S.D. Dave, J.@mdashSince common questions of law and facts arise, at the request and with the consent of the learned advocates appearing for the parties, all these five petitions are being disposed of by this common judgment and order.
2. The central question which is required to be considered and determined is whether lignite is coal covered by entry No. 1, Schedule II, Part A of the Gujarat Sales Tax Act, 1969 and is it the declared goods of special importance u/s 14 of the Central Sales Tax Act, 1956.
If yes, whether the restrictions imposed under the provisions of section 15 of the Central Sales Tax Act, 1956, would be attracted or not ?
3. Special Civil Application No. 2927 of 1991 is filed by M/s. Sagar Tiles Company, Morbi, while Special Civil Application No. 1861 of 1987 is filed by Morbi Roofing Tiles Manufacturer''s Associations and Special Civil Application Nos. 4220 of 1998, 6583 of 1988 and 3410 and 1989 have been filed by Jiyajirao Cotton Mills Ltd., Indian Rayon and Industries Ltd. and Tata Chemicals Limited, respectively. In substance the petitioners pray for declaration that the rate of tax on sales of lignite stands modified pro tanto to 4 per cent. and the respondents be restrained from levying and collecting or recovering sales tax at the rate in excess of 4 per cent. of the sale price. The petitioners have also prayed for the refund of the amount of sales tax levied in excess of 4 per cent. with interest.
4. As provided under entry 102 of Schedule II, Part A of the Gujarat Sales Tax Act, 1969 (for short "the local Act") lignite is subject to sales tax or purchase tax as the case may be at the rate of 10 paise in rupee. This entry has been inserted by the Gujarat Act No. 17 of 1981 and has come into force with effect from April 10, 1981. Entry No. 1, Schedule II, Part A of the local Act provides for levy of sales tax or purchase tax on coal in all its forms (excluding charcoal) at the rate of four paise in rupee.
5. That the coal is declared goods for special importance in inter-State trade and commerce u/s 14 of the Central Sales Tax Act, 1956. Thus by virtue of the provisions of section 15 of the Central Act, the States are prohibited from levying tax under the local Act on coal in excess of 4 per cent. of the sale or the purchase price. As indicated hereinabove entry 1, Schedule II, Part A of the local Act refers to coal including coke in all its forms (excluding charcoal) and seeks to levy tax at the rate of 4 paise in rupee. However, the State Legislature of the Gujarat State, amended the local Act No. 17 of 1981 which has come into force from April 10, 1981. By this amendment entry 102 has been inserted in Schedule II, Part A to the local Act. Initially sales tax on lignite was imposed at the rate of 6 per cent. u/s 4A of the local Act an additional tax at the rate of 10 per cent. of sales tax is leviable. Thus the effective rate of tax on lignite came to 6.6 per cent. The same rate has been increased from 6 per cent. to 10 per cent. with effect from April 1, 1987 [see section 7(13) of the Gujarat Act No. 16 of 1987] and with the additional tax provided u/s 4A of the local Act, the effective rate came to 12 per cent. However, from April 1, 1978, entry 184 was inserted and sales tax was reduced to 8 per cent., but the effective rate along with the additional tax came to 9.6 per cent. This entry has been deleted with effect from April 1, 1989. Consequently the rate of sales tax was fixed at 10 per cent. but the effective rate with additional tax stood increased to 12 per cent. up to August 5, 1988. From August 6, 1988 to July 31, 1989 the effective rate was 10 per cent. and from August 1, 1989 to March 31, 1991 it was 9.6 per cent. The State Legislature has again amended columns 3 and 4 of entry 102 with effect from April 1, 1991 and the rate of sales tax has been increased from 10 per cent. to 15 per cent. and coupled with the additional tax, the effective rate comes to 18 per cent. of the sale price.
6. The learned counsel Mr. R. D. Pathak appearing for the petitioners contended that lignite is coal and therefore the provisions of section 14 of the Central Act would be applicable to the facts of all the petitions. As natural corollary of this contention it is further contended that the provisions of section 15 of the Central Act would be attracted and the tax on lignite is subject to restrictions imposed u/s 15 of the Central Act. On behalf of the respondents it is contended that lignite is entirely a different commodity and it cannot be said to be coal. Therefore, the provisions of sections 14 and 15 of the Central Act are not attracted.
7. It is contended by Mr. Pathak, the learned counsel appearing for the petitioners, that in the year 1976, the Gujarat Mineral Development Corporation (for short "the GMDC") had made an application u/s 62 of the local Act for determination of the rate of sales tax, on lignite. As provided u/s 62 of the local Act the question can be referred to the Commissioner of Sales Tax as to whether any tax is payable in respect of a particular sale or purchase and if yes the rate at which the tax is payable. If such application is made, the Commissioner is required to pass order determining such questions. Such an application was made by GMDC together with invoice dated March 1, 1975, requesting to determine the rate of tax payable on sale or purchase of lignite. The Deputy Commissioner of Sales Tax had come to a conclusion that lignite should be treated as coal and therefore tax leviable would be at the rate of 4 per cent. on the sale or purchase price of the lignite.
8. The learned counsel Mr. Pathak has placed heavy reliance on the aforesaid determination order which is produced at annexure "A" to the memo of Special Civil Application No. 1861 of 1987. It is submitted that once such determination order is passed by the competent authority, which exercises judicial or quasi-judicial power in nature, it would be binding on the department. In support of this contention, reliance is placed on the decision of the Supreme Court in the case of Commissioner of Sales Tax v. Super Cotton Bowl Refilling Works reported in [1989] 73 STC 61. In this decision, the Supreme Court has held that such a decision would be quasi-judicial or judicial and cannot be characterised as administrative order. But the question as to whether the decision rendered in the determination proceedings would be binding for all the time to come and to all the authorities has not been determined by the Supreme Court. Therefore, this decision does not help the petitioners. On the contrary in the case of
9. Be it noted that with effect from 10th April, 1981, entry No. 102 in the local Act has been inserted and lignite has been given separate treatment. In view of this position, the determination order dated 1st April, 1976, passed by the Deputy Commissioner of Sales Tax is of little value while determining the scope of entry No. 102 inserted with effect from 10th April, 1981. When determination order was passed on 1st April, 1976, the specific entry dealing with lignite was not on the statute book. Therefore, the determination order dated 1st April, 1976, is of no help in deciding the question raised in these petitions. If the argument canvassed by the learned counsel for the petitioners is accepted, it would mean that the determination order would prevent the Legislature from amending the Act. Such an absurd interpretation cannot be accepted. Again it may be noted that the determination order u/s 62 of the local Act is nothing but classification of a particular commodity. The highest departmental authority decides the question as to whether the sale of a commodity is taxable and if so, at what rate. Thus it is nothing but a decision as regards the classification of the commodity and determination as to by which particular entry the sale of such commodity would be covered. Similar questions are being decided by the departmental authorities under the appropriate provisions of the Central Excises and Salt Act, 1944. In the context of the provisions of the Central Excises and Salt Act, 1944, the Supreme Court has held that the classification once made by the departmental authorities can be revised by the departmental itself. In the case of
10. The main contention of the petitioners is that lignite is coal and it cannot be treated as a different commodity. But it is difficult to accept this contention. Even in para 3 of memo of Spl. C.A. No. 6583 of 1988 it is averred that lignite is substitute for coal. In para 7 of memo of Spl. C.A. No. 3410 of 1989 it is averred that lignite is used as an alternative of coal. Thus according to the petitioners'' own admission, lignite is something other than coal and it is not coal. It is either substitute for coal or it is alternative of coal. In view of this admission of the petitioners, no further evidence is necessary. Moreover, petitioners are persons who are trading and dealing in lignite. They themselves consider that lignite is different from coal. Therefore what they consider regarding lignite is the best evidence for application of common parlance test. Applying this test lignite is a commodity other than coal.
11. The learned counsel appearing for the petitioners referred to Encyclopaedia Britannica, 1972 edition, Volume V, page 962 and read caption "coal and coal mining". Para I thereof deals with origin of coal while para II deals with types of coal. He referred to the following passage in relation to lignite :
"Lignite is a low-rank, brown-to-black coal containing a high percentage of moisture. It dries out and crumbles in air and is liable to spontaneous combustion. Although there are thousands of square miles of lignite deposits in United States, little is mined because of these facts, its relatively small heat value, and its location far away from large industrial areas."
On the basis of the aforesaid literature it is submitted that lignite must be taken as coal and it may be the coal of a lower rank.
12. The aforesaid submission cannot be accepted. Here reference may be made to a decision of the Supreme Court in the case of
"....... in interpreting items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted."
Recently in the case of
"..... while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense."
13. In view of the aforesaid principle laid down by the Supreme Court, the reliance placed by the learned counsel for the petitioners on the literature of Encyclopaedia Britannica is of no help to the petitioners. The court has to avoid the scientific or technical meaning. Instead the court is required to adopt and apply the popular meaning or the meaning attached to the commodity by those dealing in the same. In view of the aforesaid principle laid down by the Supreme Court the literature that is, Encyclopaedia Britannica referred to and relied upon by the learned counsel for the petitioners is of no help to the petitioners.
14. It is urged by Mr. Pathak that leco is held to be a kind of lignite and leco is coal. Therefore it is submitted that lignite also should be held to be coal. In support of this contention, reliance is placed on the decision of the Madras High Court in the case of Deputy Commissioner of Commercial Taxes v. B. R. Kuppuswami Chetty reported in [1980] 45 STC 308. The question before the Madras High Court was as to whether leco is kind of coal within the meaning of section 14 of the Central Act. It is true that in this decision the Madras High Court held that leco is a kind of lignite which goes into the process of making lignite bricks and as lignite comes within the category of coal, leco was required to be classified as coal. However, this decision is based upon the dictionary meaning, Government circulars and Tribunal''s decision. With utmost respect to the honourable Judges of the Madras High Court, it is difficult to persuade ourselves to agree with this decision. As laid down by the Supreme Court, we are required to adopt commercial parlance test or the popular parlance test while interpreting entries in taxing statute. We cannot adopt and prefer scientific or technical meaning. For the same reason, we are not in a position to agree with the decision of the Punjab and Haryana High Court in the case of Haryana Briquettes Industries v. State of Haryana reported in [1987] 64 STC 330. It is true that the Patna High Court has also taken a similar view in the case of Bajrangbali Coke Briquetting Industries v. State of Bihar reported in [1987] 66 STC 128. Therein the question was as regards the coke briquettes manufactured for domestic consumption by mixing coal dust, soil and molasses. These articles were taken to be coal falling under the category of declared goods. But this decision also follows the decision of the Madras High Court. For the same reason as indicated hereinabove, we are not in a position to agree with these decisions.
15. The learned counsel for the petitioners has relied upon a decision of the Supreme Court in the case of State of Orissa v. Dinabandhu Sahu & Sons [1976] 37 STC 583. In that case certain commodities like jeera, dhania, panmohuri, methi and postak have been accepted as the oil-seeds. If, in that case, the abovesaid commodities were to be treated as oil-seeds within the meaning of section 14 of the Central Act, the assessee was entitled to the benefit of a lower tax rate of 2 per cent. as against 5 per cent. if the abovesaid commodities were not to be treated as oil-seeds. But the abovesaid decision rendered by the Supreme Court is based upon section 14(vi) of the Central Act saying that the oil-seeds yielding non-volatile oils used for human consumption, etc., would be the goods of special importance in industry and/or commerce within the meaning of section 14 of the Central Act. On the basis of the analysis regarding the oil contents of the abovesaid articles, the Supreme Court had come to the conclusion that the abovesaid commodities also would be oil-seeds. But the distinguishing feature in abovesaid case laws is that the abovesaid commodities were yielding non-volatile oils used for human consumption and therefore they did fall within the purview of section 14(vi) of the Central Act. Here the case being entirely different we feel that the principle laid down by the Supreme Court based on the facts and circumstances of that case would not have any application to the present petitions before us.
16. Mr. Pathak, the learned counsel appearing on behalf of the petitioners, has also tried to strengthen his position by invoking the principle of functional test and by urging that if the said test is to be made applicable lignite would definitely be coal for all the purposes. In support of his contention Mr. Pathak has quoted the principle laid down by the Supreme Court in Atul Glass Industries (P.) Ltd. v. Collector of Central Excise [1986] 63 STC 322. In this decision after having carefully considered the process for the manufacture of glass mirrors from glass simpliciter, the Supreme Court has taken the view that the glass mirror cannot be accepted as glassware. The Supreme Court has noticed with due emphasis that after having undergone a certain process, the glass sheet becomes mirror and thereafter the mirror reflects, while the glassware does not. Thus adopting the principle of functional test the Supreme Court has said that glass mirror would not be glassware. Arguing in the same line, Mr. Pathak has urged that lignite is a substitute for and alternate for coal because both lignite and coal are fuel and mineral. The subsequent submission emerging from the same sought to be canvassed by Mr. Pathak is that therefore lignite also can be said to be the coal. But we feel that the facts before the Supreme Court in the abovesaid case law were entirely different. The glass sheet had undergone certain process by which the glass sheet was reflecting and it was being used as a mirror. Because of this added quality of reflecting, which is not found to be present in ordinary glass sheet, the Supreme Court has stated that the mirror and the glassware cannot be said to be same commodity. But here by adopting the abovesaid analogy it cannot be said that lignite would be coal. This is especially so because here, the commodity namely lignite does not pass through the manufacturing process and come out as a different commodity. No doubt the principle of functional test has been invoked but it was supplied for the purposes of showing that the function which is being performed by a mirror is never being performed by a glass sheet and therefore mirror which functions differently by reflecting would not be the glassware. On the analogy of the abovesaid principle, which is based entirely on different facts and circumstances it cannot be accepted that lignite would also be coal on the basis that it is being utilised as substitute for or alternative of coal and performs the functions of coal.
17. Mr. Pathak has also placed heavy reliance upon the Supreme Court decision in India Carbon Ltd. v. Superintendent of Taxes [1971] 28 STC 603. In this decision it has been found by the Supreme Court that petroleum coke is included in the entry namely "coal, including coke in all its forms."Here also before us entry No. 1, Schedule II, Part A of the local Act is in the same terms but with slight variation. The entry runs thus :
"Coal including coke in all its forms (excluding charcoal) - 4 paise in rupee is the rate of sales tax and purchase tax."
But it requires to be appreciated that what the Supreme Court has said in the abovesaid decision is that the petroleum coke would be included in the words "coke in all its forms". It could never have been disputed that petroleum coke would be the coke and therefore naturally when the entry says that "coal includes coke in all its forms" the petroleum coke would also fall within the abovesaid entry. In our view, therefore, the abovesaid decision would be of no avail to Mr. Pathak in his submission before us.
18. The same is the position in respect of another decision of the Patna High Court in Anil Hard Coke Industries v. State of Bihar [1988] 71 STC 322. In this decision it has been pointed out that "coke" is not a distinct subject-matter for taxation under the Central Act and therefore it falls within the meaning of coal in the same section of the Act. It has been pointed out by the Patna High Court that this is so by legal fiction because in common parlance coke may not be understood as coal. Taking shelter under the abovesaid pronouncement of the Patna High Court Mr. Pathak has tried to urge, before us, that here in the instant petitions also, we would subscribe to the view that lignite would be coal because lignite is not a distinct subject-matter for taxation under the Central Act, and would fall within the meaning of coal u/s 14 of the said Act. But as pointed out above in the abovesaid case the question was of coke and coal and not of lignite and coal. Viewing this case law from the said angle it becomes clear that the finding of the Patna High Court in the abovesaid decision cannot be taken as a persuasive factor, or guideline to come to the conclusion that lignite would be coal.
19. From the abovesaid analysis of the contentions raised by Mr. Pathak before us it becomes clear that the view sought to be canvassed by the petitioners before us that lignite would be coal for the purpose of section 14 and 15 of the Central Act cannot be accepted.
20. The learned counsel Ms. Doshit who appears on behalf of the State and sales tax authorities has urged before us that in the various mining legislations a separate treatment has been given to the commodities under consideration, namely, lignite and coal. Our attention has been firstly invited to the Mines and Minerals (Regulation and Development) Act, 1957, section 5(2). The said provision of the aforesaid Act says that except with the previous approval of the Central Government, no prospecting licence or mining lease shall be granted in respect of any material specified in the First Schedule. When the reference is made to the First Schedule it becomes clear that entry No. 4 reads thus :
"Coal and lignite."
This phraseology used in item No. 4 of the First Schedule appended to the abovesaid Act of 1957 makes it clear that coal and lignite have been treated as different and separate commodities altogether.
21. Ms. Doshit has also tried to derive some assistance from the definition clause u/s 3 of the Coal Mines Act. A reference to the abovesaid definition clause goes to show very clearly that lignite is not included in the coal. Section 3(c) of the Act thus :
"''coal'' includes coke in all its forms but does not include lignite."
Therefore from the abovesaid definition in the aforesaid Act of 1974 also it becomes clear that the said Central legislation also says very clearly that lignite would not be included in coal, though coke in all its forms would be included in coal.
22. Ms. Doshit has also read before us the notification appended to the Gujarat Mineral Rights Tax Act, 1985, which also treats lignite as a separate and distinct commodity. Looking to the abovesaid position emanating from the various mining legislations also it becomes clear that lignite does not get included in coal and that coal and lignite have been defined and treated as two different and separate commodities. In view of this position also the contentions raised by Mr. Pathak, the learned counsel appearing on behalf of the petitioners before us cannot be accepted.
23. On behalf of GMDC, the learned counsel Mr. Modi has stated that GMDC does not take any side. GMDC followed the decision of the Deputy Commissioner of Sales Tax rendered on 1st April, 1976. Thereafter if the position of law is changed GMDC follows that position. Today also it does not take any side and would abide by the decision of the Court. Thus in essence there is no submission either way on behalf of GMDC.
24. Relying on the decision of the Supreme Court in the case of Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax [1965] 16 STC 310 and the decision in the case of Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430, it is submitted by the learned counsel Mr. Pathak appearing for the petitioners that if the court comes to the conclusion that lignite is coal, this Court need not strike down the appropriate provisions of the local Act, but should hold that the pro tanto rate would stand modified and they are subject to the restrictions imposed under sections 14 and 15 of the Central Act. However, since we take the view that lignite is a different and separate commodity other than coal, it is not necessary to refer to these decisions in detail. In our view, there is no question of two possible views. We are of the opinion that only one view is possible and that lignite is a different commodity and it is not coal. Therefore, the reliance placed by Mr. Pathak on the decision of this Court in the case of
25. For the aforesaid reasons, we are of the opinion that lignite cannot be considered to be coal. Since this question is decided against the petitioner, all other contentions raised in support of this contention also fail.
26. No other substantial contention is raised.
27. In the result, all the petitions fail and they are ordered to be rejected. Rule discharged with no order as to costs.
28. Petitions dismissed.
