of its of its implementation does not arise. 8. Thiru J. Venugopal, the learned State Representative on the other hand, was content to rely upon the decision of the Madras High Court in Dy. CIT (CT) Pondicherry vs. R.A. Akkar Alikhan and Abdul Raheem and Co. reported in 27 STC 167 for his stand. He claimed that it has been specifically laid down that the very product under consideration viz. Loco which is produced from Lignite by a process of Briquetting and Carbonisation was the subject matter of the said decision. Under Pondicherry General Sales Tax Act, only firewood and charcoal were exempt. It is common ground that Loco is not firewood. All the same it was held to be exempt under the Entry, obviously because as domestic fuel, it was considered that it is futile on the part of the counsel to claim that this decision has no application. He contended that this decision is binding on us and that we have no optio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 29 STC 365 where it was laid down that circulars issued by the Government of India were not binding on the sales tax authorities or the High Court. He therefore wanted us to decide the issue without giving any weight to the said circular which is not binding but follow the decision of Madras High Court in 27 STC 167 which he claimed is directly in his favour. 9. We have carefully considered the materials placed before us. The appellant sells Loco which is the trade name for carbonised lignite briquettes made from lignite, a mineral excavated in the mines in Neyveli area in Tamil Nadu by the Neyveli Lignite Corporation-a public sector undertaking. Just as coke is got from coal, Loco is got from Lignite. Loco has been described as a variety of coke (Examples Govt. of India s letter dt. 22nd Sept, 1963 and view of Pondicherry tax authorities as cited by the High Court in 27 STC 167 and 168). Extracts from numerous standard encyclopaedia and text books have been filed before us. Encyclopaedia Brittanica, Mc Graw Hill Encyclopaedia of Science and Technology. The Encyclopaedia Americana, Kirk Othmer Encyclopaedia of Chemical Technology. The Encyclopaedia Americana, Kirk Othmer Encyc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lopaedias. Coal is a mineral while charcoal is from charred vegetable matter or bones. All the same, the charcoal is considered as coal in popular sense. It was therefore considered by the Court and finally by the Supreme Court in the case of CIT of ST vs. Jaswant Singh Charan Singh that there was no reason for excluding charcoal from coal in any narrow technical sense. In other words, the concept of coal stood enlarged to include charcoal also. But, lignite was coal even according to the authorities, both before and after the said decision. In other words, both in its technical and popular sense, lignite was always coal. From 1st April, 1973, Act 61/72 modified the Entry from "Coal including coke in all its forms" to "Coal including coke in all its forms, but excluding charcoal". Now the question is whether lignite also got excluded when charcoal was excluded ? If lignite was coal even before the enlarge meaning was given to coal by Courts, it is difficult to see how it ceases to be coal after the exclusion o charcoal. We found no material from any of these references for saying that lignite is a variety of charcoal. When the Government of India and State Government had clearly ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case, it is common knowledge that Loco, which is an expression which is of recent origin, has never been understood as anything otherwise than as domestic fuel". It thereafter referred to the concession of the Government Pleader "that there is no other uses of Loco otherwise than as combustible material used as charcoal. Obviously the view of Pondicherry Government was that loco could not be charcoal even if it were domestic fuel like charcoal. The High Court further observed that it (loco) was primarily intended by the manufactures as a fuel corresponding to the charcoal. The observation is understandable because even one of the published brocures issued by the Neyveli Lignite Corporation described Loco as "carbonised Lignite, an excellent substitute for Kerosene and Charcoal". However the brocure further advertised loco to be most useful for hotels and restaurants, hospitals, laundries, as well as domestic fuel besides being useful as industrial fuel and as fuel for boilers, cement and bricks kilns etc. As repeatedly urged by the learned counsel, it was conceded before the Madras High Court, that Loco was primarily a domestic fuel. Now the learned counsel points out that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956. In another sense, charcoal is still coal in view of the Supreme Court decision reported in 19 STC 469 though this variety of coal (charcoal) is no longer declared to be goods of special importance in inter-State trade and commerce under s. 14. Hence charcoal in the relevant year for the High Court decision was coal even under s. 14 of the Central Sales-tax Act and all the same it was exempt under item 18 of the Third Schedule of Pondicherry General Sales Tax Act. If charcoal could be exempt though it was declared goods during the year, we could not understand at all the claim that lignite was exempted by the Madras High Court in its said decision in 27 STC 167 only because it was charcoal and not coal. If it was a substitute for charcoal as a domestic fuel exemption under item 18 followed in the view of the Madras High Court decision which considered that item 18 sought to exempt a class of goods which are domestic fuel and on the popular sense loco could be construed as charcoal because it was taken as domestic fuel as a goods substitute for charcoal. That does not make it charcoal. To report, the issue before the High Court was not whether lignite was coal at all. The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpreting entry like "Firewood and charcoal" the functional nature of the entry as domestic fuel was considered and user text applied. However in considering s. 14(1) of the Central Sales Tax Act, the user test cannot be applied, since it is well established that user test is not conclusive as held in numerous cases as for example State of Madras vs. S.P. Vadivelu Ors. (2) STC 448, K.J. Joshi and Co. vs. Joint Commercial Tax Officer (1972) TLR 1928, Madras. (v) The contention of the State under the Pondicherry Act was that "loco" fell under "coke in all its form". This finding of lower authorities was neither question nor disturbed by the High Court. The conclusion of the High Court obviously was that, notwithstanding the fact that it was coke, it was exempt under Entry 18 as a domestic fuel". In this sense also the Madras High Court s decision is not at all inconsistent with the claim of the appellant. (vi) There is no authority for presuming that the side decision held. (a) Lignite is a variety of charcoal (b) But for its being a variety of charcoal, it could not be classed under "coal". The High Court did not lay down any such proposition as presumed by Revenue. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not listed iron hoops in the list of items covered by the said entry in a circular letter. Non-listing of certain item in the circular was taken to mean that it was excluded. It is in this context that the Court found that the concession claimed could not be ruled out by a circular. Where a clarification, which confirms a concession to the tax payer, is given we doubt very much whether it was open to the assessing authority to ignore it at his will in respect of some cases and follow it in some others. The Madras High Court in Authorised Representative Shenbaga Nadar and Balasubramania Nadar vs. State of Madras reported in 31 STC 81 clearly pointed out to the desirability of following administrative instructions for the date of uniformity words : " As pointed out by Bernard Schwartz in his "Introduction to American Administrative Law" Second Edition, at page 54 : "Administrative interpretation are in most cases accepted as final. These affected will normally conform to them, for they serve as the guided to administrative action. In America, indeed, they tend to acquire all but statutory effect because of the deference which the Courts normally pay to them, where the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i vs. K.K. Sen (56 ITR 198) the authorities would naturally be bound to accord such concessional treatment to the assessees under their jurisdiction. Otherwise, the result would be arbitrary because it will then be open to the authorities to deny one assessee the concession on an alleged correct interpretation of law while granting all others the concession treatment authorised by the Departmental authorities." Even taking a middle path, it stands to reason that the clarification could not be lightly brushed aside. The Madras High Court in 31 STC 81, as pointed out earlier held that the instruction "cannot altogether be ignored". In State of Madras vs. Harshkant S. Metta (31 STC 365) it held that though it (instruction) is not binding it "may be of some assistance in the interpretation". If it is so even for appellant authorities, it stands to reason that it cannot be ignored by the assessing authority and that, where it is sought to be ignored, the appellate authorities could enforce compliance on the part of the assessing authority where there is departure from the same. In fact in Cauvery Spinning Manufacturing Co. Ltd. vs. The Ulhasngar Municipal Council 1971 AIR SC 1021, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the subject both by the Central or State Government. 12. Another line of argument adopted by the learned State Representative was that the State Government in enacting item No. 82 w.e.f. 4th March, 1974, classified Loco along with charcoal. This would not have been possible if these were declared goods. Since we could not go into the vires of this provision in view of the decision of K.S. Venkatraman and Co. (P) Ltd. vs. State of Madras (17 STC 418) the learned State Representative contended that we will not be justified in treating it as declared goods. Actually we will not be justified in interpreting the law prior to 4th March, 1974 on the basis of such enactment as on 4th March, 1974. Besides, it is doubtful when there is a prima facie conflict between the Central Sales tax and Tamil Nadu General Sales Tax Act, we would be justified in ignoring the provisions of the CST Act on the plea that we cannot question the provisions of Tamil Nadu General Sales Tax Act, especially s. 2(h) and s. 4 of the local Act make s. 14(i) of CST Act also part of the local act. We are however finding it unnecessary to go into the question of the competence of the Legislature as canvassed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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