IMPORTANT POINT
o If a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in Rule 13 will qualify for special treatment-Vehicles used by a Company (which mined ore and turned out copper in carrying on activities as a miner and as manufacturer) fell within Rule 13, even if the vehicles were used merely for removing ore from the mine to the factory, and finished goods from the factory to the place of storage. Spare parts and accessories required for the effective operation of those vehicles were also held to fall within Rule 13.
o The ratio of Indian Copper Corporation Limited is resounding-If a dealer is engaged both in mining operations and the manufacturing process -The two processes being interdependent -it would be impossible to exclude vehicles used for removing the mined material from the place of operation to other places.

Introduction:

Mining and quarrying, as we know, are related, yet distinct activities. One concerns the major minerals, and the other minor minerals. One involves the prospecting or extracting, the other mere excavation. Their semantic nuances apart, can we treat “quarrying” as an act of “mining”? We will answer.

Facts:

2. TMT Granites (Pvt.) Ltd., a dealer under the KVAT Act, quarries and crushes minor minerals; that is, the granite and other building materials. It uses much machinery and many vehicles in its quarrying operations and also the connected crushing operations. To fuel its machinery and vehicles, the Company uses High Speed Diesel(HSD). So the Company claims concession for the HSD and wants to download C-Forms. Access denied, the Company has filed this writ petition.

Submissions:

Petitioner’s:

3. Sri Philip J. Vettickattu, the learned counsel for the petitioner, strenuously contends that the Company can claim tax concession on the HSD it purchases. According to him, Section 8 of the Central Sales Tax Act, 1956 (“CST Act”) enables the Company to claim that advantage.

4. As Section 8 of the Act refers only to mining, Sri Vettickattu has taken me through a few lexical provisions of certain statutes: Section 3(d) of the Mines and Minerals (Development and Regulation) Act, Section 2(j) of the Mines Act, 1952, and also the Kerala Minor Mineral Concession Rules, 2015.

5. Sri Vettickattu has taken pains to explain that the fuel consumed for the machinery and the motor vehicles must alike be treated as the goods enjoying the tax benefit under Section 8 of the CST Act. To support his contentions he has relied on Indian Copper Corporation Ltd., v. Commissioner of Commercial Taxes, AIR 1965 SC 891 J.K. Cotton Spinning and Weaving Mills Co., Ltd., v. Sales Tax Officer, AIR 1965 SC 1310 Bihar Mines Ltd., v. Union of India, AIR 1967 SC 887 All Kerala River Protection Council v. State of Kerala, 2015 (2) KLT 78 D.K. Trivedi and Sons v. State of Gujarat AIR 1986 SC 1323.

6. Dr. Thushara James, the learned Government Pleader, on the other hand, has strenuously contended that the mining and quarrying are entirely different activities. According to her, the Government grants mining permit, whereas the Department of Geology grants quarrying permit. She has also submitted that mining concerns itself with major minerals and the quarrying with minor minerals. The former is extracted subsoil and the latter super-soil.

7. Dr. James has also contended that the Kerala Value Added Tax Act, especially Section 8, covers only the consumables related to mining activity. In this regard, she stresses that the Company’s using motor vehicles for transporting the quarried material falls outside Section 8 of the CST Act. According to her, transportation is an activity unconnected to the quarrying, even if quarrying were to be equated with mining.

8. Taking me through all the statutory provisions which the petitioner's counsel referred to earlier, Dr. James has made valiant efforts to convince me that the Company’s demand for tax concession or exemption cannot be sustained. Dr. James would contend that none of the judgments the Company has relied on draws out the fundamental distinction between mining and quarrying. That issue is sub silentio— accepted ‘in silence’, without adjudication. Instead, these judgments concerned themselves either with the permits granted, mostly, for mining. So those judgments, she asserts, could be distinguished. In the end, she urges the Court to dismiss the writ petition.

9. Heard Sri Philip J. Vettickattu, the learned counsel for the petitioner, and Dr. Thushara James, the learned Government Pleader. Discussion:

10. The petitioner-Company, a registered dealer under the KVAT Act and the Central Sales Tax Act, 1956, has been engaged in quarrying and crushing of granite metals. It uses several items of machinery and motor vehicles for its quarrying operations. It claims that the machinery and the motor vehicles are “integrally co