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204 Goods & Services Tax Cases - Reports [Vol. 1
not change. We regret, we cannot agree with his submission. Firstly, we do not
agree that the coal briquettes are the same commercial commodity as coal. In
our opinion, coal is a raw material for making coal briquettes. The method of
manufacturing coal briquettes has been stated above, and this certainly is a
processing, treating or adapting the coal. The appellant manufactures coal
briquettes by compiling the hard coke breeze mechanically with the help of
cinders which is usually 5 per cent of the total hard coke breeze. In the
compilation of the hard coke breeze, 95 per cent of the hard coke breeze,
which is known as coal-dust or breeze coke is taken which is compiled with
the help of clay and molasses. Hence, in our opinion, coal briquettes is a
different commercial commodity from coal. Moreover, even if it is not a
different commercial commodity, the process of making coal briquettes will
amount to a “manufacture” as it is processing, treating or adapting coal. In our
opinion, by the processing of coal to make coal briquette, the coal-dust loses
its identity. Coal briquettes and coal-dust are two different commodities in
substance as well as in characteristics. The coal briquettes are altogether in
different shape, form and moisture as well as characteristics, as compared to
coal-dust.”
21. Admittedly coal breeze is being burnt at a specific temparature to
remove the impurities from the coal. It involves some process. By process
of burning, the coal ceases its original character. Hard coke which is
obtained out of the aforesaid process is highly combustible and is commercially
known as a different commodity. Therefore, the process involved
in converting the coal into hard coke is the process of manufacturing
within the ambit of section 2(ee) of the Act and, therefore, sales made
by the applicant of such hard coke is liable to tax. The Tribunal has erred
in granting exemption on the turnover of hard coke. The order of the
Tribunal is erroneous and is liable to be set aside.
22. Learned counsel for the applicant has relied upon two decisions of this
Court; one in the case of Khanna Coke Industries Ltd. v. Assistant Commissioner,
Sales Tax 1978 UPTC 473 and another in the case of Ashoka
Industries v. Commissioner of Sales Tax 1989 UPTC 562, wherein this
Court has held that coal briquettes fall within the entry of all kinds of coal.
Relying upon the aforesaid decisions, learned counsel for the applicant
submitted that hard coke is also one of the forms of the coal and, therefore,
once the tax has been paid on the coal, the applicant is not liable for further
tax on hard coke. In my view, the aforesaid two decisions are not relevant
to the issue involved in the present case. Hard coke for the purposes of rate
of tax may fall within the entry of “coal of all kinds” being one of the forms
of coal but the question involved in the present case is whether the
applicant is liable to tax on the sale of hard coke as a manufacturer and the
process of converting the coal into hard coke amounts to manufacturing.
If the process of conversion of coal into hard coke amounts to manufacturing
and the hard coke is a different commercial commodity than the
coal, the applicant is liable to tax on the sale of hard coke being the
manufacturer. In view of above, in my view, the process of conversion of
coal into hard coke amounts to manufacturing within the ambit of section
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 80
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