Case: State Of Bihar  Vs. Universal Hydrocarbons Co.Ltd. & Anr Etc

S. MOHAN, J. Leave granted. Respondent No. 1 is a private company. The respondent No. 2 is one of the directors-cum-shareholders. The respondents purchases raw petroleum product. This product undergoes a process of manufacture in the factory. The ultimate commodity is calcined petroleum coke (hereinafter referred to "C.P.C.").The respondent was subject to sales tax under the Bihar Finance Act, 1981 (hereinafter referred to as "the Finance Act") on the sale of C.P.C. as well as the Central Sales Tax Act, 1956 (hereinafter referred to as "the Act"). The respondents stated that he missed to claim the adjustments of sales tax paid on the purchase of raw materials in the returns filed for the months of July and August, 1990. The admitted tax due thereon was paid. In terms of section15(b) of the Act, the respondent was entitled to a refund of sales tax paid under the Finance Act. While filing the return for the month of September, 1990, the respondent did not pay the admitted tax of Rs. 1, 96, 072 but claimed refund of Rs. 5, 22, 728 which would be adjusted towards the admitted tax of Rs. 1, 96, 072 and the balance of Rs. 3, 26, 656 was to be refunded on account of Bihar sales tax paid on the direct raw materials purchased for the months of July, August and September, 1990.The application for refund was considered by the Assistant Commissioner and the same was dismissed since the claim for refund was against law. By order dated November 8, 1990, a penalty of Rs. 9, 852.85 was imposed. Against this order, respondent preferred C.W.J.C. No. 7549 of 1990.Thereafter the respondent filed an application of refund for Rs. 19, 22, 340.12 for the period 1985-86 and Rs. 17, 65, 987.01 for the period 1986-87 under section15(b) of the Act read with rule 35 of Bihar Sales Tax Rules, 1983, By notice dated February 2, 1991, the dealer was called upon to substantiate his claim. While that application was pending, he preferred C.W.J.C. No. 5813 of 1991 before the High Court of Patna. While disposing of the writ petition, the High Court ordered on September 5, 1991, to consider the claim of refund and pass orders. On a consideration of the matter, the Joint Commissioner by order dated December 16, 1991, rejected the claim. Thereupon, the respondent preferred C.W.J.C. No. 415 of 1992.Both C.W.J.C. Nos. 7549 of 1990 and 415 of 1992 came to be disposed of under a common order dated April 10, 1992 which is impugned in this civil appeal. Accordingly, the writ petitions were allowed.The High Court set aside the findings of the Joint Commissioner in so far as he held that R.P.C. and C.P.C. though different commercial commodities, are declared goods under section14(ia) of the Act, the petition was liable to be rejected on the ground that raw petroleum coke has undergone a process of manufacture. On this line of reasoning, the High Court took the view that C.P.C. is a form of R.P.C. and, therefore, petitioners before it, would be entitled to exemption reimbursement under section15(b) of the Act.In this civil appeal before us, the only contention urged by the State of Bihar is that no doubt the entry under section 14(ia) of the Act says coal including coke in all its forms, but excluding charcoal". Having regard to the ruling of this Court in State of Tamil Nadu v. Pyare Lal Malhotra it should be held if R.P.C. has undergone a process of manufacture which ultimately results in C.P.C. it is a different product for the purpose of taxation. In the field of taxation, the State has a wide choice in choosing the object of taxation. In this case, one added feature is that for the purpose of excise duty, R.P.C. is treated differently than C.P.C., both the products being subject to separate excise duty. Therefore, it is prayed that the judgment of the High Court be set aside and the order of the Joint Commissioner be restored. In opposition to this, learned counsel for the respondents urges that there is a wide distinction between entry under section14(ia) of the Central Sales Tax Act relating to coke in all forms and section 14(iv) iron and steel, "that is to say". Because of this peculiar phraseology that is to say", the ruling of Pyare Lal case came to be so laid down, but here, there is no such difficulty, having regard to the nature of the entry. The same principle came to be adopted with regard to "oil-seeds" in Sait Rikhaji Furtarnal v. State of Andhra Pradesh. As a matter of fact, India Carbon Ltd. v. Superintendent of Taxes, Gauhati fully supports the stand of the respondents. The High Court was justified in relying on this ruling. This decision also refers to Pyare Lals ruling. Further, in State of Tamil Nadu v. Mahi Traders in relation to hides and skins, at page 734 the test of different commercial commodities has been categorically rejected. In order to appreciate this controversy, we will now refer to the relevant provisions of the Act. Section 14 of the Act catalogues certain goods of special importance in inter-State trade or commerce. They are commonly called "declared goods". Item (ia) reads as follows "coal, including coke in all its forms, but excluding charcoal : Provided that during the period commencing on the 23rd day of February, 1967, and ending with the date of commencement of section11 of the Central Sales Tax (Amendment) Act, 1972 (61 of 1972), this clause shall have effect subject to the modification that the words but excluding charcoal shall be omitted;". The object of classifying the goods as "declared goods" can be gathered from section15 of the Act. This section imposes restrictions and conditions with regard to tax on sale or purchase of "declared goods" within a State. Clauses (a) and (b) of the said section read as follows : "The tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed four per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage; Where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, and tax has been paid under this Act in respect of the sale of such goods in the course of inter-State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State." * In the instant case, the respondent purchases R.P.C. and after subjecting that to a process of manufacture C.P.C. is produced. When exemption was sought to be claimed on the ground that both these items will fall under section14(ia) of the Act, that was rejected by the Joint Commissioner. He took the following view : "It is not disputed that the raw petroleum coke and the calcined petroleum coke, though different commercial commodities, are both declared goods. In order to entitle inter-State sale of such goods to avail the benefit of section15(b) of the Central Sales Tax Act, the same goods as subjected to inter-State levy of tax must be sold in the course of inter-State trade or commerce. The expression such goods used in section 15(b) quoted above and underlined by me is very significant in the matter. Once the particular goods which had earlier been subjected to inter-State tax in the State was again put to a process of manufacture, it loses its original identity and emerges as another form of finished product though still remaining a declared goods. To cite an example, case of steel scrap or billets rolled into different kinds of steel materials may be taken. When these are purchased as raw materials within a State after being subjected to State tax at 4 per cent being declared goods and are then rolled into rods, channels, wire, etc., they become different commercial commodity though still remaining declared goods as defined under section14 of the Central Sales Tax Act. In the instant case, the raw petroleum coke, a declared goods is put to the process of production by the dealer in his factory called Universal Hydrocarbons Co. Pvt. Ltd., and another commercial commodity, namely, calcined petroleum coke, again a declared goods in terms of section 14(ia) is produced. Therefore, the original identity of raw petroleum coke is lost then calcined petroleum coke is the outcome of the process of manufacture." * In supporting the reasoning, reliance is placed on Pyare Lals case. The ultimate finding given by him is as under : "That though raw petroleum coke and calcined petroleum coke both commodities are declared goods under section14(ia) of the Central Sales Tax Act in the light of judgment of the honourable Supreme Court in the case of India Carbon Ltd. dated August 18, 1971, for the purposes of sales tax they are two separate commercial commodities. That the raw petroleum coke has not been sold in the course of inter-State trade or commerce in the same forms in terms of section15(b) of the Central Sales Tax Act rather it has undergone a process of manufacture in a factory and the commodity turned out thereby is calcined petroleum coke which is a different commercial commodity proved by levy of separate Central excise duty at both the points of production of raw petroleum coke and calcined petroleum coke." * In rendering this finding reliance is placed on the purchase bills, sales bills and registration certificate. The High Court in the impugned judgment considered the scope of the phrase "that is to say". Thereafter it proceeded to hold that C.P.C. is a form of R.P.C. and, therefore, the exemption under section15(b) of the Act would be available.We have already, referred to entry relating to coke occurring under section14(ia) of the Act. When the entry says "coke in all its forms", there is no possibility of bringing coke of different forms except under this entry. The Joint Commissioner has clearly held that both raw petroleum coke and calcined petroleum coke, though different commercial commodities are "declared goods". However, he held that by process of manufacture, raw petroleum coke has lost its original identity and has resulted in a new product, namely, calcined petroleum coke. Therefore, according to him, the benefit under section15(b) of the Act could be availed of only if the same goods are subject to inter-State levy of tax. He opined the use of words "such goods" under section15(b) of the Act are of significance.We are totally unable to accept this line of reasoning. Once the entry is "coke in all its forms" irrespective of the fact raw petroleum coke loses its original identity or in the process of manufacture calcined petroleum coke is produced, cannot take calcined petroleum coke out of the purview of this entry. In more or less identical situation, this Court held in India Carbons case that petroleum coke is one form of coal governed by the expression "coal" within section 14(ia). The relevant extract of the judgment is as under : "It is not disputed that if petroleum coke is covered by clause (i) of section 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 section15(a) of the Central Act. The High Court was of the view that the word coal includes coke in all its forms in clause (i) of section14 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, or the appellant was negatived that petroleum coke was covered by the aforesaid provision of the Central Act.This decision fully supports the respondent. The fact that calcined petroleum coke is a different commodity is of little consequence, In interpreting the scope of hides and skins which fall under section14(iii) of the Act, this Court in Mahi Traders case held at pages 236-237 of STC; 734-735 of SCC as under : "....... According to him the products purchased and sold are not different even under the classification by way of the dichotomy between raw and dressed hides and skins under the Tamil Nadu General Sales Tax Act. Under the Central Sales Tax Act, the appellant is in a much better position, because all the hides and skins are brought together in one entry. Whether raw or dressed, the product falls under the same entry....... The operations involved in leather manufacture however fall into three groups. Pre-tanning operations include soaking, liming, deliming, bating and pickling, and post-tanning operations are splitting and shaving, neutralising, bleaching, dyeing, fat-liquoring and stuffing, setting out, samming, drying, staking and finishing. These operations bring about chemical changes in the leather substance and influence the physical characteristics of the leather, and different varieties of commercial leather are obtained by suitably adjusting the manufacturing operations. These processes need not be gone into in detail but the passages relied upon clearly show that hides and skins are termed leather even as soon as the process of tanning is over an the danger of their putrefaction is put an end to. The entry in the CST Act, however, includes within its scope hides and skins until they are dressed. This, as we have seen, represents the stage when they undergo the process of finishing and assume a form in which they can be readily utilised for manufacture of various commercial articles. In this view, it is hardly material that coloured leather may be a form of leather or may even be said to represent a different commercial commodity. The statutory entry is comprehensive enough to include the products emerging from hides and skins until the process of dressing or finishing is done." This is enough to conclude the case against the appellant. However, since reliance is placed on Pyare Lal Malhotras case, we have to make a brief reference to the same. That case dealt with the scope of the entry 14(iv) of the Act, iron and steel "that is to say". The interpretation of this phrase "that is to say" loomed large. It was held in paragraphs 13 and 14 (page 326 of STC; 806 of AIR), as under : "It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new marketable commodity, is the decisive test in determining whether an excise duty is leviable or no on certain goods. No doubt, in the law, dealing with the sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the sales tax law, it may also become necessary to consider whether a manufacturing process, which has altered the identity of the commercial commodity, has taken place. The law of sales tax in also concerned with goods of various descriptions. It, therefore, becomes necessary to determine when they ceased to be goods of one taxable description and become those of a commercially different category and description. It appears to us that the position has been simplified by the amendment of the law, as indicated above, so that each of the categories falling under iron and steel constitutes a new species of commercial commodity more clearly now. It follows that when one commercial commodity is transformed into another, it becomes a separate commodity for purposes of sale tax." * The position here is entirely different. There is no such phrase under section14(ia) of the Act. In the case of "oil-seeds" occurring under section14(iv) of the Act, similar phraseology, namely, "that is to say" occurs. This Court is sait Rikhaji Furtarnal v. State of Andhra Pradesh; held in paragraph 4 as under : "Mr. Rangam appearing in support of the appeals contended that there was a circular of Government of India with reference to the provisions of the Central Sales Tax Act as to what would be included within the meaning of oil-seeds and all the five items referred to here were included in the circular as being oil-seeds. It is difficult for us to accept his submission that after the Act has been amended reliance is available to be placed on the circular. On the basis of the test indicated by this Court in State of Tamil Nadu v. Pyare Lal Malhotra we must hold that the expression that is to say employed in the definition in the statute with reference to oil-seeds is exhaustive and is not illustrative. Since on amendment these five items are no more included in oil-seeds, the appellant is not entitled to claim the benefit".This vital distinction cannot be lost sight of. Therefore, the argument of the appellant has to be rejected.

Decision:
0[ds]In the instant case, the respondent purchases R.P.C. and after subjecting that to a process of manufacture C.P.C. is produced. When exemption was sought to be claimed on the ground that both these items will fall under section14(ia) of the Act, that was rejected by the JointHigh Court in the impugned judgment considered the scope of the phrase "that is to say". Thereafter it proceeded to hold that C.P.C. is a form of R.P.C. and, therefore, the exemption under section15(b) of the Act would be available.We have already, referred to entry relating to coke occurring under section14(ia) of the Act. When the entry says "coke in all its forms", there is no possibility of bringing coke of different forms except under this entry. The Joint Commissioner has clearly held that both raw petroleum coke and calcined petroleum coke, though different commercial commodities are "declared goods". However, he held that by process of manufacture, raw petroleum coke has lost its original identity and has resulted in a new product, namely, calcined petroleum coke. Therefore, according to him, the benefit under section15(b) of the Act could be availed of only if the same goods are subject tolevy of tax. He opined the use of words "such goods" under section15(b) of the Act are of significance.We are totally unable to accept this line of reasoning. Once the entry is "coke in all its forms" irrespective of the fact raw petroleum coke loses its original identity or in the process of manufacture calcined petroleum coke is produced, cannot take calcined petroleum coke out of the purview of this entry. In more or less identical situation, this Court held in India Carbons case that petroleum coke is one form of coal governed by the expression "coal" within sectionHigh Court was of the view that the word coal includes coke in all its forms in clause (i) of section14 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, or the appellant was negatived that petroleum coke was covered by the aforesaid provision of the Central Act.This decision fully supports the respondent. The fact that calcined petroleum coke is a different commodity is of little consequence, In interpreting the scope of hides and skins which fall under section14(iii) of the Act, this Court in Mahi Traders case held at pageshe position here is entirely different. There is no such phrase under section14(ia) of the Act. In the case ofoccurring under section14(iv) of the Act, similar phraseology, namely, "that is to say"vital distinction cannot be lost sight of. Therefore, the argument of the appellant has to be rejected.