2003 (9) TMI 723 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the notice and order levying tax on cold rolled strips manufactured from hot rolled strips.
2. Interpretation of Section 14 and Section 15 of the Central Sales Tax Act, 1956.
3. Applicability of Section 17 of the West Bengal Sales Tax Act, 1994.
4. Relevance of precedents and judgments from the Supreme Court and High Courts.
5. Impact of administrative letters on tax liability.

Issue-wise Detailed Analysis:

1. Legality of the notice and order levying tax on cold rolled strips manufactured from hot rolled strips:
The petitioners challenged the notice dated December 13, 1999, and the order dated December 6, 1999, which levied tax on the sale of cold rolled strips manufactured from hot rolled strips. The Assistant Commissioner, Commercial Taxes, disallowed the petitioners' claim for deduction of tax on sales of cold rolled strips under Section 17(3)(a)(vi) of the West Bengal Sales Tax Act, 1994, stating that hot rolled strips were not purchased for resale and were not sold in the same form.

2. Interpretation of Section 14 and Section 15 of the Central Sales Tax Act, 1956:
The petitioners argued that both hot and cold rolled strips are included within sub-clause (vi) of clause (iv) in Section 14 of the Central Sales Tax Act, 1956, and should be treated as one commodity. They contended that the legislature intended to levy taxes on any item at not more than one stage, as per Section 15. However, the court noted that the items under Section 14 are described separately, and the transformation of one commercial commodity into another creates a separate taxable entity.

3. Applicability of Section 17 of the West Bengal Sales Tax Act, 1994:
The petitioners relied on Section 17 of the West Bengal Sales Tax Act, 1994, arguing that the amendment deleting the expression "in the same form" implies that items mentioned in the same sub-clause should be treated as one commodity. However, the court held that the omission of the phrase "in the same form" does not alter the interpretation that different commodities under the same sub-heading are treated separately for tax purposes.

4. Relevance of precedents and judgments from the Supreme Court and High Courts:
The petitioners cited various Supreme Court judgments, including State of Tamil Nadu v. Pyare Lal Malhotra, Telangana Steel Industries v. State of Andhra Pradesh, and others, to support their contention. The court, however, emphasized the precedence of the five-judge bench decision in A. Hajee Abdul Shukoor and Co. v. State of Madras, which held that raw hides and skins and dressed hides and skins constitute different commodities. This principle was reiterated in K.A.K. Anwar & Co. v. State of Tamil Nadu, establishing that different commodities listed under the same sub-heading in Section 14 do not constitute a single taxable commodity.

5. Impact of administrative letters on tax liability:
The petitioners referred to a letter dated March 31, 1999, from the State Government's Finance Department to support their claim. However, the court clarified that such administrative letters do not have any binding effect on the determination of sales tax liability.

Conclusion:
The court dismissed the writ petition, upholding the assessment order that levied tax on the sale of cold rolled strips manufactured from hot rolled strips. The court affirmed that different commodities listed under the same sub-heading in Section 14 of the Central Sales Tax Act, 1956, are to be treated separately for tax purposes, following the larger bench decision in A. Hajee Abdul Shukoor and Co. v. State of Madras. The omission of the phrase "in the same form" in Section 17 of the West Bengal Sales Tax Act, 1994, does not change this interpretation. The administrative letter cited by the petitioners was deemed non-binding on the tax authorities.