Indian Carbon Ltd. Vs. Superintendent of
Taxes, Gauhati & Ors  INSC 204 (18 August 1971)
CITATION: 1972 AIR 154 1972 SCR (1) 316 1971
SCC (3) 612
Assam Sales Tax Act, 1947, Sch. 3 as attended
by Assam Act 14 of 1964-Central Sales Tax Act, 1956, ss. 14(1) and 15Petroleum
coke, if 'declared goods'.
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]
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
C. K. Daphtary, M. C. Chagla, J. B.
Dadachanji, P. D. Himatsingka, B. P. Maheshwari and I. N. Shroff, for the
Naunit Lal and Swaranjt Sodhi, for the
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 incorporated under
the India 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 coal,
gas". 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 ofa 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, hereinaftercalled 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 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 conclusion 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 sub metallic
luster. Any similar substance left as a residue when petroleum, shale oil, etc.
are distilled to dryness." Our attention has been invited by learned
counsel for the State to the discussion in Encyclopedia 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
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.