M/S South Eastern Coalfields Limited vs. Commissioner Of Commercial Tax

Facts

The applicant, M/s South Eastern Coalfields Limited (SECL), a public sector undertaking involved in mining and selling coal, purchased explosives for coal excavation at Bishrampur Area. SECL claimed a tax rate of 1% on these explosives. The Adjudicating Authority, Assistant Commissioner, Commercial Tax, Bilaspur, disputed this claim in an order dated 31.12.2021, asserting that entry tax was leviable at a different rate as per a notification under Section 4A of the Entry Tax Act, dated 29.09.1997. SECL's appeal to the Additional Commissioner, Commercial Tax, Bilaspur, was dismissed on 04.10.2024, with the authority holding that the rate of explosive was in accordance with law. Subsequently, SECL's second appeal before the Chhattisgarh Commercial Tax Tribunal was also dismissed on 04.10.2024, observing that SECL was registered as a manufacturer. SECL then filed an application under Section 55(1) of the CGVAT Act for reference of a substantial question of law, which was dismissed by the Tribunal on 26.05.2025.

Held

The High Court held that the order dated 26.05.2025 passed by the Chhattisgarh Commercial Tax Tribunal, rejecting the applicant's application to refer a substantial question of law, suffers from irrationality and illegality. The Court found that the question of law raised by the applicant and forming part of the impugned order requires consideration by the High Court, as these are not questions of fact. The Court was of the prima facie view that the Tribunal's refusal was not justified. Therefore, the High Court allowed the application and directed the Learned Commercial Tax Tribunal, Raipur, to state the case and refer it for consideration to the High Court. The Court did not decide the substantive issue regarding the tax rate on explosives, as the primary issue before it was the Tribunal's refusal to refer the case.

Key Issues

1. Whether the order dated 26.05.2025 passed by the Chhattisgarh Commercial Tax Tribunal, refusing to refer a substantial question of law, is illegal and irrational? (Question of law) Petitioner's Arguments: - The applicant argued that the order of the Tribunal refusing to refer the substantial question of law is arbitrary, illegal, and irrational, and that the question of law raised requires consideration by the High Court as it is not a question of fact. - The applicant also submitted that an identical issue is pending for consideration in another Tax Case (No. 99/2023) involving the present applicant. Respondent's Arguments: - The respondent-State opposed the applicant's submission, contending that the applicant's case is based on Section 2(n) of the VAT Act, 2005, whereas Section 2 is not part of Section 13 of the Entry Tax Act, 2012, which deals with the application of certain provisions of the Chhattisgarh Value Added Tax, 2005. - The State further submitted that, irrespective of the above, the applicant would fall within the definition of a "manufacturer".