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Mineral Sales Corporation Vs. Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case Number S.T.A. No. 514 of 1978
Judge
Reported in[1980]46STC208(All)
AppellantMineral Sales Corporation
RespondentCommissioner of Sales Tax
Appellant Advocate Bharatji Agarwal, Adv.
Respondent Advocate The Standing Counsel
DispositionAppeal allowed
Cases ReferredIn Mini Fertilizer (P.) Ltd. v. Commissioner of Sales Tax
Excerpt:
- .....thing which can be described as mineral. it is exhaustive in nature. but it does not extend to form. a mineral taken out of the mine may assume numerous forms or shapes by manufacture or even by processing according to its use and need. what is covered in this entry is mineral and not its form. the learned counsel for the assessee relied on khanna coke industries ltd. v. assistant commissioner of sales tax 1978 u.p.t.c. 473 and urged that if coke bricks manufactured mechanically out of coal-dust was held to be covered in the expression 'coal and coke', there is no reason why powdered dolomite, etc., may not be taken to be mineral. the argument overlooks the entry in respect of coke. it reads coal including coke in all its forms. the use of the words 'in all its forms' widened the.....
Judgment:

R.M. Sahai, J.

1. In order to get the controversy settled if emery-powder, dolomite powder, silica sand, soap-stone powder and alumina were covered by the entry 'minerals of all kinds' in Notification No. 4949 dated 30th May, 1975, the assessee invoked the Commissioner's jurisdiction under Section 35 of the Sales Tax Act. It was admitted that these items were sold after powdering and not in the form in which they were obtained from the mine. On this admission it was held by the Commissioner that the assessee was a manufacturer and powdered items sold by it were not minerals and were taxable as unclassified items.

2. Mineral is defined as a solid homogenous crystalline chemical element or compound that results from inorganic process of nature and that has a crystalline structure or chemical composition or range of compositions. Emery occurs as mixture of mineral corundum magnesite and others. It is very hard and is used as abrasive. Dolomite contains calcium and magnesium metals in the form of carbonates. Alumina is an oxide of aluminium metal found in earth along with silica. In fact the Commissioner did not dispute that these items were minerals. The question is whether these minerals obtained from earth continue to be so even after powdering by mechanical or manual process. Before doing so it is necessary to examine the scope of the entry in Notification No. 4949.

3. The use of the words 'all kinds' expands the scope and width of the entry. It includes every thing which can be described as mineral. It is exhaustive in nature. But it does not extend to form. A mineral taken out of the mine may assume numerous forms or shapes by manufacture or even by processing according to its use and need. What is covered in this entry is mineral and not its form. The learned counsel for the assessee relied on Khanna Coke Industries Ltd. v. Assistant Commissioner of Sales Tax 1978 U.P.T.C. 473 and urged that if coke bricks manufactured mechanically out of coal-dust was held to be covered in the expression 'coal and coke', there is no reason why powdered dolomite, etc., may not be taken to be mineral. The argument overlooks the entry in respect of coke. It reads coal including coke in all its forms. The use of the words 'in all its forms' widened the scope. ' But the import of both the expressions 'of all kinds' and 'in all its forms' is different. The one multiplies items of the same kind, the other multiplies the same commodity in different forms.

4. The learned counsel then urged that 'kinds' in Black Law Dictionary has been defined as class, grade or sort, genus, generic, class, description and in Random House Dictionary it is defined to mean variety. Therefore, the word used in the entry should be understood in its widest sense including in its fold all varieties of minerals. Reliance was also placed on Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 S.T.C. 433 (S.C.), where the expression 'all varieties of textiles' was extended by the Supreme Court to cover even dryer felts. The learned counsel placed ISI specifications, which, according to him, have been approved as standard even by the Supreme Court in Union of India v. Delhi Cloth and General Mills Co. Ltd. A.I.R. 1963 S.C. 791 and urged that powdered ore is described as non-ferrous metal in ISI; therefore, on the same analogy, powdered mineral should be understood as mineral.

5. For purposes of taxability under the Sales Tax Act what has to be seen is whether a new commercial commodity was produced. It is not solid or powdered form that is material but coming into being of a new commodity. In M.M. Trading Corporation v. Union of India A.I.R. 1972 S.C. 2551, a question arose whether wolfram concentrate was covered in the expression 'metallic ore' in item No. 26 of Import Tariff. It was held by the Supreme Court:

'Wolfram bearing material as mined, contains frequently less than 0.5 per cent of W03 and as much as a content of 2 per cent of W03 is rare. In order to produce a usable ore concentration operations are necessary which involve crushing, washing and similar process separating the useless gangue to bring it to a minimum 65 per cent WO3 content without which it is not regarded as an acceptable wolfram ore or wolfram concentrate and useless to consuming industries. Basic operations bringing the material to such a standard are not a manufacturing process but form part of normal wolframite mining activities.' According to a letter dated February 3, 1965, from the Director of National Metallurgical Laboratory to the Controller of Customs, wolfram ore is always selectively mined in the technical terminology. The selectively mined tungsten contains about 70 per cent W03. Such selective mining does not constitute a manufacturing process.

6. The learned standing counsel urged that this decision is not helpful to the assessee as the entire basis of it was that the process by which wolfram was obtained did not amount to manufacture whereas Sub-section (e-1) added to Section 2 by U.P. Act No. 38 of 1975 with retrospective effect from 13th October, 1972, defines manufacture to mean even processing or treating. According to him, as items in dispute were crushed and processed to make them marketable, it amounted to manufacture and, therefore, a new commercial commodity shall be deemed to have come into being. The argument is correct only to the extent that even processing amounts to manufacture. But if by processing no new commercial commodity has been produced it is doubtful if it can be treated as separate item for taxability. Manufacture means to produce, to bring out something. If nothing has been produced, no new thing has been brought out, then an item cannot be said to have been manufactured. It was open to the legislature to give an artificial meaning to the word 'manufacture'. But that did not result in altering the basic concept of taxable event which arises by coming into being of different or new commodity and not by the inclusion of the word 'process' in 'manufacture'.

7. In Mini Fertilizer (P.) Ltd. v. Commissioner of Sales Tax 1979 U.P.T.C. 1063, a question arose whether sulphur roll obtained from sulphur by melting, pumping and rolling, etc., ceased to be mineral. It was held :

In the present case, one may proceed on the basis that sulphur rolls are obtained from rock sulphur by a manufacturing process. The question however still remains as to whether there has been an alteration in the identity of the commercial commodity, viz., sulphur. In my view, there is no such drastic alteration as to take out sulphur rolls from the category of 'all kinds of minerals' as mentioned in the notification. All that has happened is that rock sulphur has been purified and put in the shape of sulphur rolls. There has been no essential change in the quality and the character of sulphur as found in the sulphur rocks and in sulphur rolls. Sulphur rolls are really nothing else but a purified form of rock sulphur.

8. It would thus be seen that items which are in dispute continued to be mineral despite crushing into minute particles and no new commercial commodity came into being.

9. In the result, this appeal succeeds and is allowed. The order passed by the Commissioner is set aside. The assessee shall be entitled to its costs, which is assessed at Rs. 300. Fee of the standing counsel is assessed at Rs. 300.


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