Facts of the Case

This case concerns the pre-GST Chhattisgarh Entry Tax Act, not GST. M/s South Eastern Coalfields Limited (SECL) filed TAXC No.99 of 2023 before the Chhattisgarh High Court, seeking a reference on the question of whether coal extraction amounts to 'manufacture' for the purpose of levying entry tax under Section 4-A of the Entry Tax Act on steel tubes and explosives used in the extraction process. The applicant contended that mere extraction of coal from mines does not constitute 'manufacture', relying on the Supreme Court's decision in Commr. of C. Ex. & Cus., Bhubaneswar-I v. Tata Iron and Steel Co. Ltd., 2003 (154) E.L.T. 343 (SC). The Commissioner of Commercial Tax opposed this, contending that quarrying and extraction of coal would fall within the meaning of 'production', treated as synonymous with 'manufacture'. The matter was heard on 18.07.2023.

Issues Involved

  1. Whether coal extraction — involving the use of steel tubes and explosives — amounts to 'manufacture' so as to attract entry tax under Section 4-A of the Chhattisgarh Entry Tax Act.
  2. Whether this question required a formal reference to the High Court by the Commercial Tax Tribunal.

Petitioner's Arguments

  • Coal extraction is not 'manufacture'; the steel tubes and explosives are used only as tools for extracting coal, not for manufacturing a new product, and hence Section 4-A of the Entry Tax Act should not apply.

Respondent's Arguments

  • Quarrying and extraction of coal amounts to 'production', which is a synonym for 'manufacture' in this statutory context, so the entry tax levy on the goods used in that process was justified.

Court Order / Findings

  • The Division Bench, having heard both sides and perused the case law and records, held that the issue raised by the applicant needed to be adjudicated.
  • The Court called upon the Commercial Tax Tribunal to make a reference, elaborating the facts and the question of law, and to refer the same to the High Court for decision.
  • The Tax Case was accordingly disposed of by way of this referral direction — the substantive question of whether coal extraction is 'manufacture' was not itself decided by this order.

Important Clarification

This order does not settle whether coal extraction is 'manufacture' under the (pre-GST) Entry Tax Act — it merely directs the Tribunal to frame and refer that question to the High Court for a considered decision at a later stage. It is a purely procedural referral order, useful to note for coal and mining companies tracking this pending reference, but it carries no ruling on the substantive tax question, and it has no application to GST law.

Sections Involved

  • Chhattisgarh Entry Tax Act — Section 4-A (levy of entry tax; 'manufacture' as a qualifying condition)
  • This is a pre-GST commercial/entry tax matter; no GST provision was involved.

Decision – In Favour of

Neither party's substantive contention was decided — the Tax Case was disposed of only by directing the Commercial Tax Tribunal to frame and refer the 'manufacture' question to the High Court for adjudication.

Case Details

High Court of Chhattisgarh, Bilaspur | TAXC No.99 of 2023 | Coram: Hon'ble Justice Goutam Bhaduri and Hon'ble Justice Sanjay S. Agrawal | Date: 18.07.2023.

Link to Download the Order

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