In a recent ruling, the division bench of the Orissa High Court held that ballasts or boulders or chips being mineral as per Entry 117 of the taxable list are exigible to tax at the rate of 4% of taxable list.
The bench was hearing a bunch of petitions and appeals wherein the rate of tax applicable to ballasts were challenged.
The assessee entered into an agreement with the South Eastern Railway for supply of machine crushed track ballast for laying the same on both the sides of railway track in different locations as per the tender call notice.The assessing Officer held that the ballasts are taxable at a higher rate of 12% against the claim of the assessee that the same are taxable at a lower rate.The first appellate authority, while dismissed the appeal by observing that the scope of contract, being supply of machine crushed ballasts, would be liable to be exigible to tax at the rate of 12%.
On second appeal the Appellate Tribunal found that the ballasts comeswithin the scope of Section 2(g) of the Act and “ballast” supplied to the Railway falls within the ambit of “mineral” for which the rate of 4% is applicable as per Entry 117 of the taxable list. The Department challenged the above order before the High Court in appeal.
The division bench comprising of Justice I.Mahanty and Justice D.P Choudhury observed that the ballasts are deduced from the spalls which are extracted from quarry. The ballasts may be different size to make it boulder or chips. Neither ballasts nor chips or boulders are found in the taxable list. The bench applying the “common parlance test”, noted that it is mineral and is taxable at a rate of 4% under the Orissa Sales Tax Act.
Read the full text of the Judgment below.
