Ujjal Bhuyan J.
1. By this application under article 226 of the Constitution of India, petitioner challenges the decision of the revenue authorities of the State in treating Bentonite as a chemical and taxing the same as a residuary item attracting tax @ 12.5% under the Assam Value Added Tax Act, 2003. Consequently, the assessment order dated 30.3.2009 for the assessment year 200506 as affirmed by the revisional authority and by the Assam Board of Revenue in appeal have been put to challenge.
2. The facts of the case may be briefly noted.
3. Petitioner is a proprietorship concern engaged in the business of purchase and sale of Acids, Chemicals, Minerals, Bentonite etc. Petitioner is a registered dealer under the Assam Value Added Tax Act, 2003 (''VAT Act''). For the assessment year 200506, petitioner submitted monthly tax returns along with due payment of tax as per the said returns. During the said year, petitioner affected sale of Bentonite to the extent of Rs. 7,10,815 and paid 4% VAT thereon, being covered by item Nos. 45 and 72 of the Second Schedule PartA General to the VAT Act, which furnishes a list of goods taxable at 4%. Description of the item against entry No.45 is "ores and minerals" and against entry No.72, it is "clay including fire clay".
4. The jurisdictional Superintendent of Taxes made audit assessment under section 36 of the VAT Act. In the assessment order dated 30.3.2009, the assessing officer referring to a circular dated 5.1.2006 of the Commissioner of Taxes, Assam, held that the item Bentonite is taxable at 12.5% instead of 4% which the dealer had paid. The assessable turnover was worked out accordingly. It may be mentioned that as per the circular dated 5.1.2006, Bentonite powder was held to be a chemical and not as clay on the basis of Gujarat High Court decision in the case of Vijay Foundry and Machinery Works v. State of Gujarat 84 STC 152. It was further held that since Bentonite powder was an unclassified item, it would be taxable under the entry at Serial No. 1 of the Fifth Schedule to the VAT Act @ 12.5%.
5. Petitioner filed revision petition before the Commissioner of Taxes against the aforesaid assessment order contending that the rate of tax in case of Bentonite should have been 4% as per entry 45 or 72 of the Second Schedule to the VAT Act instead of being charged at 12.5% as a residuary item under entry 1 of the FifthSchedule to the VAT Act. However, the revisional authority by the order dated 11.8.2009 upheld the order of the assessing officer based on the departmental circular, which in turn was based on the decision of the Gujarat High Court in the case of Vijay Foundry holding that Bentonite clay is not a mineral and, therefore, could not be brought under entry 45 or 72 of the Second Schedule to the VAT Act. As Bentonite clay is not enlisted as a specific item, it was correctly treated as a residuary item which is taxed at a higher rate.
6. Petitioner preferred appeal before the Assam Board of Revenue, which was registered as Case No.39 STA/2009. By the judgment and order dated 13.10.2010, the Board of Revenue upheld the orders of the departmental authorities based on the Gujarat High Court decision in Vijay Foundry and dismissed the appeal.
7. Aggrieved, petitioner has filed the present writ petition.
8. We have heard Mr. G.K. Joshi, learned senior counsel assisted by Mr. R.K. Joshi, learned Counsel for the petitioner as well as Mr. S. Saikia, learned standing counsel, Finance Department for respondents 1 to 4.
9. Mr. G.K. Joshi, learned senior counsel appearing for the petitioner submits that the Gujarat High Court decision in Vijay Foundry is clearly distinguishable on facts as under the Assam Minor Mineral Concessions Rules, 1994, Bentonite is classified as a minor mineral. Consequently, Bentonite would be covered by the specific entries 45 and 72 of the Second Schedule to the VAT Act. Therefore, there is no scope for treating Bentonite as a residuary item under the Fifth Schedule to the VAT Act. which attracts higher tax� 12.5%. In support of his submissions, learned senior counsel has referred to and relied upon the following decisions :
State of Maharashtra v. Bradma of India Ltd., 140 STC 17.
Hindustan Poles Corporation v. Commissioner of Central Excise, Calcutta, 145 STC 626.
Commercial Taxes Officer v. Jalani Enterprises, (2011)4 SCC 386.
10. Mr. S. Saikia, learned Standing Counsel, Finance Department on the other hand submits that there is no infirmity in the decision taken by the State revenue authorities. He submits that the departmental authorities having held Bentonite as a chemical and not as a mineral, it was rightly taxed as a residuary item in the absence of any specific entry in the Taxable Schedule to the VAT Act. Though no counter affidavit has been filed, the relevant records have been produced. He also refers to adecision of the hon''ble Supreme Court in the case of Atul Glass Industries (P.) Ltd. v. Collector of Central Excise, AIR 1986 SC 1730.
11. Submissions made have been considered.
12. Section 3(e) of the Mines and Minerals (Regulation and Development) Act, 1957, which is a central legislation, defines minor minerals. Section 15 of the said Act empowers the State Government to make rules for regulating the grant of mining leases, etc., in respect of minor minerals and for purposes connected therewith. Assam Minor Mineral Concessions Rules, 1994 have been made by the Government of Assam under the Mines and Minerals (Regulation and Development) Act, 1957. Under the said Rules, Bentonitc has been classified as a minor mineral with a specific rate of royalty chargeable.
13. In the Directory of Mineral Consumers in India, a publication of Indian Bureau of Mines, which has been placed on record by the petitioner, Bentonite has been specified as clay as well as mineral. According to the petitioner, it is also the stand of the Government of India that Bentonite is a minor mineral defined under section 3(e) of the Mines and Minerals (Regulation and Development), Act, 1957, which would be evident from the answer given by the Minister of State, Ministry of Coal and Mines, Government of India, in the Lok Sabha against unstarred question No. 2284 on 30.7.2002 which has also been placed on record by the petitioner and which has remained unrebutted. Further, Bentonite is classified, as "other clays" under tariff item No.2508.10 under the Central Excise Tariff Act, 1985.
14. Coming to the VAT Act, PartA General of Second Schedule thereto furnishes a list of goods taxable at 4%. As already noticed, description of goods covered by the item at Serial No. 45 is "ores and minerals" and against Serial No. 72, it is "clay including fire clay".
15. Reading the provisions of Assam Minor Mineral Concessions Rules, 1994 together with the above entries, it is quite evident that Bentonite being a minor mineral would be covered by the entry at Serial No.45 of PartA General of the second schedule, if not by both the entries at Serial Nos. 45 and 72.
16. The Gujarat High Court based its decision in Vijay Foundry to a large extent on the fact that in the Mines and Minerals (Regulation and Development) Act, 1957 or in the Gujarat Rules framed thereunder, nowhere Bentonite was referred to either as mineral or as minor mineral. That was a case decided in the year 1981 and the Gujarat Rules did not classify Bentonite as a mineral. The specific stand of the Central Government came thereafter in the year 2002. Moreover, in the Assam Rules of 1994, Bentonite is clearly classified as a minor mineral. In these circumstances, the Gujarat decision is clearly distinguishable and reliance placed thereon by the revenue authorities has vitiated the assessment order as well as the subsequent orders.
17. As has already be noticed earlier, there is a specific entry against vSerial No.45 (if not also against Serial No.72) specifically covering Bentonite as a mineral, which attracts tax@ 4%. Therefore, there is no justification to treat Bentonite as a residuary item against Serial No.1 of Fifth Schedule to the VAT Act, attracting higher, rate of tax at 12.5%. The Apex Court has held in State of Maharashtra v. Bradma of India Ltd. that a specific entry would override a general entry and that resort has to be had to the residuary heading only when by a liberal construction the specific heading cannot cover the goods in question. In the case of Commercial Taxes Officer v. Jalani Enterprises, the hon''ble Supreme Court has held as under :
"It is settled law that when one particular item is covered by one specified entry, then the Revenue is not permitted to travel to the residuary entry. If from the records it is established that the product in question could be brought under a specific entry then there is no reason to take resort to the residuary entry".
18. In the case of Atul Glass Industries relied upon by the Revenue, the hon''ble Supreme Court had reiterated the well known principle that in determining the meaning or connotation of words and expressions describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly wellsettled it is that the words or expression must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. This decision, in our view, instead of helping the Revenue, can only fortify the case of the petitioner.
19. Thus, having regard to the facts and circumstances of the case and in view of the discussions made above, we are of the considered opinion that the item Bentonite which is being traded by the petitioner would be covered by the entry against Serial No. 45 of PartA General of the Second Schedule to the VAT Act (if not also covered by the entry against Serial No.72 thereof), Consequently, it will attract tax @ 4%.
20. The orders of the lower authorities are accordingly interfered with. Petitioner will be entitled to the consequential relief.
21. Writ petition is allowed.
22. No cost.
