Indian Carbon Limited Vs. Superintendent of Taxes, Gauhati and ors. - Court Judgment

Excerpt:
sales tax petroleum coke sections 14, 14 (1) and 15 of central sales tax act, 1956 and assam sales tax act, 1947 rate sales tax imposed on petroleum coke challenged section 14 (1) of act of 1956 provides that coal in all forms to be taxed at rate as provided in act petroleum coke included within the purview of definition provided in act in circumstances such coke can be taxed as per rate provided under act of 1956 and not under state act. - sections 163-a & 166: [r.v.raveendran & l.s.panta,,jj] motor accident claim-principles governing determination of liability and quantum of compensation under sections 163-a and 166 respectively distinction between held, the principles relating to determination of liability and quantum of compensation are different for claims made under section 163-a of the mv act, 1988 and claims under section 166 of the said act. section 163-a and schedule ii to the 1988 act in terms do not apply to determination of compensation in applications under section 166. section 163-a r/w schedule ii: [r.v.raveendran & l.s.panta,jj] method for determination of compensation as provided for under schedule ii- various discrepancies/errors in multiplier scale and other incongruities occurring in schedule ii were pointed out by supreme court. sections 166 & 168: [r.v. raveendran & l.s. panta, jj] fatal accident - objective approach in assessing compensation what is just compensation - held, assessment of compensation, though involves certain hypothetical considerations, should nevertheless be objective. justice and justness emanate from equality in treatment, consistently and thoroughness in adjudication, and fairness and uniformity in the decision making process and the decisions. hence, expressing grave concern over lack of uniformity and consistency among the decision of tribunals, held, when the factors/inputs as well as the formula/legal principles are the same, consistency and uniformity, and not divergence and freakiness, should be the result of adjudication to arrive at just compensation. to arrive at uniformity and consistency in determination of compensation in cases of death, tribunals directed to follow the well-settled steps as indicated herein. sections 166 & 168 :[r.v.raveendran & l.s.panta,jj] fatal accident-assessment of compensation held, facts are required to be established by claimants in relation thereto - issue to be determined by tribunal to arrive at loss of dependency restated. sections 166 & 168 :[r.v. raveendran & l.s.panta,jj] fatal accident - heads (and amounts under such heads) under which compensation may be granted held, assessment of compensation though involving certain hypothetical considerations, should nevertheless be objective. further, the compensation awarded does not become just compensation merely because the tribunal considers to be just. just compensation is adequate compensation which is fair and equitable, on the facts and circumstances of the case, to make good the loss suffered as a result of the wrong, as far as money can do so, by applying the well settled principles relating to award of compensation. it is not intended to be a bonanza, largesse or source of profit. justice and justness emanate from equality in treatment, consistency and thoroughness in adjudication, and fairness and uniformity in the decision-making process and the decisions. while it may not be possible to have mathematical precision or identical awards in assessing compensation, same or similar facts should lead to awards in the same range. when the factors/inputs are the same, and the formula/legal principles are the same, consistency and uniformity, and not divergence and freakiness, should be the result of adjudication to arrive at just compensation. therefore, if different tribunals calculate compensation differently on the same facts, the claimant, the litigant, the common man will be confused, perplexed and bewildered. if there is significant divergence among the tribunals in determining the quantum of compensation on similar facts, it will lead to dissatisfaction and distrust in the system. basically only three facts need to be established by the claimants for assessing compensation in the case of death i.e. (a) age of the deceased; (b) income of the deceased; and (c) the number of dependants. further, the issues to be determined by the tribunal to arrive at the loss of dependency are; (i)additions/deductions to be made for arriving at the income of the deceased; (ii) the deduction to be made towards the personal living expenses of the deceased; and (iii) the multiplier to be applied with reference to the age of the deceased. if these determinants are standardized, there will be uniformity and consistency in the decisions. there will be lesser need for detailed evidence. it will also be easier for the insurance companies to settle accident claims without delay. thus, to have the said uniformity and consistency, the tribunals are directed to determine compensation in cases of death, by the following well-settled steps viz., step 1 (ascertaining the multiplicand) the income of the deceased per annum should be determined. out of the said income a deduction should be made in regard to the amount which the deceased would have spent on himself by way of personal and living expenses. the balance, which is considered to be the contribution to the dependant family, constitutes the multiplicand; step 2 (ascertaining the multiplier) having regard to the age of the deceased and period of active career, the appropriate multiplier should be selected. this does not mean ascertaining the number of years he would have lived or worked but for the accident. having regard to several imponderables in life and economic factors, a table of multipliers with reference to the age has been identified by the supreme court. the multiplier should be chosen from the said table with reference to the age of the deceased; step 3 (actual calculation) the annual contribution to the family (multiplicand) when multiplied by such multiplier gives the loss of dependency to the family; thereafter, a conventional amount in the range of rs. 5000 to rs 10,000 may be added as loss of estate. where the deceased is survived by his widow, another conventional amount in the range of rs. 5000 to rs. 10.000should be added under the head of loss of consortium. but no amount is to be awarded under the land of pain, suffering or hardship caused to the legal heirs of the deceased. the funeral expenses, cost of transportation of the body (if incurred) and cost of any medical treatment of the deceased before death (if incurred) should also be added. sections 166 & 168: [r.v.raveendran & l.s.panta,jj] selection of relevant multiplier - appropriate table for - inconsistency among decisions of tribunals/courts - need to avoid - as some tribunals/courts following multiplier given/actually adopted in mv act schedule ii and certain following different multipliers indicated in different decisions of supreme court, held, such kind of inconsistency is to be avoided. cases falling under section 166 are governed by davies method i.e. method enunciated in davies case, 1942 ac 601. multiplier to be used in such cases should be as mentioned in column (4) of the table given herein (in para 40), prepared by applying susamma thomas case, (1994) 2 scc 176 (which preferred davies method), trilok chandra case, (1996) 4 scc 362 and charlie case, (2005) 10 scc 720 thus, the operative multiplier is 18 for the age groups of 15 to 20 and 21 to 25 years; and 17,16,15,14 and 13 for the age groups of 26 to 30,31 to 35, 36 to 40, 41 to 45 and 46 to 50 years respectively; and 11,9,7, and 5 for the age groups of 51 to 55,56 to 60 to 65 and 66 to 70 years respectively . sections 166 & 168: [r.v.raveendran & l.s.panata,jj] death in accident-compensation - determination of income of deceased held, generally the actual income of the deceased less income tax should be the starting point for calculating the compensation. but having regard to evidence as to future prospects, in kerala state road transport corporation v susamma thomas 1994 (2) scc 176, the court increased the income by nearly 100%, in sarla dixit v balwant yadav, 1996 (3) scc 179 the income was increased only by 50% and n abati bezbaruah v geological survey of india, 2003 (2) scc 148 the income was increased by a mere 7%. in view of the imponderables and uncertainties, it is favoured to adopt as a rule of thumb, an addition of 50% of actual salary to the actual salary income of the deceased towards future prospects, where the deceased had a permanent job and was below 40 years, (where the annual income is in the taxable range, the words actual salary should be read as actual salary less tax). the addition should be only 30% if the age of the deceased was 40 to 50 years. there should be no addition, where the age of the deceased is more than 50 years. though the evidence may indicate a different percentage of increase, it is necessary to standardize the addition to avoid different yardsticks being applied or different methods of calculation being adopted. where the deceased was self-employed or was on a fixed salary (without provision for annual increments, etc.), the courts will usually take only the actual income at the time of death. a departure therefrom should be made only in rare and exceptional cases involving special circumstances. in the present case, the conclusion of the high court as to the monthly income of the deceased is in conformity with the legal principle that about 50% can be added to the actual salary, by taking note of the future prospects. further, the assumption of the appellant claimants that the actual future pay revisions should be taken into account for the purpose of calculating the income is not sound. in this case, the accident and death occurred in the year 1988. the award was made by the tribunal in the year 1993. the high court decided the appeal in 2007. the pendency of the claim proceedings and appeal for nearly two decades is a fortuitous circumstance and that will not entitle the appellants to rely upon the two pay revisions which took place in the course of the said two decades. if the claim petition filed in 1988 had been disposed of in the year 1988-1989 itself and if the appeal had been decided by the high court in the year 1989-1990, then obviously the compensation would have been decided only with reference to the scale of pay applicable at the time of death and not with reference to any future revision in pay scales. if the contention urged by the claimants is accepted, it would lead to the following situation: the claimants could only rely upon the pay scales in force at the time of the accident, if they are prompt in conducting the case. but if they delay the proceedings, they can rely upon the revised higher pay scales that may come into effect during such pendency. surely, promptness cannot be punished in this manner. hence, the contention that the revisions in pay scale subsequent to the death and before the final hearing should be taken note of for the purpose of determining the income for calculating the compensation, is rejected. sections 166, 168 & 163-a: [r.v. raveendran & l.s. panta, jj] compensation under section 166 - deductions to be made from income of deceased towards his personal and living expenses applicability of one-third deduction as envisaged in section 163-a - held, in order to arrive at the contribution to the dependants, the personal and living expenses of the deceased should be deducted from his income. but no evidence need be led to show the actual expenses of the deceased. in fact, any evidence in that behalf will be wholly unverifiable and likely to be unreliable. the claimants will obviously tend to claim that the deceased was very frugal and did not have any expensive habits and was spending virtually the entire income on the family. on the other hand, it will be difficult for the respondents in claim petition to produce evidence to show that the deceased ws spending a considerable part of the income on himself or that he was contributing only a small part of the income on his family. therefore, it became necessary to standardize the deductions to be made under the head of personal and living expenses of the deceased. this lead to the practice of deducting towards personal and living expenses of the deceased, one-third of the income if the deceased was married, and one-half (50%) of the income if the deceased was a bachelor. this practice was evolved out of experience, logic and convenience. in fact one-third deduction got statutory recognition under the second schedule to the mv act, 1988, in respect of claims under section 163-a of the said act. but, such percentage of deduction is not an inflexible rule and offers merely a guideline. though in some cases the deduction to be made towards personal and living expenses is calculated on the basis of units indicated in u.p.s.r.t.c., v trilok chandra 1996 (4) scc 362, the general practice is to apply standardized deductions. having considered several subsequent decisions of the supreme court, it is opined that where the deceased was married, the deduction towards personal and living expenses of the deceased, should be one-third (1/3rd) where the number of dependent family members is 2 to 3, one-fourth (1/4th) where the number of dependent family members is 4 to 6, and one-fifth (1/5th) where the number of dependent family members exceeds six. but where the deceased was a bachelor and the claimants are the parents, the deduction follows a different principle. in regard to bachelors, normally, 50% is deducted as personal and living expenses, because it is assumed that a bachelor would tend to spend more on himself. even otherwise, there is also the possibility of his getting married in a short time, in which event the contribution to the parent(s) and siblings is likely to be cut drastically. further, subject to evidence to the contrary, the father is likely to have his own income and will not be considered as a dependant and the mother alone will be considered as a dependant. in the absence of evidence to the contrary, brothers and sisters will not be considered as dependants, because they will either be independent and earning, or married, or be dependent on the father. thus, even if the deceased is survived by parents and siblings, only the mother would be considered to be a dependant, and 50% would be treated as the personal and living expenses of the bachelor and 50% as the contribution to the family. however, where the family of the bachelor is large and dependent on the income of the deceased, as in a case where he has a widowed mother and large number of younger non-earning sisters or brothers, his personal and living expenses may be restricted to one-third and contribution to the family will be taken as two-third. in the present case where the deceased was survived by a widow, three minor children, parents and grandfather, who later died), as an earning member, the deceased would have spent more on himself than the other members of the family apart from the fact that he would have incurred expenditure on travelling/transportation and other needs. therefore, interest of justice would be met if one-fifth is deducted as the personal and living expenses of the deceased. sections 166 & 168: [r.v.raveendran & l.s.panta,jj] determination of compensation - death of a government servant, aged 38 years, in a motor accident deceased, whose salary at the time of his death was rs 4000 p.m., was survived by a widow, three minor children, parents and grandfather, who later died - taking note of future prospects of said deceased, his monthly income for purpose of assessment of compensation determined as rs 6006 by adding about 50% of his salary to actual salary income - deducting 1/5th of the monthly income towards personal and living expenses of deceased, contribution to family (dependants) determined as rs 57,658 p.a. having regard to age of deceased, applying the multiplier of 15, loss of dependency worked out as rs. 57,658 x 15 i.e. rs 8.64,870 - in addition thereto, claimants also entitled to rs 5000 under the head of loss of estate and rs 5000 towards funeral expenses - further, widow to get rs 10,000 as loss of consortium -thus, total compensation determined as rs 8,84,870 - after deducting rs 7,19,624 awarded by high court, the enhanced compensation would be rs.1,65,246 - appellant claimants are entitled to said enhanced sum in addition to what was already awarded, with interest @ 6% p.a. from the date of petition till the date of realisation. - the latter is characteristic of good quality, high temperature coke. the language is clearly wide and coal has been stated to include coke in all its forms.a.n. grover, j.1. this is an appeal by certificate from a judgment of the assam and nagaland high court.2. the appellant is a company incorporated under the indian companies act 1956 in the state of assam. it started its business on november 17, 1962 for the first time. its business includes sale and purchase of petroleum coke. until september 1, 1964 no sales tax was levied or was payable by the company on the sale of petroleum coke because in schedule 3 of the assam sales tax act 1947, hereinafter called the 'assam act', which enumerated the goods on which tax was not payable, entry 7 read 'coal, coke and coalgas'. by amending act 14 of 1964 the said entry was deleted from schedule 3 to the assam act with effect from september 1, 1964. by means of a letter dated july 7, 1964 the superintendent of taxes, assam, informed the company that the petroleum coke and gas were taxable at the rate of 5 np in a rupee under the assam act and directed the company to submit the return for all the periods prior to september 1, 1964 and also apply for registration under the assam act for the sale of petroleum coke within the state of assam. the company preferred a petition for revision under section 31(2) of the assam act challenging the order of the superintendent of taxes. this petition was dismissed by the commissioner of taxes on september 8, 1965. during the pendency of the said revision petition the superintendent of taxes by his letter dated august 14, 1965 modified his earlier order to the extent that the demand was confined to the sale of petroleum coke subsequent to september 1, 1964. the company then moved the high court under article 226 of the constitution which was dismissed.3. in the writ petition as also the return filed in reply thereto and before the high court the provisions of certain other enactments were mentioned. these were the assam finance sales tax act 1956 as amended from time to time and the assam (sales of petroleum and petroleum products....) act 1956 as amended. it is unnecessary to refer to their relevant provisions because before us it is common ground that the tax would be payable under the assam act, the only question being about the rate. under the assam act the rate chargeable was 5 paise per rupee. but it has been claimed on behalf of the appellant that by virtue of the provisions of the central sales tax act 1956. hereinafter called the 'central act', the rate at which the tax would be payable is 2 paise per rupee.4. section 14 declares, inter alia, that coal including coke in all its forms constitutes goods which are of special importance in inter-state trade or commerce. section 15(1) of the central act as it stood at the relevant time was in the following terms:section 15 every sales tax law of a state shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely:(a) the tax payable under that law in respect of any sale or purchase of such goods inside the state shall not exceed (two per cent) of the sale or purchase price thereof and such tax shall not be levied at more than one stage.(b)...5. it may be mentioned that by amending act 13 of 1966 3% was substituted for 2% with effect from july 1, 1966.6. it is not disputed that if petroleum coke is covered by clause (i) of section 14 which reads 'coal including coke in all its forms' the state was not competent to levy tax at a rate exceeding the one given in section 15(a) of the central act. before the high court it was common ground that petroleum coke is used mainly in industries dealing with the manufacture of carbon products and it differs in material constituents, quality, utility and composition from the ordinary coke used as fuel. it is used largely in the manufacture of dry cells, carbon electrodes and electric furnace resistance elements. reference has also been made in the judgment to what is stated in 'chemical engineers' handbook', 3rd edn., at page 1566:coke is a hard, dense, infusible carbonization residue that ranges from a dull gray-black to a silvery grey; the latter is characteristic of good quality, high temperature coke. a coke of this type makes a ringing sound when dropped or struck with a hard object. it exhibits a porous cellular structure, which primarily depends upon the kind of coal used and the rate of heating during the carbonization process.7. the high court was of the view that the word 'coal' includes coke in all its forms in clause (i) of section 14 of the central act and must be taken to mean coke derived from coal. in other words it must be coke which had been derived or acquired from coal by following the usual process of heating or burning. the contention, therefore, of the appellant was negatived that petroleum coke was covered by the aforesaid provision of the central act.8. we are wholly unable to agree with the reasoning or the conclusion of the high court with regard to the ambit and scope of clause (i) of section 14 of the central act. the language is clearly wide and coal has been stated to include coke in all its forms. it is not denied that petroleum coke is one of the forms of coke. therefore on a plain reading of the aforesaid clause it is incomprehensible how petroleum coke can be excluded from its ambit. it may be that the clause mentions coal only and then declares that that word shall include coke in all its forms. that shows that the object of the words which follow coal is to extend its meaning. in the writ petition it was stated in para 2 that 'coke is the refuse left after destructive distillation of coal, shale or oil and is called petroleum coke. metallurgical coke or pitch coke, to indicate its source or origin; but all these are carbonacious material used for the same purpose and having same properties, more or less, main being-mixed carbon,-volatile matters, ash and-moisture.9. in the affidavit in opposition that was filed by the assistant commissioner of taxes, assam, this statement does not appear to have been properly denied. all that has been stated in para 5 is that the word 'coke' in clause (i) of section 14 implies coke obtained from coal only and does not include petroleum coke. the statement in the writ petition is very similar to the meaning of the word 'coke' given in webster's new international dictionary; vol. i. which is as follows:the infusible, cellular, coherent residue obtained when coal is subjected to destructive distillation. it consists mainly of carbon, is hard, porous and gray, and has a submetallic luster. any similar substance left as a residue when petroleum, shale oil, etc. are distilled to dryness.10. our attention has been invited by learned counsel for the state to the discussion in encyclopaedia britannica, vol. 5 on coke, coking and high temperature carbonization. we do not consider that when the parliament used the word 'coke' in section 14(i) of the central act it had any intention to give it a meaning other than the ordinary dictionary meaning which would cover petroleum coke. at any rate, the language employed is so wide viz. 'coke in all its forms' that petroleum coke which is a form of coke cannot possibly be excluded merely by reference to the word 'coal'.11. for the reasons given above the appeal is allowed and the judgment of the high court is set aside. the writ petition shall stand allowed only to the extent that the state will be entitled to levy tax under the assam act not exceeding the rate given in clause (a) of section 15 of the central act. the appellant shall be entitled to its costs in this court.