TMI Blog1995 (1) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... dent had purchased iron scrap and not ship named 'M.V. State of Andhra'? 2.. If the answer to the above question is in the affirmative, whether the Tribunal was correct in law in holding, that purchase tax under section 13 is not attracted because there was resale of the scrap as per the meaning given to the "resale" in section 2(26) of the Bombay Sales Tax Act, 1959?" 2.. The assessee, M/s. Delhi Iron Steel Co. Pvt. Ltd., who is a dealer registered under the Bombay Sales Tax Act, 1959 ("the Act"), carries on the business of purchasing and selling old machinery, electric motors, iron and steel in the form of scrap, angles, bars, plates, etc., and scrap of non-ferrous metals. It also carries on the business of purchasing condemned unse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner was that the Sales Tax Officer was wrong in holding that what was purchased by the assessee was a ship. According to the assessee, the ship in question being unserviceable and condemned, was not a ship but scrap. It was further contended by the assessee that the articles obtained from the ship were sold without doing anything on them which could be termed as "manufacture". According to the assessee, it did not manufacture anything but merely resold the articles obtained from the discarded or condemned ship and hence no purchase tax was leviable under section 13 of the Act. It was also pointed out by the assessee that the material obtained by the assessee from the unserviceable ship in question also included materials on bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le ship which was no more a ship but was merely scrap. The Tribunal accepted the contention of the assessee and held that the assessee had in fact purchased re-rollable scrap in the form of old ship. The Tribunal observed that the assessee had proved before it from relevant documents that what had been purchased by it was scrap and not a ship. The Tribunal, therefore, held that the assessee purchased iron scrap in the form of condemned and unserviceable ship and sold the same, and hence section 13 of the Act was not attracted. Aggrieved by the above decision of the Tribunal, the Revenue is before us by way of this reference. 3.. We have heard the counsel for the parties and perused the order of the Tribunal and the relevant documents. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture of scrap. If the answer is in the affirmative, purchase tax would be leviable on the turnover of purchase thereof, otherwise not. 4.. There is no dispute in the case before us about the fact that the ship in question was a condemned and unserviceable ship and it was sold as such for breaking and scrapping purposes. The tender itself was "for purchasing the cargo vessel 'M.V. State of Andhra' belonging to the Shipping Corporation of India Ltd. for breaking and scrapping purposes". Clause (10) of the terms and conditions of the tender specifically provides that "The hull of the vessel shall be completely scrapped, dismantled, dismembered or destroyed within the period allowed to the buyer by the concerned Government authorities from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the current ITC policy, has been canalised through Metal Scrap Trade Corporation Ltd. and it would be responsibility of the buyers to apply for CCp with letter of authority through Metal Scrap Trade Corporation Ltd." 5.. In the light of the above factual position, we do not find any force in the submission of the learned counsel for the Revenue that the ship purchased by the assessee from the Shipping Corporation of India has to be regarded as a "ship" notwithstanding the fact that it was condemned and unserviceable at the time of sale and was sold for breaking and scrapping purposes. We are of the clear opinion that the condemned and unserviceable ship purchased by the assessee was not a ship but re-rollable scrap in the form of old ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auction was scrap and when he sold the scrap later, he was only a second seller. This decision of the Madras High Court now stands approved by the Supreme Court in State of Tamil Nadu v. Raman Co. [1994] 93 STC 185. The ratio of the above decision squarely applies to the facts of the present case. Here admittedly, the condemned and unserviceable ship was sold by the Shipping Corporation of India "for breaking and scrapping purposes". It was, in fact, made clear by the Shipping Corporation of India itself in the agreement that it was a sale of rerollable scrap in the form of old ship. What the assessee acquired from the purchase of the condemned and unserviceable ship was not a ship, but old materials and articles contained therein which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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