29-8- 2025 M/s Balajee Minerals, Nehru Nagar, Bhilai v. Non
Case Details
Page 1 of 19 (Tax Case Nos.27/2024, 29/2024 & 44/2024) SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2025.08.30 13:43:20 +0530 HIGH COURT OF CHHATTISGARH AT BILASPUR 2025:CGHC:43947-DB AFR TAXC No. 27 of 2024 (Assessment Year 2010-2011) Order reserved on: 31-7-2025 Order delivered on: 29-8- 2025 M/s Balajee Minerals, Nehru Nagar, Bhilai. --- Applicant Commissioner of Commercial Tax, Raipur. versus --- Non-applicant TAXC No. 29 of 2024 (Assessment Year 2014-2015) M/s Starex Minerals, Nehru Nagar, Bhilai. --- Applicant Commissioner of Commercial Tax, Raipur. Versus --- Non-applicant TAXC No. 44 of 2024 (Assessment Year 2011-2012) M/s Starex Minerals, Nehru Nagar, Bhilai (C.G.) --- Applicant Versus Commissioner of Commercial Tax, Raipur (C.G.) --- Non-applicant For Applicants : Mr. Neelabh Dubey, Advocate. For Non-applicant : Mr. Rahul Tamaskar, Government Advocate. Page 2 of 19 (Tax Case Nos.27/2024, 29/2024 & 44/2024)
Legal Reasoning
Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Deepak Kumar Tiwari, JJ. C.A.V. Order Sanjay K. Agrawal, J. 1. The Chhattisgarh Commercial Tax Tribunal, Raipur, in exercise of power conferred under Section 55(1) of the Chhattisgarh Value Added Tax Act, 2005 (for short, ‘the VAT Act’) has referred the following questions of law for decision by this Court under Section 55(1) of the VAT Act, which state as under: - Common questions of law in Tax Case Nos.29/2024 & 44/2024 1. Whether under the facts and the circumstances of the case the Tribunal is justified to hold that applicant dealer is manufacturer u/s-2(n) of the CG Vat Act and the provision of Sec.4-A of the entry tax applies. 2. Whether under the facts and circumstances of the case the Tribunal is justified to rely upon the decision of the High Court in the case of Rewa Coal Fields Ltd. Shahdol Vs. Sales Tax Commissioner, M.P. & Others (1994) 18 CTJ, page-71 which is under the MP General Sales Tax Act when the definition of manufacture u/s-2(j) was wide enough even to include collection of sand from river bed. 3. Whether under the facts and circumstances of the case the Tribunal is justified to apply the definition of raw material in this case whereas the issue is on manufacture. The CG Vat Act do not define raw material. Questions of law in Tax Case No.27/2024 1. Whether under the facts and the circumstances of the case inspite of accepting that the appellant do not hold explosive license the amount of Rs. 13,10,772/- in the balance sheet as blasting expenses, the Tribunal is justified to hold that this is purchase of explosive. Page 3 of 19 (Tax Case Nos.27/2024, 29/2024 & 44/2024) 2. Whether under the facts and circumstances of the case the Tribunal is justified to rely upon the decision of the High Court in the case of Rewa Coal Fields Ltd. Shahdol Vs. Sales Tax Commissioner, M.P. & Others (1994) 18 CTJ, page-71 which is under the MP General Sales Tax Act when the definition of manufacture u/s-2(j) was wide enough even to include collection of sand from river bed. 3. Whether under the facts and circumstances of the case, the Tribunal is justified to conclude that, the appellant has not produced the receipts and expenditure of the contract from Telecommunication consultants Limited. 2. Since common question of law arises for consideration in these three tax cases, except question Nos.1 & 3, they have been clubbed
Decision
together, heard together and are being disposed of by this common order. 3. The aforesaid questions of law arise for decision on the following factual backdrop: - {For the sake of convenience, Tax Case No.27/2024 (M/s. Balajee Minerals v. Commissioner of Commercial Tax) is taken as lead case.} 4. M/s. Balajee Minerals (applicant in Tax Case No.27/2024) entered into agreement for supply of blasting material (explosives) with M/s. Starex Minerals (applicant in Tax Case Nos.29/2024 & 44/2024). The applicant/assessee had filed 1st & 3rd quarterly returns on time and 2nd & 4th quarterly returns were filed with delay, however, the annual returns were not filed. Show cause notice for assessment was issued to the applicant and documents were filed on behalf of the applicant in which it is shown that the applicant had purchased explosives of ₹ 13,10,772/- and calculated Page 4 of 19 (Tax Case Nos.27/2024, 29/2024 & 44/2024) entry tax @ 1%. However, the Assessing Officer was of the view that the explosives were being used for mining and therefore entry tax was to be collected at enhanced rate as per Section 4A of the Chhattisgarh Entry Tax Act, 1976 and accordingly, assessment order was passed by the Assessing Officer for the assessment year 2010-11 against which the applicant filed appeal which was allowed by the appellate authority vide order dated 10-11-2016 and entry tax on explosives was charged as 1% in place of 10%, thereby, extending the benefit of ₹ 1,19,106/- to the assessee/applicant. The Commissioner, Commercial Tax, Raipur exercising suo motu revisional jurisdiction in case of the assessee, enhanced entry tax under Section 4A of the Chhattisgarh Entry Tax Act, 1976 and set aside the order dated 10-11-2016 and restored the assessment order dated 30-12-2015. In the second appeal preferred by the applicant, it was pleaded that the applicant is not the manufacturer and therefore not liable for enhanced rate of tax @ 10% under Section 4A of the Entry Tax Act and it was further pleaded that the applicant had never purchased explosives and had paid the amount to M/s. Starex Minerals. It was found that the applicant itself had shown ₹ 13,10,772/- for purchase of explosives and had paid entry tax @ 1%. The Chhattisgarh Commercial Tax Tribunal relying upon the judgment of the Supreme Court in the matter of Rewa Coal Fields Ltd. Shahdol v. Sales Tax Commissioner, M.P. and others1 held that mining was a manufacturing activity and 1 (1994) 18 CTJ, page-71 Page 5 of 19 (Tax Case Nos.27/2024, 29/2024 & 44/2024) proceeded to dismiss the appeal and rectification application was also dismissed whereupon reference application was filed under Section 55(1) of the VAT Act which was also dismissed. However, ultimately, application was filed before this Court for calling upon the Tribunal to make a reference and the Tribunal was directed to make reference upon which this reference has been made and above stated questions of law have been sent by the Tribunal seeking answer by this Court. 5. Mr. Neelabh Dubey, learned counsel appearing for the applicants herein/assessee, would submit that the Assessing Officer solely relying upon the circular dated 30-12-2016 invoked Section 4A of the Entry Tax Act and levied 6% and 10% entry tax wrongly treating the applicant as manufacturer. He would further submit that both the appellate forums affirmed the assessment without adjudicating the core statutory question whether the applicant’s activity constitutes “manufacture” under the VAT Act which is the essential prerequisite for attracting any notification under Section 4A of the Entry Tax Act mechanically invoking inapplicable precedent and misleading administrative circulars. He would rely upon the decisions of the Supreme Court in the matters of State of Maharashtra v. Mahalaxmi Stores2, Aman Marble Industries (P) Ltd. v. Collector of Central Excise, Jaipur3, Deputy Commissioner of Sales Tax (Law), Board of