M/S. SONEBHADRA FUELS versus COMMISSIONER, TRADE TAX, U.P. LUCKNOW

Citation: [2006] SUPP. 4 S.C.R. 213 · Decided: 01-08-2006 · Supreme Court of India · Bench: ASHOK BHAN

Judgment (excerpt)

M/S. SONEBHADRA FUELS 
A 
v. 
COMMISSIONER, TRADE TAX, U.P. LUCKNOW 
AUGUST I, 2006 
[ASHOK BHAN AND MARKANDEY KATJU, JJ.] 
B 
UP Trade Tax Act; 
Section 3-A-Coal briquettes-exemption/rebate of sales tax-whether 
permissible-Held, on facts, the process of making coal briquettes will amount C 
to 'manufacture' and as such the coal briquettes are not the same commercial 
commodity as coal, hence, liable to tax-Section 2(e-1). 
The appellant is carrying on business in coal and aloo manufactures 
'coal briquettes,, popularly known as 'coal tikil'. The assessee applied for D 
exemption/rebate of sales tax claiming that the coal briquettes are the same 
commodity as coal which had already been subjected to tax. However, his 
claim was rejected by the Assessing Authority, the appeal was also 
dismissed by the Appellate Authority. Further appeal to the Tribunal was_ 
referred to a larger Bench of five members which decided against the 
assessee. Notifications issued, at different stages, under Section 3-A of the E 
UP Trade Tax Act provided that coal included coke in all its forms, but 
excluded charcoal. Coal is a declared commodity under Section 14 of the 
Central Sales Tax Act, 1956 and the entry given in clause (i-a) reads "coal 
including coke in all its forms, but excluding charcoal." 
It was contended by the appellant, that coal briquettes are same as F 
coal and hence no liability of tax can be fastened on the sale of coal 
briquettes. It was further contended that under Section 15 of the Central 
Sales Tax Act, tax cannot be imposed on declared goods at more than one 
stage. As the ·coal-dust has already been subjected to tax, he submitted 
that 'coal tiklies' are not taxable. It was also contended that coal briquettes G 
are produced merely by using a binding material such as clay or molasses 
along with the coal, and hence he submitted that the identity does not 
change. 
It was contended by the respondent that coal briquettes is a different 
213 
H 
214 
SUPREME COURT REPORTS (2006] SUPP. 4 S.C.R. 
A chimerical commodity from coke or coal, and since coal tiklies are made 
from coal dust by processing or manufacturing in which the coal dust loses 
its original form, quality etc., it amounts to 'manufacture." 
Dismissing the appeals, the court 
B 
HELD: I.I. The definition of 'manufacture' in Section 2(e-I) of the 
UP Trade Tax Act covers within its sweep not only such activities which 
bring into existence a new commercial commodity different from the 
articles on which that activity was carried on, but also such activities which 
do not necessarily result in bringing into existence an article different from 
C the articles on which such activity was carried on, meaning thereby that 
the commercial identity of the goods subjected to the processin~, treating 
or adapting changes or not, is not very material. (220-D-E-F-G( 
D 
Mis. B.P. Oil Mills ltd. v. Sales Tax Tribunal and Ors., AIR (1998) SC 
3055, relied upon. 
Chowgule & Co. Pvt. ltd. v. Union of India, AIR (1981) SC 1014; Devi 
Das Copa! Krishnan etc. v. State of Punjab and Ors., AIR (1967) SC 1895; 
Ashirwad !spat Udyog and Ors. v. State level Committee and Ors., (1998( 8 
SCC 85; Deputy Commissioner of Sales Tax (law), Board of Revenue (Taxe:,~, 
Ernakulam v. Mis. Coco Fibres, AIR (1991) SC 378; Mis. Saraswati Sugar 
E Mills v. Haryana State Board and Ors., AIR (1992) SC 224; Union of Jndia 
and Anr. v. Delhi Cloth and General Mills Co. ltd., AIR (1963) SC 791; 
Rajasthan State Electricity Board v. Associated Stone Industries and Anr., 
(2006) 6 SCC 141; State of Maharashtra and Anr. v. Mahalaxmi Stores, 
(2003( I SCC 70; Aspinwall & Co. ltd. v. Commissioner of lncome Tax, 
Ernakulam, (2001 ( 7 SCC 525; Ujagar Prints and Ors. v. Union of India and 
F Ors., [1989) 3 SCC 488; Decorative laminates (lndia) Pvt. ltd. v. Collector 
a/Central Excise, (1996] 10 SCC 46; Gramophone Co. India ltd v. Collector 
of Customs, (2000] I SCC 549 and laminated Packings (P) ltd. v. Collector 
of Central Excise, (1990( 4 SCC 51, referred to. 
G 
2. I. The coal briquettes are not the same commercial commodity as 
coal. Coal is a raw material for making coal briqut:ttes. The method of 
manufacturing coal briquettes certainly is a processing, treating or 
adapting the coal. The findings of fact given by the Tribunal that 'coal 
dust' and 'coal briquettes' are entirely different commerical commodities 
are not to be interfered with, (221-C-F( 
H 
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SONEBHADRA FUELS'· COMMISSIONER

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