DURGA BRICKS Vs. STATE OF BIHAR

JUDGEMENT

(1.) The question of law arising in the above appeal is one of classification and is framed as follows :-

(2.) Sri Aamir Hayat, learned counsel appearing for the appellant would contend that the assessee was a works contractor from whom tax at the rate of 4% was deducted and later a demand was made for enhanced tax at the rate of 12.5%. It is the contention of the assessee that he has been paying royalty under the Bihar Minor Mineral Concession Rules, 1972 and that the materials dealt with by the assessee being stone chips, stone boulders and sand, used in the works contract of construction of a road, is covered under the definition of a 'minor mineral' as available in the Mines and Minerals (Development and Regulation) Act, 1957 (for brevity, 'the MMDR Act"); which is also covered by the definition of 'minerals'. The said items are covered under Entry 53 in Schedule III of VAT Ordinance applicable to the assessment year 2005-06 which speaks of 'Ores and minerals'. Subsequent notifications are also referred to by the learned counsel for the assessee to show that the clear intention of the legislature was to include the subject items within the definition of 'Ores and minerals' for the relevant assessment year 2005-06.

(3.) Sri Vikash Kumar, learned counsel appearing for the State would, however, refute the contentions totally. It is argued that 4% tax deducted from source is as per the provisions of the taxing statute and that does not determine the tax payable insofar as the accretion of goods in the works contract, which has to be as per the schedules or under the residuary provision in Sec. 14. 'Ores and minerals' by its natural connotation does not include sand, stone chips and stone boulders. 'Ores and minerals' are found under the Schedule of Industrial Inputs and the specific items dealt with by the assessee are used only in construction activities. The classification under the tax enactment cannot go by the definition in the MMDR Act; which is a central legislation. At the relevant year only 'ores and minerals' were included under Schedule III in which cannot be included the subject items. The subject items, not anywhere mentioned in the Schedules I to IV, fall under the residuary clause as provided under Sec. 14 of the VAT Act; exigible to tax at the rate of 12.5%. The subsequent concession given by the State legislature, including the subject items in Schedule III does not disclose the intention of the legislature in the relevant assessment year, but on the other hand, reveals the State Government's decision to make the subject items exigible to tax at a lower rate in the subsequent years, which clearly postulates the higher levy in the relevant assessment year.