news round up - Taxmann

2010] Commissioner, Trade Tax v. Ramco Coke Industries (All.) 197
A
B
C
D
E
F
G
of same - Held, yes [Section 2(e-1) read with section 2(ee) of U.P. Trade
Tax Act, 1948]
FACTS
The assessee was engaged in the business of manufacture and sale of hard
coke. It claimed that the manufactured hard coke was not liable to tax
because it was manufactured out of the tax paid coal and both coal and
hard coke were the same commodities. The assessing authority having
found that the hard coke was manufactured by the assessee after the
processing of coal breeze held that both coal and hard coke were two
different commodities and the assessee being manufacturer of hard coke
was liable to pay tax on the sale of hard coke. On appeal, the Deputy
Commissioner (Appeals) upheld the action of the assessing authority.
On second appeal, the Tribunal held that the coal and hard coke were not
two different commodities but were the same commodity and that since
hard coke was made out of the tax paid coal, it was not further liable to tax.
It, therefore, allowed the claim of the assessee.
On revision :
HELD
It is clear that the coal breezes are being burnt at a specific temperature to
remove the impurities from the coal and as a result of such burning process
hard coke is obtained. Hard coke is a highly combustible item. Though
breezes and hard coke both are used as fuel but hard coke is used for specific
purposes being highly combustible. [Para 7]
The definition of ‘manufacture’ as indicated in section 2(e-1) includes
‘processing, treating or adapting any goods’. Thus, the meaning of “manufacture”
in the U.P. Trade Tax Act is wider. A dealer will be liable to pay tax
on sale of any goods which he makes by processing, treating or adapting the
goods he purchased. [Para 9]
In the instant case, admittedly the coal breeze was being burnt at a specific
temperature to remove the impurities from the coal. It involved some
process. By process of burning, the coal ceased its original character. Hard
coke which was obtained out of the aforesaid process was highly combustible
and was commercially known as a different commodity than the coal.
Therefore, the process involved in converting coal into hard coke was the
process of ‘manufacturing’ within the ambit of section 2(ee). [Para 21]
Therefore, the assessee was liable to pay tax on the sale of hard coke being
the manufacturer of hard coke. [Para 22]
Hence, the order of the Tribunal was erroneous and was liable to be set
aside. [Para 23]
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 73