JN])JAN CARBON LTD v. SUl'ERINTENDENT OF TAXES, GAUHATI & Ors.

Indian 1t started its busi Companies Act 1956 in the State of Assam. nei;s on November 17, 1962 for the first time. lts business cludes sale and purchase of petroleum coke. Until September !. 1964 no sales tax was levied or was payable by the company on the sale of petroleum coke because in Schedule 3 of the Assam Sales Tax Act 194 7, hereinafter called the 'Assam Act'. which enumerated the goods on which tax was not payable, Entry 7 A B c D E F G H ·A B c D E F G H INDIAN CARBON v. SUPDT, OF TAXES (Grover, J.) 317 read ".coal, coke and coalgas". By Amending Act 14 of 19M the said Entry was deleted from Schedule 3 to the Assa'm Aet witk ' effect from, September l, 1964. By means of a letter dated July 7, 1964 the Superintendent of Taxes, Assam, informed the com pany that the petro]eum coke and gas were taxable at the rate of 5 Np in a rupee under the Assam Act and directed the company to submit the return for all the periods prior to September 1, 19(;.( and also apply for registration under the Assam Act for the sale of petroleum coke within the State of Ass~. The company pre~ ferred a petition for revision under s. 31 ( 2) of the Assam Act challenging the order of the Superintendent of Taxes. This peti- - tion was dismissed by the Conunissioner of Taxes on September 8. 1965. During the pendency of the said Superintendent of Taxes by his letter dated August 14, 1965 - modified his earlier order to the extent that the demand was con fined to the sale of petroleum coke subsequent to September 1, 1964. The company then moved the High Court under Art. 226 of the Constitution which was dismissed. revision petition In the writ petition as also. the return filed in reply thereto and before rthe High Court the provisions of certain other enact ments were mentioned. Thes'e were the Assam Finance Salei Tax Act 19 5 6 as amended from time to time and (Sales of Petroleum and, Petroleum Products; ..... ) Act 1956 as amended. It is unnecessary to refer to their relevant provi sions because before us it is common ground that the tax would be payable under the Assam Act, the only question being about the rate. - Under the Assam Act the rate chargeable was 5 paise per rupee. But it has been claimed on. behalf of the appellant that by virtue of the provisions of the Central Sales Tax Act 1956. hereinafter called the "Central Act", the rate at . which the would be payable is 2 paise per rupee. the ~am - Section 14 declares, inter alia, that coal including coke in all 'in_ its forms constitutes goods which are of special inter-SJate .trade or commerce. Section 15 ( 1) of the Central Act as it stood 'at the relevant time was in the following terms : -· importance S. 15 ''Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase ·of declared goods, be -subject to the following restrictions · and conditions, namely : - (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed (two per cent) of the sale or purchase price thereof, and such tax shall not .be levied at more .than one stage. 2-1340Sup.CJ/71 Scanned by CamScanner 318 SUPREME COURT REPORTS [ 19 72] I S.C.R. (b) " A It may be mentioned that by Amending Act 13 of 1966 3% was substituted for 2% with effect from July 1, 1966. It is not disputed that if petroleum coke is covered by clause (i) of s. 14 which reads "coal including coke in all its forms" the B State was not competent to levy tax at a rate exceeding the one given ins. 15 (a) of the Central Act. Before the High Court it was common ground that petroleum coke is used mainly in indus tries dealing with. the manufacture of carbon products and differs in material constituents, quality, utility and composition from the ordinary coke used as fuel. manufacture of dry cells, carbon electrodes and electric furnace resistance elements. Reference has also been made in the judg ment to what is stated in 'Chemical Engineers' Handbook', 3rd Edn., at page 1566 : - It is used largely the c "Coke is a hard, dense, infusible carbonization residue that ranges from a dull gray-black to a silvery grey; the latter is characteristic of good quality, high temperature coke. A coke of this type makes a ringing sound when dropped or struck with a hard object. It exhibits a porous cellular structure, which primarily rate of depends upon the kind of coal used and heating during the carbonization process." D E The High Court was of the view that the word 'coal' includes coke in all its forms in clause (i) of s. 14 of the Central Act and must be taken to mean coke derived from coal. In other words it must be coke which had been derived or acquired from coal by follow- ing the usual process of heating or burning. The contention, therefore, of the appellant was negatived that petroleum coke was F covered by the aforesaid provision of the Central Act. We are wholly unable to agree with the reasoning or the con clusion of the High Court with regard to the ambit and scope of clause (i) of s. 14 of the Central Act. The language is clearly wide and coal has been stated to include coke in all its forms. is not denied that petroleum coke is one of the forms of coke. Therefore on a plain reading of the aforesaid clause it is incom prehensible how petroleum coke can be excluded from its ambit. It may be that the clause mentions coal only and then declares that that word shall include coke in all its forms. That shows that the object of the words which follow coal is to extend meaning. In the writ petition It was stated in para 2 that "coke is the refuse left after destructive distillation of coal, shale or oil and is called Petroleum coke. Metallurgical coke or pitch coke, It G its H INDIAN CARBON v. SUPDT. OF TAXES (Grover, J.) 319 to indicate its source or origin; but all these are carbonacious material used for the same purpose and having same properties, more or less, main being -Mixed Carbon,-Volatile Matters, -Ash and-Moisture." In the affidavit in opposition that wru> filed by the Assistant Com missioner of Taxes, Assam, this statement does not appear to have been properly denied. All that has been stated in para 5 is that the word "coke'' in clause ( i) of s. 14 implies coke obtained from coal only and does not include petrolewn coke. The statement the word in the writ petition is very similar to the meaning of "coke" given in Webster's New International Dictionary; Vol. l which is as follows : - 'The infusible, cellular, coherent residue obtained It when coal is subjected to destructive distillation. consists mainly of carbon, is hard, porous, and gray, and has a submetallic luster. Any similar substance left as a residue when petroleum, shale oil, etc .. are distilled to dryness." Our attention has been invited by learned counsel for the State to the discussion in Encyclopaedia Britannica, Vol. 5 on coke, coking and high temperature carbonization. We do not consider that when the Parliament used the word "coke" in s. 14(i) of the Central Act it had any intention to give it a meaning other than ihe ordinary dictionary meaning which would cover petroleum coke. At any rate, the language employed is so wide viz. "Coke in all its forms" that petroleum coke which is a form of coke cannot possibly be excluded merely by reference the word "Coal". For the rea, ons given above the appeal is allowed and Judgment of the High Court is set aside. The writ petition shall stand allowed only to the extent that the State will be entitled to levy tax under the Assam Act not exceeding the rate given cl. (a) of s. 15 of the Central Act. The appellant shall be entitl ed to its costs in this Court. A B c D E F G V.P.S. Appeal allowed.