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PETITIONER: INDIAN CARBON LTD.

       Vs.

RESPONDENT: SUPERINTENDENT OF TAXES, GAUHATI & ORS.

DATE OF JUDGMENT18/08/1971

BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S.

CITATION:  1972 AIR  154            1972 SCR  (1) 316  1971 SCC  (3) 612

ACT: Assam  Sales Tax Act, 1947, Sch. 3 as attended by Assam  Act 14  of 1964-Central Sales Tax Act, 1956, ss. 14(1)  and  15- Petroleum coke, if ’declared goods’.

HEADNOTE: The  appellant  was  carrying on the business  of  sale  and purchase of ,petroleum coke.  By the Amending Act (Assam) 14 of  1964 sales-tax wits leviable. on the sale  of  petroleum coke,  under the Assam Sales Tax Act, 1947.  Under  the  Act the rate chargeable was 5%.  The appellant however contended that  under s. 14 of the Central Sales Tax Act, 1956,  coal, including  coke in all its forms, was one of  the  ’declared goods’  and  that under s. 15 as it stood  at  the  relevant time. the tax leviable could not exceed 2%.  The High  Court held against the assessee on the ground that the word ’coke’ implied, only coke obtained from coal. Allowing the appeal to this Court, HELD  : Parliament used the word ’coke’ in s. 14(1)  of  the Central  Act in its ordinary dictionary meaning which  would cover petroleum coke. [319 E] Since  the clause mentions that coal shall include  coke  in all  its  forms,  the object was to extend  the  meaning  of ’coal’  to include petroleum coke which is one of the  forms of coke. [318 G-H; 3 19 F]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1612  of 1968. Appeal  from the judgment and order dated February 16,  1968 of   the Assam and Nagaland High Court in Civil Rule No.  28 of 1966. C.   K.  Daphtary,  M. C. Chagla, J. B.  Dadachanji,  P.  D. Himatsingka,  B.  P. Maheshwari and I. N.  Shroff,  for  the appellant. Naunit Lal and Swaranjt Sodhi, for the respondents. The Judgement of the Court was delivered by Grover, J. This is an appeal by certificate from a  judgment of the Assam and Nagaland High Court. The appellant is a company incorporatedunder   the    India

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Companies Act 1956 in the State of Assam.It started  its business on November 17, 1962 for the first time.Its business includes sale and purchase of petroleum coke.Until September 1, 1964 no sales tax was levied or was payable  by the  company  on  the  sale of  petroleum  coke  because  in Schedule  3  of the Assam Sales Tax  Act  1947,  hereinafter called the ’Assam Act’, which ,enumerated the goods on which tax was not payable, Entry 7 317 read  "coal, coke and coalgas".  By Amending Act 14 of  1964 the said Entry was deleted from Schedule 3 to the Assam  Act with  effect from September 1, 1964.  By means of- a  letter dated  July  7,  1964 the Superintendent  of  Taxes,  Assam, informed  the company that the petroleum coke and  gas  were taxable  at the rate of 5 Np in a rupee under the Assam  Act and  directed the company to submit the return for  all  the periods  prior  to  September 1, 1964  and  also  apply  for registration  under the Assam Act for the sale of  petroleum coke  within  the State of Assam.  The company  preferred  a petition  for  revision  under S. 31(2)  of  the  Assam  Act challenging the order of the Superintendent of Taxes.   This petition  was  dismissed  by the Commissioner  of  Taxes  on September 8, 1965.  During the pendency of the said revision petition  the  Superintendent of Taxes by his  letter  dated August  14,  1965 modified his earlier order to  the  extent that  the demand was confined to the sale of petroleum  coke subsequent to September 1, 1964.  The company then moved the High  Court  under Art. 226 of the  Constitution  which  was dismissed. In  the  writ  petition as also the return  filed  in  reply thereto and before the High Court the provisions of  certain other  enactments  were  mentioned.  These  were  the  Assam Finance Sales Tax Act 1956 as amended from time to time  and the Assam (Sales of Petroleum and Petroleum Products...... ) Act  1956 as amended.  It is unnecessary to refer  to  their relevant  provisions because before us it is  common  ground that the tax would be payable under the Assam Act, the  only question being about the rate.  Under the Assam Act the rate chargeable  was 5 paise per rupee.  But it has been  claimed on behalf of the appellant that by virtue of the  provisions of  the Central Sales Tax Act 1956, hereinafter- called  the "Central Act", the rate at which the tax would be payable is 2 paise per rupee. Section 14 declares, inter alia, that coal including coke in all  its  forms  constitutes  goods  which  are  of  special importance in inter-State trade or commerce.  Section 15  (1 ) of the Central Act as it stood at the relevant time was in the following terms :- S.15 "Every sales tax law of a State shall, in so far  as it imposes or authorises the imposition of a tax on the sale or  purchase of declared goods, be subject to the  following restrictions and conditions, namely               (a)   the  tax  payable  under  that  law   in               respect of any sale or purchase of such. goods               inside  the  State shall not exceed  (two  per               cent)  of the sale or purchase price  thereof,               and  such tax shall not be levied at mom  than                             one stage.               2-1340Sup.CI/71               318               (b)......................               It may be mentioned that by Amending Act 13 of               1966  3%  was substituted for 2%  with  effect               from July 1, 1966. It  is  not disputed that if petroleum coke  is  covered  by

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clause (i) of s. 14 which reads "coal including coke in  all its forms" the State was not competent to levy tax at a rate exceeding  the  one given in s. 15 (a) of the  Central  Act. Before  the High Court it was common ground  that  petroleum coke   is  used  mainly  in  industries  dealing  with   the manufacture  of carbon products and it differs  in  material constituents,  quality,  utility and  composition  from  the ordinary  coke  used  as fuel.  It is used  largely  in  the manufacture  of  dry cells, carbon electrodes  and  electric furnace  resistance elements.  Reference has also been  made in  the judgment to what is stated in  ’Chemical  Engineers’ Handbook’, 3rd Edn., at page 1566               "Coke    is   a   hard,    dense,    infusible               carbonization residue that ranges from a  dull               gray-black  to a silvery grey; the  latter  is               characteristic    of   good   quality,    high               temperature coke.  A coke of this type makes a               ringing  sound when dropped or struck  with  a               hard  object.  It exhibits a  porous  cellular               structure,  which primarily depends  upon  the               kind  of  coal used and the  rate  of  heating               during the carbonization process." The High Court was of the view that the word ’coal’ includes coke in all its forms in clause (i) of s. 14 of the  Central Act  and must be taken to mean coke derived from  coal.   In other  words  it  must be coke which  had  been  derived  or acquired from coal by following the usual process of heating or  burning.  The contention,, therefore, of  the  appellant was  negatived  that  petroleum  coke  was  covered  by  the aforesaid provision of the Central Act. We are wholly unable to agree with the reasoning or the con- clusion of the High Court with regard to the ambit and scope of clause (i) of s. 14 of the Central Act.  The language  is clearly wide and coal has been stated to include coke in all its  forms.  It is not denied that petroleum coke is one  of the  forms  of coke.  Therefore on a plain  reading  of  the aforesaid  clause it is incomprehensible how petroleum  coke can  be excluded from its ambit.  It may be that the  clause mentions coal only and then declares that word shall include coke  in all its forms.  That shows that the object  of  the words  which follow coal is to extend its meaning.   In  the writ  petition  it was stated in para 2 that "coke  is  the; refuse left after destructive distillation of coal, shale or oil  and  is called Petroleum coke,  Metalluraical  coke  or pitch coke, 319 to  indicate  its  source  or  origin;  but  all  these  are carbonacious  material used for the same purpose and  having same properties, more or less, main being -mixed Carbon,-Volatile Matters, -Ash and-Moisture." In  the  affidavit  in  opposition that  was  filed  by  the Assistant Commissioner of Taxes, Assam, this statement  does not appear to have been properly denied.  All that has  been stated in para 5 is that the word "coke" in clause (1) of s. 14 implies coke obtained from coal only and does not include petroleum coke.  The statement in the writ petition is  very simila to the meaning of the word " coke" given in Webster’s New International Dictionary; Vol.  I which is as follows               "The  infusible,  cellular,  coherent  residue               obtained when coal is subjected to destructive               - distillation.  It consists mainly of carbon,               is   hard,  porous,  and  gray,  and   has   a               submetallic  luster.   Any  similar  substance               left  as a residue when petroleum, shale  oil,               etc. are distilled to dryness."

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Our  attention has been invited by learned counsel  for  the State to the discussion in Encyclopaedia Britannica, Vol.  5 on  coke, coking and high temperature carbonization.  We  do not  consider that when the Parliament used the word  "coke" in s. 14(i) of the Central Act it had any intention to  give it  a  meaning other than the  ordinary  dictionary  meaning which would cover petroleum coke.  At any rate, the language employed  is  so  wide viz.  "Coke in all  its  forms"  that petroleum  coke which is a form of coke cannot  possibly  be excluded merely by reference to the word ’Coal’. For  the reasons given above the appeal is allowed  and  the Judgment of the High Court is set aside.  The writ  petition shall  stand allowed only to the extent that the State  will be entitled -to, levy tax under the Assam Act not  exceeding the rate given in cl. (a) of s. 15 of the Central Act.   The appellant shall be entitled   to its costs in this Court. V.P.S.                                                Appeal allowed. 320