MISRILALL JAIN & SONS Vs. UNION OF INDIA

JUDGEMENT

(1.) In the writ petitions, the petitioner seeks for quashing the demand notices issued by the Commercial Taxes Department in respect of recovery of Value Added Tax for the assessment year 2010-11 and 2011-12 and also to quash the order/demand dated 21.02.2013 whereby the petitioner/assessee was directed to pay the tax amount of Rs. 91,59,118.94 and interest of Rs. 1,05,55,540.28, totalling Rs. 1,97,14,659.22 for the assessment year 2010-11 and for the assessment year 2011-12, the assessee was directed to pay tax amount of Rs. 1,56,70,579.04 and the interest of Rs. 7,41,909.88 totalling to Rs. 1,64,12,488.92 on difference of sale prices which has been demanded from the petitioner.

(2.) The petitioner is a Mines owner and is engaged in sale of the Iron Ore. The petitioner is registered under the Jharkhand Value Added Tax Act, 2005 having the TIN No. 20211200323 for sale of the raw Iron Ore Lumps. It is stated that Schedule-II of the Mines and Minerals (Development and Regulation) Act, 1957 provides the rate of royalty in respect of minerals and in terms of Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957, a mining lessee has to pay royalty on consumption/removal of minerals at the rate prescribed in Schedule-II of the said Act. Entry-22 of Schedule-II provides that the royalty for Iron Ore Lumps and Fines would be the sale price at ad valorem basis. The petitioner was paying royalty at the rate of 10% of the sale price. Prior to the said Notification there was fixed royalty for different quality (iron content) of Iron Ore on tonnage basis. However, basis was changed to ad valorem by the subsequent Notification. The Central Government in exercise of powers conferred by Section 13 of the Mines and Minerals (Development and Regulation) Act, 1957 amended the Mineral Concession Rules, 1960 and substituted Rule 64D in the Mineral Concession Rules, 1960. Rule 64D provides that the royalty shall be computed on minerals on ad valorem basis according to the formula mentioned therein. The amendment provided that the state-wise sale price for different minerals as published by Indian Bureau of Mines shall be the sale price for computation of royalty in respect of any mineral produced.

(3.) It is further stated that the Iron Ore is a de-controlled commodity and there is no law, restricting or fixing the price of Iron Ore Lumps or any other form of the Iron Ore and therefore, fixing of sale price of Indian Bureau of Mines by virtue of Rule 64D is bad, arbitrary, misconceived, miscalculated and against the provisions of the Mines and Minerals (Development and Regulation) Act, 1957 and the Constitution of India. The Mines and Minerals (Development and Regulation) Act, 1957 does not give power to make Rule nor it gives power to any authority to fix sale price of minerals. The sale price may depend upon the quantity of the Mineral Ore and thus, a lesser quantity may fetch higher price whereas, in bulk sale the price may come down and thus, there cannot be fixed sale price in respect of de-controlled item. At no point in time either the Assessing Authority or Indian Bureau of Mines took any data from the petitioner-company to ascertain what is the sale price of the Iron Ore sold by the petitioner-company and therefore, the Indian Bureau of Mines or any authority cannot assume a sale price for the petitioner-company.