M/s. TMT GRANITES (PVT) LTD. Versus THE COMMISSIONER STATE GST DEPARTMENT, KERALA, TRIVANDRUM, THE DEPUTY COMMISSIONER OF STATE TAX STATE GST DEPARTMENT, PALAKKAD, THE ASSISTANT COMMISSIONER (ASSESSMENT) , PALAKKAD AND THE STATE OF KERALA REPRESENTED BY ITS SECRETARY (TAXES DEPARTMENT) , THIRUVANANTHAPURAM – 2018 (11) TMI 1360 – KERALA HIGH COURT – TMI – Mining Services – C-Forms – concession for the HSD – whether “quarrying” can act as “mining”? – benefits under Section 8 of the CST Act – whether the fuel it uses for its machinery and vehicles qualifies for that benefit?
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Held that:- The Court analysed, among other things, Section 8 of the CST Act. It has held that the “locomotives and motor-vehicles” are used by the petitioner “after the mining operations were concluded and before the manufacturing process commenced,” and also to carry the finished products.
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The Company uses HSD oil as its fuel in its quarrying operations. With that fuel it runs its machinery and also its
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major minerals, and the other minor minerals. One involves the prospecting or extracting, the other mere excavation. Their semantic nuances apart, can we treat quarrying as an act of mining ? We will answer. Facts: 2. TMT Granites (Pvt.) Ltd., a dealer under the KVAT Act, quarries and crushes minor minerals; that is, the granite and other building materials. It uses much machinery and many vehicles in its quarrying operations and also the connected crushing operations. To fuel its machinery and vehicles, the Company uses High Speed Diesel(HSD). So the Company claims concession for the HSD and wants to download CForms. Access denied, the Company has filed this writ petition. Submissions: Petitioner s: 3. Sri Philip J. Vettickattu, the learned counsel for the petitioner, strenuously contends that the Company can claim tax concession on the HSD it purchases. According to him, Section 8 of the Central Sales Tax Act, 1956 ( CST Act ) enables the Company to claim that advantage. 4. As Secti
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he mining and quarrying are entirely different activities. According to her, the Government grants mining permit, whereas the Department of Geology grants quarrying permit. She has also submitted that mining concerns itself with major minerals and the quarrying with minor minerals. The former is extracted subsoil and the latter super-soil. 7. Dr. James has also contended that the Kerala Value Added Tax Act, especially Section 8, covers only the consumables related to mining activity. In this regard, she stresses that the Company s using motor vehicles for transporting the quarried material falls outside Section 8 of the CST Act. According to her, transportation is an activity unconnected to the quarrying, even if quarrying were to be equated with mining. 8. Taking me through all the statutory provisions which the petitioner's counsel referred to earlier, Dr. James has made valiant efforts to convince me that the Company s demand for tax concession or exemption cannot be sustained.
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mpany needs huge quantities of oil, Hindustan Petroleum Corporation has allowed it to have its own filling station. 11. So the Company Wanted to take advantage of Section 8 of the CST Act. For that purpose, the Company wanted to download C forms from KVATIS, the department's online portal. Access denied, the Company submitted applications in November and December 2017, requesting the authorities to let the Company to access the C forms. Though departmentally the Company's applications were considered, eventually nothing came out of it. Aggrieved, the Company has filed this Writ petition. 12. I reckon much depends on what Section 8 of the CST Act says. The provision, to the extent relevant, reads: Section 8. Rates of tax on sales in the course of inter-State trade or commerce:- (1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which
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described in sub-section (3), and (c) it must be paying tax under the CST Act. These conditions fulfilled, the dealer can pay tax at three per cent of its turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. 14. Sub-section (3) (b) of Section 8 specifies the goods. Among them included are the goods specified in the certificate of registration of the registered dealer for use by it in the manufacture or processing of goods for sale or in mining . The Company, however, carries quarrying operations. So the question is, can quarrying be equated with mining ? Mining and Quarrying: 15. First, we will examine the definitional dynamics of the words mine and quarry . According to Dictionary of Mining, Mineral, & Related Terms, compiled by the U.S. Bureau of Mines,6 quarry is an open or surface mineral working, usually for the extraction of building stone, such as slate, limestone, an
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l, metallic ore, coal, salt, etc. Lexically, true, both quarrying and mining are distinct activities with different objectives. But the question is, does this distinction survive legislatively. In Section 8 of the CST Act, only mining is found mentioned, though. 18. In Bihar Mines Ltd., of the Constitution Bench, Bachawat J., wrote a concurring judgment, supplementing the lead judgment by Raghubar Dayal, J. His Lordship has elaborated on mining and winning minerals. That discussion may not help here. Legislative Definitions: 19. Section 2 (j) (iv) of the Mines Act, 1952, defines "mine" to mean any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried on. And this excavation includes (i) all borings, bore holes, oil wells and accessory crude conditioning plants, including the pipe conveying mineral oil within the oil fields; (ii) all shafts, in or adjacent to and belonging to a mine, whether in the course of being su
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of minor minerals and for purposes connected therewith. 22. Rule 2 (xvi) of the Kerala Minor Minerals Concession Rules 2015 defines quarrying lease to mean a mining lease for minor minerals granted under these rules for a period as specified in Rule 39. Rule 15 deals with the removal of overburden by a quarrying permit holder. 23. To elaborate, Rule 15 permits a person with a quarrying permit for extracting minerals also to extract overburden from the area under the permit without obtaining a quarrying permit, if such extraction is inevitable for him to extract the mineral under the permit. Judicial View: 24. In D.K. Trivedi and Sons, the petitioner raised questions relating to the constitutionality of Section 15(1) of the Mines and Minerals (Regulation and Development) Act, 1957, the power of the State Governments to make rules under Section 15 to enable them to charge dead rent and royalty in respect of leases of minor minerals granted by them. Also in question was the validity of R
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ining leases granted under the Mineral Concession Rules, 1960. 26. Then, D.K. Trivedi has paid particular attention to the Gujarat Minor Mineral Rules, in the statutory backdrop of Section 15(2). The term "minerals", as we have already noted, is defined by Clause (a) of Section 3 as including "all minerals except mineral oils". This definition would thus include, according to D.K. Trivedi, minerals which are minor minerals as also minerals other than minor minerals. The term "minor minerals" is, however, separately defined by Clause (e) because the power to make rules for them is vested by Section 15(1) in the State Governments. Of course, the power to make rules with respect to minerals other than minor minerals is vested in the Central Government. 27. D.K. Trivedi rejects the plea that the power to fix from time to time the rate of royalty under Sub-section (3) can only apply to mining leases and other minor mineral concessions and not to quarry leases.
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f the Gujarat Rules. That Rule defines "quarry lease" as "a kind of mining lease in respect of a minor mineral granted under these rules." In this context, we will, here, examine Rule 2 (xvi) of the Kerala Minor Mineral Concession Rules, 2015. It is, in fact, in para materia with the Gujarat Rule: Quarrying Lease means a mining lease for minor minerals granted under these rules for a period as specified in rule 39; Quarry leases are, therefore, included in the term "mining leases", so holds D.K. Trivedi. And so must we. 29. To cap the discussion, I may refer to the Division Bench's judgment in All Kerala River Protection Council. It has dealt with, among other things, the environmental issues concerning the mining and quarrying in the State of Kerala. After an exhaustive analysis of the legal position on the issue, the Division Bench has held that mining operation is a wider term, which shall include mining operations by any means; that is, mining leas
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elecommunications network or in mining, or in the generation or distribution of electricity or any other form of power. 32. In Indian Copper Corporation Limited, the petitioner applied to the tax authorities for registration as a dealer under the Central Sales Tax Act, setting out a list of goods for specification in the certificate of registration under section 8 of the Act. The authority issued the certificate of registration to the petitioner excluding certain categories of goods which the Corporation claimed should be specified under section 8(3)(b) of the Act. The Corporation then filed a writ petition. The High Court of Patna allowed it in part; it asked the authority to include only a few of the goods the petitioner had insisted on. Notably, it excluded the motor vehicles. 33. To have the rest of the goods, too, included in the certificate of registration, the petitioner approached the Supreme Court. Then, the Court analysed, among other things, Section 8 of the CST Act. It has
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rom the factory. The expression "goods intended for use in the manufacturing or processing of goods for sale" may ordinarily include such vehicles as are intended to be used for removal of processed goods from the factory to the place of storage. 34. In J.K. Cotton Spinning and Weaving Mills, the Supreme Court has followed Indian Copper Corporation. It has held that Section 8(3)(b) authorises the Sales Tax Officer to specify the goods intended for use by the dealer in the manufacture or processing of goods for sale or in mining, and so on. By Rule 13, the Central Government has prescribed the goods referred to in s. 8(3)(b) : such goods must be intended for use in the manufacture or processing of goods for sale or in mining or generation or distribution of power, and the intended use of the goods must be as specified in Rule 13. It is true that under Rule 13, read with Section 8(3)(b), mere intention to use the goods in the manufacture or processing of goods for sale will not
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miner and as manufacturer) fell within Rule 13, even if the vehicles were used merely for removing ore from the mine to the factory, and finished goods from the factory to the place of storage. Spare parts and accessories required for the effective operation of those vehicles were also held to fall within Rule 13. 35. Veering back to the facts, I may observe that the Company uses HSD oil as its fuel in its quarrying operations. With that fuel it runs its machinery and also its motor vehicles. In Indian Copper Corporation Ltd., the Supreme Court has discussed thread bear the legislative nuances of Section 8, especially Section 8(3)(b), of the CST Act. On facts too, the Company's case accords with Indian Copper Corporation Ltd. 36. Indeed, the Government Pleader has contended that the Company, if it were in mining activity, may have justification to claim tax concession for the fuel it uses for running its machinery. But she has strongly opposed the Company's claim on the fuel it
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