Marthoma Granites v. Assistant Commissioner, Special Circle, Commercial Taxes, Thodupuzha; Deputy Commissioner (Appeals), Commercial Taxes, Kottayam; Inspecting Assistant Commissioner, Commercial Taxes, Kattappana

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **FRIDAY, THE 13TH DAY OF JANUARY 2017/23RD POUSHA, 1938** ## **WP(C).No. 1229 of 2017 (C)** **---------------------------** **PETITIONER:** ## **----------** **MARTHOMA GRANITES, EDAVETTY PO, THODUPUZHA, PIN 685588, REPRESENTED BY MANAGING PARTNER U.I.JOHN** **BY ADV. SRI.V.V.GEORGEKUTTY** **RESPONDENT(S):** **--------------** **1. ASSISTANT COMMISSIONER, SPECIAL CIRCLE, COMMERCIAL TAXES, THODUPUZHA 685585.** **2. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOTTAYAM 686001.** **3. INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, KATTAPPANA 685515.** **BY GOVERNMENT PLEADER SRI V.K.SHAMSHUDHEEN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13-01-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **K.V.** ## **WP(C).No. 1229 of 2017 (C)** ## **---------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS ----------------------EXHIBIT P1 TRUE COPY OF THE PENALTY ORDER DATED 28.09.2016 FOR 2012-13 ISSUED BY THE 1ST RESPONDENT . EXHIBIT P2 TRUE COPY OF THE APPEAL MEMORANDUM FOR 2012-13 FILED BEFORE THE 2ND RESPONDENT . EXHIBIT P2 A TRUE COPY OF THE STAY PETITION FILED ALONG WITH THE APPEAL. EXHIBIT P3 TRUE COPY OF THE STAY ORDER DATED 21.12.2016 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P4 TRUE COPY OF THE JUDGMENT OF THE SUPREME COURT REPORTED IN 47 STC, 124. RESPONDENT(S)' EXHIBITS NIL -----------------------** **/TRUE COPY/** **P.A.TO JUDGE** **K.V.** ## **K. VINOD CHANDRAN, J.** -----------------------------------------W.P.(C) No. 1229 of 2017 (C) -----------------------------------------Dated: 13[th] January, 2017 ## **J U D G M E N T** The petitioner is aggrieved with the interim order passed in an appeal, as seen from Ext.P3. The petitioner, admittedly, purchased two trucks from Tamil Nadu on the strength of C-Forms and claimed concessional rate under Section 8(2) read with Section 10A of the Central Sales Tax Act, 1956 ('CST Act' for short). 2. The petitioner had purchased the vehicles for use of transportation from its mines and it is contended that it is used for movement of stones and minerals to the production units for manufacturing metal. The specific provision, as seen from the CST Act, enables concessional rate only in cases where there is re-sale by ## **W.P.(C) No. 1229/2017** **-2-** the purchasing dealer or when the goods purchased are used in the manufacture or processing of goods for sale or in tele-communication network or in mining or distribution of power. The petitioner, admittedly, is a registered dealer carrying on mining and hence relies on the decision in **Chowgule & Co. Pvt. Ltd. v. Union of India - 47 STC 124** to contend that the petitioner is entitled to claim concessional rate for the purchase of the trucks which are used to transport the raw material, being, rubble mined and for production of the finished product, being processed metal. 3. **Chowgule & Co.** was a company engaged in the business of mining iron-ore and selling it in the export market. The matter came up before the Hon'ble Supreme Court, when the lower authorities declined inclusion of certain goods in the certificate of registration applied for under Section 7 of the CST Act. **-3-** ## **W.P.(C) No. 1229/2017** The contention of the assessee was that the operation of mining and processing of the mined ore for export sale was interdependent. The process involved mining of the ore, transportation from the mines to the river side for transportation to the Marmagoa Harbour by barges, from where the ore was blended and loaded into the ships, all of which constituted an integrated action capable of falling under Section 8 of the CST Act. 4. The Hon'ble Supreme Court found that there is no manufacture, in the blending carried on, since it does not result in bringing forth a new article commercially. As for being covered under the actual mining operation, it was found that the goods which are purchased by the assessee, for use in operations subsequent to the stacking of the ore at the mining site, would not be eligible for inclusion in the certificate of registration under Section 7 of the CST Act. However, **-4-** ## **W.P.(C) No. 1229/2017** the blending of ore; in the course of loading it into the ship at the harbour, through the mechanical ore handling plant, situated at the harbour, would come within the meaning of 'processing'. It was the categorical finding that the different quantities of ore, when blended together in the course of loading through the mechanical ore handling plant, undergoes a change in their physical and chemical composition. Hence, it was held that the mining of ore and processing it for sale by carrying out blending, constitute an integrated process and carrying the ore from the mining site to the riverside and from the riverside to the harbour, where the blending is being done, is part of an integrated process. Even the vehicles used for such transportation from the mining site to the riverside and then to the harbour, were found to be goods capable of inclusion in the certificate of registration. ## **W.P.(C) No. 1229/2017** **-5-** 5. What assumes significance in the present case is that the petitioner, but for merely stating that the raw materials are transported to the manufacturing unit; does not specifically speak of any manufacturing unit owned by the petitioner being situated in another location. It is also not clear as to the manufacture or processing which is carried on. On the mere bland assertion that there is a manufacture carried on without the attendant facts being placed on record, it cannot be said that the decision of the Hon'ble Supreme Court has any application to the facts of the above case. 6. The appellate authority had granted a stay on the appellant paying 30% of the demand and furnishing adequate security for the balance amounts to the satisfaction of the assessing authority. Though, this Court does not find any reason to interfere with the reasoning in the order, the second proviso to Sub ## **W.P.(C) No. 1229/2017** **-6-** Section (4) of Section 55 of the Kerala Value Added Tax Act, 2003 enables an assessee to pay 20% of the tax demanded and the entire collected tax so as to obtain a stay of the recovery till the disposal of the first appeal. In such circumstance, the petitioner would be entitled to avail of that option and pay the amount of 20% of tax demanded within one month from today and on such payment, the recovery proceedings shall be kept in abeyance, till the appeal is disposed of, untrammeled by any observation made herein. The writ petition is disposed of in limine. Sd/K.VINOD CHANDRAN, JUDGE jjj 13/1/17