TMI Blog1970 (4) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... thority by its order dated 25th January, 1968, proposed to assess the said petitioners under the Tamil Nadu General Sales Tax Act, 1959, treating their sales turnover of Rs. 28,20,278.76 of mild steel rounds, flats, angles, etc., as liable to tax at 2 per cent. for the assessment year 1966-67. The objection to the proposed assessment by the petitioners was that the iron and steel scraps from which rolled mild steel rounds, flats and angles have been made had already suffered tax in the State as first sale of declared goods and that as such rolled mild steel, iron flats and angles are not liable to tax, as they are declared goods under section 14 of the Central Sales Tax Act not liable to tax on second and subsequent sales. They also contended that the rolled mild steel rounds, flats and angles are not goods different from the iron and steel scraps purchased by them. The petitioners filed the above Writ Petition No. 520 of 1968 for prohibiting the assessing authority from making any assessment on the basis of the said notice proposing assessment. In the said writ petition they contend that the prescription of single point tax specified in section 14 of the Central Sales Tax Act he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an a casual trader or agent of a non-resident dealer) whose total turnover for a year is not less than fifteen thousand rupees and every casual trader or agent of a non-resident dealer, whatever be his turnover for the year, shall pay a tax for each year at the rate of three per cent. of his taxable turnover:...... (2) Notwithstanding anything contained in sub-section (1) in the case of goods mentioned in the First Schedule, the tax under this Act shall be payable by a dealer, at the rate and only at the point specified therein on the turnover in each year relating to such goods whatever be the quantum of turnover in that year." Section 4: "Notwithstanding anything contained in section 3, the tax under this Act shall be payable by a dealer on the sale or 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, whatever be the quantum of turnover in that year." Schedule I to the Act sets out the goods in respect of which single point tax is leviable under sub-section (2) of section 3 and Schedule II sets out a list of declared goods in respect of which single point ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 966 with effect from 1st July, 1966. Section 15 ensures that in the case of declared goods they should in all circumstances be liable to tax only at a specified stage in the series of sales and at the prescribed rate. In the light of the above statutory provisions the substantial contention of the petitioners is that "iron and steel" cannot be subjected to tax at more than one stage, and at more than the prescribed rate of 3 per cent. under any circumstances and that if the sales tax law of any State imposes or authorises the imposition of a tax on the sale or purchase of "iron and steel" at more than one stage or at more than 3 per cent., such law would be invalid. Admittedly the rate of tax has not exceeded the prescribed rate of 3 per cent. as the rate of tax levied under section 4 read with Schedule II of the Act is only 3 per cent. and it has not exceeded the rate fixed in section 15(a). We are concerned herein only with the question whether by levying tax on rolled "iron and steel" bars and plates etc., made out of iron and steel scrap and the ingots (already subjected to tax), the revenue has contravened the provisions of section 15 of the Central Sales Tax Act prohibiting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, blooms and slabs. 4. Tin bars. 5. Skelp. B. 1. Steel bars and rods. 2. Structurals (viz. angles, tees, joists and channels). Bearing plates and crossing-sleeper bars. 3. Plates. 4. Chequered plates. 5. Boiler plates. 6. Black sheets-plain and corrugated. 8. Heavy rails. 9. Light rails 10. Fish-plates-heavy and light. 11. Tool (1) A.I.R. 1947 P.C. 72. steel. 12. Bullet-proof plates. 13. Shell steel blooms and bars. 14. Box strapping. 15. Baling hoops. 16. Gate channels. C. 1. Hard bright wire. 2. Annealed wire. 3. Galvanised wire. 4. Telegraph wire. 5. Signal wire galvanised. D. Tin plates. E. Alloy steel. F. Iron and steel defectives and scraps. On the basis of the said explanatory note, it was contended that the Government of India had itself treated all the commodities listed under the head A to F as "iron and steel", that the single point tax contemplated by section 15 of the Central Sales Tax Act should therefore be levied at only one stage in the series of sales from the raw stage to the final stage of production by the rolling mills and that it is not contemplated that the goods are to be taxed at various stages and in its various forms. The learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabricated materials from the single point scheme, and that the single point scheme contemplated by section 15 should be from the stage of scrap up to the production stage by the rolling mills. The learned counsel relies on the decision in State of Punjab v. Chandu Lal Kishori Lal[1970] 25 S.T.C. 52 (S.C.). in support of his stand that cotton, ginned or unginned, is treated as a single commodity under one item of declared goods and that, though they are two distinct commercial goods, for the purpose of section 15 of the Central Act it is treated as one item. The learned counsel also referred to the decision of the Supreme Court in State of Madhya Bharat v. Hiralal[1966] 17 S.T.C. 313 (S.C.)., where it was held, construing Notification No. 58 under section 5 of the Madhya Bharat Sales Tax Act, 1950, exempting "iron and steel" from sales tax, that the exemption will include iron and steel bars, flats and plates. The learned Judges in that case negatived the contention of the State that the expression "iron and steel" meant "iron and steel" in the original condition and not "iron and steel" in the shape of sheets, bars and plates and that distinction should be made between raw materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew till 1st October, 1958, the State can levy tax at one stage in respect of purchases of declared goods inside the State made by a dealer for use by him in the manufacture of goods, and that from 1st October, 1958, the State was enabled to levy tax at any one stage as it chooses. They also noted that the amended section 15 of the Central Act does not fix the stage by its own force but that the Punjab Act, which they had to consider, had provided in section 2(ff) that the prescribed stage for single point taxation was the stage of purchase by a dealer for use in the manufacture of goods. This decision, according to the learned counsel for the petitioners, does not decide the question at issue in the case, and we also agree with him. The question decided by the Supreme Court was that when iron and steel scraps and ingots are converted into iron and steel bars and plates, the process involves one of manufacture and this was necessary for the purpose of levying a purchase tax on the purchase of raw material for producing the rolled iron and steel sections. The learned Judges have not expressed any view on the question whether in the manufactured state, iron and steel plates and bars e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even after hydrogenation. Oil is a chemical compound of glycerine with fatty acids, or rather a glyceride of a mixture of fatty acids-principally oleic, linoleic, stearic and palmitic-the proportion of the particular fat varying in the case of the oil from different oil-seeds and it remains a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids undergoes a slight change. In its essential nature therefore no change has occurred and it remains an oil-a glyceride of fatty acids-that it was when it issued out of the press." It is urged that when vanaspati, which is produced from groundnut oil after chemical process, is treated as groundnut oil, rolled iron and steel sections which are made out of iron and steel scrap into certain presentable and usable forms will not cease to be "iron and steel". According to the learned counsel this is a fortiori case, for reconversion is impossible in the case of vanaspati while it is possible in the case of "iron and steel". The learned Assistant Government Pleader appearing on behalf of the State, however, contends, relying on the decisions in Devgun Iron and Steel Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Act. A reading of the said entry as a whole shows that the statute wanted to treat all forms of iron and steel either as raw material or as a finished product from the rolling mill as "iron and steel" and the product as emerging from the various stages of manufacture cannot be treated different from "iron and steel". The learned Government Pleader places strong reliance on the case reported in Devgun Iron and Steel Rolling Mills v. State of Punjab[1961] 12 S.T.C. 590. and the decision of the Supreme Court in Devi Dass Gopal Krishnan v. State of Punjab[1967] 20 S.C.T. 430 (S.C.) and contends that the rolled iron and steel articles are commercially different and that the State is entitled to bring them to tax notwithstanding the fact that the scrap out of which they have been made had been taxed already. In effect the State contends that it is entitled to treat each of the commodities mentioned in the various sub-items in entry (iv) separately for the purpose of levying single point tax. As we had already noted, the decision in Devgun Iron and Steel Rolling Mills v. State of Punjab[1961] 12 S.T.C. 590. and Devi Dass Gopal Krishnan v. State of Punjab[1967] 20 S.C.T. 430 (S.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same and that it had not ceased to be iron and steel. The learned Government Pleader also referred to the decision in State of Gujarat v. S.V. Motichand[1969] 23 S.T.C. 288., particularly the dissenting view of Divan, J., that "the real test applicable to such cases is the test of possibility of substitution of the one for the other so far as consumers are concerned and if there is no such possibility, it would be a new commodity and would no longer be a form of the original article and that corrugated iron sheet is not a form of iron or steel but is an article of iron or steel and is a distinct commodity covered by entry 80 of Schedule B to the Bombay Sales Tax Act, 1953." But it is found that the majority view was that corrugated iron sheets were merely iron in another shape and form, that it cannot be regarded as an article or product manufactured or fabricated out of iron, that merely because iron is given the shape of sheets and is subject to corrugation for the purpose of giving it rigidity and increased stiffness so as to make it acceptable to a particular class of persons who might want to use it in the form of iron sheet for roofing and walling, it does not cease to be i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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