TMI Blog1995 (8) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocates (Mrs. Indu Malhotra and Ms. Ayesha Khatri, Advocates, with them), for the appellant. A.K. Ganguli, Senior Advocate (A. Mariarputham, Mrs. Aruna Mathur and A. Kapoor, Arputham Aruna Co., Advocates, with him), for the respondents. -------------------------------------------------- The judgment of Janarthanam, J., of the Madras High Court in Vasantham Foundry and Others v. Union of India and Others (W.P. Nos. 21165 to 21170 of 1993 dated 7th December, 1993) runs as follows: Janarthanam, J.- Vasantham Foundry, Coimbatore (petitioner in W.P. Nos. 21165 and 21166 of 1993) and members of the associations, namely, Southern India Engineering Manufacturers' Association, Coimbatore (petitioner in W.P. Nos. 21167 and 21168 of 1993) and the Coimbatore District Tiny and Small Scale Industries Association, Coimbatore (petitioner in W.P. Nos. 21169 and 21170 of 1993) it is said are engaged in the manufacture and sale of cast iron castings. 2.. Government of India (first respondent), it is said, issued clarification that the expression "cast iron" in the list of declared goods would cover cast iron castings. It is upon such a clarification, the Special Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins the same, even if the appellant purchases iron and mixes it with carbon and silicon thereby deriving 'cast iron' and then pours it into different moulds. In sum, 'cast iron' is different from the cast iron pipes, man-hole covers, bends, etc., manufactured and sold by the appellant. It cannot be denied, in such a situation that the products manufactured by the appellant are, in commercial parlance, different and distinct goods from the cast iron." (page 52a-c). "So far as clarifications/Circulars issued by the Central Government and/ or State Government are concerned, they represent merely their understanding of the statutory provisions. They are not binding upon the courts. It is true that those clarifications and circulars were communicated to the concerned dealers but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law. There can be no estoppel against the statute. The understanding of the Government, whether in favour or against the assessee, is nothing more than its understanding and opinion. It is doubtful whether such clarifications and circulars bind the quasi-judicial functioning of the authorities under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are absolutely no merits for the entertainment of all these writ petitions, in the facts and circumstances of all these cases. The Third Schedule to the APGST Act pertains to declared goods in respect of which, single point tax only is leviable under section 6 thereof. The said section 6 was enacted by the Andhra Pradesh Legislature to accord with sections 14 and 15 of the Central Sales Tax Act, 1976 (Act 74 of 1956-for short "the CST Act "). Similar is the position in the State of Tamil Nadu, by incorporation of pari materia provisions under the TNGST Act. The Second Schedule to the TNGST Act is relatable to "declared goods", in respect of which, single point tax only is leviable under section 4 thereof, which had been enacted by the Legislature of the Tamil Nadu in accord with the salient provisions adumbrated under sections 14 and 15 of the CST Act. Sub-item (i) of item 2 to the Third Schedule of the APGST Act reads as follows: S.No. Description of goods Point of levy Rate of tax 2 Iron and steel, that is to say- Pig iron and cast iron including ignot moulds, bottom plates, iron scrap, cast iron scrap, run ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issuance of writs of certiorari as prayed for. 12.. As already indicated, the goods manufactured and sold by the petitioners are falling under the description "cast iron castings", which in commercial parlance, had been construed by the apex Court as a different and distinct commodity from cast iron exigible to tax as not a declared goods. As such, the declaratory relief as prayed for is also not capable of being granted. 13.. All these writ petitions are therefore liable to be dismissed and they are accordingly dismissed. Consequently, all the W.M.Ps. are also dismissed. Soli J. Sorabjee and A.N. Haksar, Senior Advocates (Mrs. Indu Malhotra and Ms. Ayesha Khatri, Advocates, with them), for the appellant. A.K. Ganguli, Senior Advocate (A. Mariarputham, Mrs. Aruna Mathur and A. Kapoor, Arputham Aruna Co., Advocates, with him), for the respondents. [Judgment per : Suhas C. Sen, J.]. The question that falls for determination in this case is whether the `cast iron in the list of declared goods in the Tamil Nadu General Sales Tax Act would include `Cast Iron Castings. 2. The case of the appellant is that the basic raw materials for producing cast iron a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed aluminised, tinned or coated such as by copper; (xvi) defective, rejects, cuttings or end pieces of any the above categories;" 4. Section 15 of the Act imposed restrictions and conditions in regard to sales tax on sale or purchase of declared goods within a State. By Section 15(a) of the Act, the sales tax payable under any State law in respect of any sale or purchase of declared goods inside the State shall not exceed 4% of the sale or purchase price thereof and such sales tax shall not be levied at more than one point. 5. Section 4 of the Tamil Nadu General Sales Tax Act deals with tax in respect of declared goods and reads as follows :- Notwithstanding anything contained in sub-sections (2) to (8) of Section 3 or Section 3A or Section 3B but subject to the provisions of sub-section (1) of Section 3, the tax under this Act shall be payable by a dealer on the sale or the purchase inside the State of declared goods at the rate and only at the point specified against each in the second schedule on the turnover in such goods in each year. 6. Entry 4 of the Second Schedule to the Tamil Nadu General Sales Tax Act has reproduced clause (iv) of Section 14 of the Central S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly. This circular superseded all earlier circulars and it was declared that the revised classification will take effect from 1-4-1993. 11. The case of the appellant, Vasantham Foundry, is that it is doubtful whether such clarification/circulars can have any binding effect on quasi-judicial authorities under the Sales Tax Act. But, following this circular, notices were issued by Commercial Tax Officer to various foundry owners proposing to assess to tax sale of cast iron castings at the rate of 8%. A group of writ petitions were moved by Vasantham Foundry, Coimbatore, and members of Southern India Engineering Manufacturers Association, Coimbatore and the Coimbatore District Tiny and Small Scale Industries Association, Coimbatore, challenging the aforesaid clarification as well as notices. All these writ petitions were dismissed by a common order in which it was held that there was absolutely no merit in all these cases. The law as to the treatment of the cast iron castings and as to in what manner the goods by the description cast iron castings had to be treated for assessment purposes, has been declared by the Supreme Court and is binding not only on all quasi-judicial fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the cast iron. Indeed this aspect is not seriously disputed by Shri Ganguli, the learned counsel for the appellant. The appellant, in the instant case, has not disputed the above proposition laid down in the case of Bengal Iron Corporation (supra). It has been argued that if in a given case it is found that agricultural implements or parts of a motor vehicle or manhole covers, bends, or cast iron pipes are being produced in a foundry, these cannot be treated as `cast iron , but will have to be treated as finished goods made of cast iron. But, `cast iron casting at its primary stage must be treated as declared goods. When pig iron or scrap iron is melted in the foundry and mixed with carbon and silicon, it cannot be said that the molten metal was cast iron and when the molten metal is poured into a mould, it ceased to be cast iron. 14. In our judgment, this contention must be upheld. When Section 14 declared certain goods as of special importance in inter-State trade or commerce, it could not have the molten metal in contemplation. It is nobody s case that the molten metal is bought and sold in the market. What is bought and sold is cast iron, which is obtained by pouring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent s sake that a quantity of molten metal can be purchased by a customer, it can only be delivered by a foundry in a container. The molten metal will solidify on cooling and acquire the shape and size of the container. In other words, the molten metal will become rough cast iron casting. Similarly, if the molten metal is delivered in moulds, it will acquire the size and shape of the moulds as soon as it cools down and will acquire the size and shape of mould. It is nobody s cast that it is the molten metal which is dealt with in inter-State trade or commerce. When the Central Government declared cast iron as goods of special importance in inter-State trade or commerce, it must have in contemplation some commodity which is actually traded in inter-State trade or commerce. If rough cast iron castings are treated as something distinct and separate from cast iron, the purpose behind Sections 14 and 15 will be defeated. 17. It has been asserted on behalf of the appellant that `cast iron would have to be given its natural meaning and understood in the light in which the expression has been understood by the trade for several decades. The Central Government through the Department of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs : Casting is the process of producing a metal object of a desired shape by pouring molten metal into a mold and allowing the metal to cool and solidify. Man has been making cast metal objects for artistic or practical purposes since very early times, when the first castings probably were made of gold or copper formed in a stone or clay mold. The earliest axes and other useful metal objects were cast in open molds of stone or baked clay. Early art objects were made of cast gold, silver, copper or bronze; one existing life-sized portrait head in cast bronze from Mesopotamia dates from about 2250 B.C. The shaping of metals in the liquid state has been in development for centuries. With the growth of industrial societies. the need for metal castings has become very great. In the United States alone the industry produces more than 16 million tons of castings annually, using iron, steel, copper, aluminium, zinc, alloys, and magnesium alloys." Therefore, it appears from this that the molten form is not regarded as `cast iron at all according to the Encyclopaedia Americana. It is produced by pouring the molten alloy into moulds. `Casting is also used generally to describe the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India vide its letters dated 28-2-1977 and 21-1-1984; (v) Memorandum dated 17-4-1985 issued by the Government of Andhra Pradesh; (vi) communication Memo No. 11469 C.T./7A12/88, dated 31-7-1991 issued by the Commissioner of West Bengal; and (vi) letter from the C.C.T. Andhra Pradesh dated 12-3-1992. In all these communications consistent view has been taken that `cast iron castings have to be treated as `cast iron . 23. It has been argued that the word `cast iron must be understood in the way the trade understands it. This understanding has been recognised and implemented by the various circulars issued by various State Governments and the Central Government from time to time in a consistent view. This meaning should not be discarded without very strong reasons. In the instant case, if the well-understood meaning is discarded and the new meaning is adopted, 6,000 foundries in the State of Tamil Nadu and thousands of other foundries all over the country will suffer irreparable loss or damage. 24. Lastly, it has been contended that the circular dated 14-9-1993 issued by the Tamil Nadu Government is based on misconception of the law laid down by this Court in the case of Benga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir classification under the First Schedule (for clarification will take effect from First April, 1993. Government are being addressed for orders not to re-open past assessment involving sales of rough cast iron castings. In respect of pending assessments, revised rate of tax may be applied, but collection of difference between the tax assessed and; 4. Additional levies of surcharge, additional surcharge and additional sales tax may be deferred pending receipt of orders of waiver from Government." 25. We are of the view that there is considerable force in the contention of the appellant. The appeals are allowed. The circular dated 14-9-1993 is quashed and the impugned show cause notices issued pursuant to the aforesaid circular are also quashed, with the clarification that `rough unmachined cast iron castings will continue to be treated as declared goods under sub-item (i) of Item (iv) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959. 26. The respondents, however, will be at liberty to tax any product made out of the `rough unmachined cast iron castings in accordance with law. 26. There will be no order as to costs. 27. Civil Appeal Nos. 2640 and 264 ..... 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