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

Held

The High Court held that the issue raised by the applicant regarding whether coal extraction constitutes 'manufacture' under Section 4-A of the Entry Tax Act requires adjudication. The Court found merit in the applicant's contention that the matter needs to be settled. Consequently, the Court directed the Commercial Tax Tribunal to make a reference to the High Court. This reference should elaborate on the facts of the case and the specific question of law involved. The Court did not decide on the merits of the case but rather facilitated a formal reference for a definitive ruling. The ratio decidendi is that disputes concerning the definition of 'manufacture' in the context of extraction activities, especially when relying on precedent, warrant a formal reference from the Tribunal to the High Court for resolution.

Facts

The applicant, M/s South Eastern Coalfields Limited, engaged in coal extraction, challenged the levy of tax under Section 4-A of the Entry Tax Act. The applicant contended that coal extraction does not constitute 'manufacture' and that the steel tubes and explosives used are merely for extraction. They relied on the Supreme Court decision in Commissioner of Central Excise & Customs, Bhubaneshwar-I vs. Tata Iron and Steel Co. Ltd. The respondent, Commissioner of Commercial Tax, argued that quarrying and extraction of coal fall under 'production' and are synonymous with 'manufacture'. The High Court considered the submissions and the case law.

Key Issues

1. Whether the activity of coal extraction by the applicant qualifies as 'manufacture' under Section 4-A of the Entry Tax Act, thereby attracting tax levy? Petitioner's Arguments: The applicant argued that coal extraction is not 'manufacture'. They contended that the materials used, such as steel tubes and explosives, are solely for the purpose of extracting coal and do not transform it into a new product. They placed reliance on the Supreme Court's decision in Commissioner of Central Excise & Customs, Bhubaneshwar-I vs. Tata Iron and Steel Co. Ltd. to support their claim that the activity does not amount to manufacture. Respondent's Arguments: The respondent argued that the applicant's work involves quarrying and extraction of coal from mines. They submitted that such activities encompass 'production' and are synonymous with 'manufacture' under the relevant Act.