Saturday, 28 October 2017

HC : Burnt coal residue from paper manufacture taxable as "Coal", not "residuary" article

Burnt coal residue from paper manufacturing process classifiable as “coal including coke in all its form….”, taxable at 4% under U.P. VAT Act as it retains its combustible properties; HC finds that during AYs 1999-2000, 2000-01 & 2001-02, said product was taxed at 4% but pursuant to HC decisions in Modi Spinning & Weaving Mills and British India Corporation Limited, same came to treated as “unclassified” residual article taxable at 10% from AY 2002-03 onwards; Observes that in case of Modi Spinning & Weaving Mills, the issue pertained to taxability of “coal cinder” whereas British India Corporation case dealt with taxability of “coal ash”, thus these cases cannot be understood or applied without bearing in mind the particular commodities under consideration therein; Noting that Revenue had not submitted any evidence to establish that residual commodity had lost all its combustible properties, HC remarks that “In issues of classification, the Department cannot be permitted to vacillate unless there be new material and evidence which may justify or warrant a change in stance”; Referring to Division Bench decision in District Cooperative Development Federation Ltd. which held that “coal dust” would classify as “coal” as both have same combustible properties and similar usage, HC rules in favour of assessee  : Allahabad HC

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