TMI Blog2004 (3) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... a return disclosing the entry of non-ferrous metal scrap of the value of Rs. 1,86,78,549 and paid entry tax at the rate of one per cent under the Act on the said Act. The assessing authority accepted the returns and passed two orders of assessment dated March 28, 2000 in regard to the years 1995-96 and 1996-97. 3.. Section 3(1) of the Act, which is the charging section provides that there shall be levied and collected a tax on entry of any goods specified in the First Schedule to the Act, into a local area for consumption, use or sale therein, at such rates not exceeding the specified percentage of the value of the goods, from such date as may be specified by the State Government by notification. Sub-section (6) of section 3 provides that, no tax shall be levied under the Act on any goods specified in the Second Schedule on its entry into a local area for consumption, use or sale therein. Between May 1, 1992 and March 31, 1994 the First Schedule to the Act contained following entry at Sl. No. 60: "Non-ferrous castings and ingots and scrap of base metals (other than iron and steel scrap) and alloys thereof." From April 1, 1995, entry 60 in the First Schedule was deleted and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferrous metal scrap to tax and paying the entry tax thereon, and the assessing authority having passed the assessment order by accepting such returns, whether the appellant could challenge the levy and collection of entry tax, by filing appeals? Re: Point No. (i): 7.. The term non-ferrous metal refers to any of a class of chemical elements which are solid minerals, other than iron and its alloys. The word "scrap" refers to unwanted bits, pieces, shavings and fragments which however are of some value as metal "scrap" also refers to metal or other raw material recovered from old/discarded/ unused and condemned machinery, ships, vehicles, etc., "scrap metal" is defined in the New Encyclopaedia Britannica (15th Edition Vol. 10 at Page 568) as "used metals that are an important source of industrial metals and alloys, particularly in the production of Steel, Copper, Lead, Aluminium and Zinc...........Scrap is usually blended and remelted to produce alloys similar to or more complex than those from which the scrap was derived". 8.. In Porritts Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433; AIR 1979 SC 300, the Supreme Court held that a word describing a commodity in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them attractive and acceptable forms. They did not in the process lose their character as iron and steel. The dealer sold 'iron and steel' in the shape of bars, flats and plates and the customer purchased 'iron and steel' in that shape. We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the notification. The conclusion arrived at by the High Court is correct." In other words both "scrap" and scrap converted into flats/bars/ plates for manufacture of a product or article, were considered as "metal", and that the term "metal" refers to any "metal" used as raw material as contrasted from the finished product produced/manufactured from such raw material. 8.2 The decision in Hiralal [1966] 17 STC 313 (SC) was followed in Commissioner of Income-tax v. Krishna Copper and Steel Rolling Mills [1992] 193 ITR 281 (SC); AIR 1992 SC 422. The Supreme Court held that the words "iron and steel (metal)" denote not only the metal in its pristine form as an ore or as an extraction from the ore, but in the context of manufacturing industry, refers to any metal used as a raw material in the manufacture of various articles in contradistinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms were eligible for concessional rate of tax. The High Court held that aluminium ingots, wire bars and billets would be "metals and alloys" attracting a lower rate of tax. The High Court held that rolled products prepared by rolling ingots and extrusions manufactured from billets must be regarded as different commercial commodities from ingots and billets and therefore outside the category of "metals and alloys". The appellant challenged the decision of the High Court holding that rolled products and extrusions were to be taxed at regular rates and not as "metals and alloys". While upholding the said decision of the High Court, the Supreme Court held thus: "We are concerned with the manner in which these and similar expressions have been employed by those who framed the relevant notifications, and with the inference that can be drawn from the particular arrangement of the entries in the notifications. We must derive the intent from a contextual scheme. Section 3-A of the U.P. Sales Tax Act empowers the State Government to prescribe, by notification, the rate, and the point, at which the tax may be imposed on the sale of a commodity. A consideration of the notifications issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STC 411 (SC); AIR 1981 SC 1649. "The above decisions were rendered in the context of the Sales Tax Acts and notifications thereunder. They, however, bring out two points. First, they make it clear that there is a real and clear dichotomy between 'iron and steel' and 'products or goods made of iron and steel' and, indeed, between any metal as such and the products or goods fabricated therefrom." Then the Supreme Court proceeded to formulate the following question in the context of points urged before them, that is whether assessees (steel rolling mills engaged in the manufacture of mild steel rods, bars and rounds) were entitled to a higher development rebate specified in section 33(1)(b), (B)(i)(a) of the Income-tax Act, 1961 and to relief under section 80-I of Income-tax Act as it then stood: ".........having regard to the nature of the iron and steel industry and its processes, do M.S. bars, rods and rounds represent the raw material for the manufacture of articles of iron and steel or are they themselves articles made of iron and steel?" The Supreme Court answered the said question thus: "We would like to emphasise, at the cost of repetition, that what we should exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be termed as a "finished product". It is "metal". Re: Point No. (ii): 12.. The appellant does not dispute the fact that it had voluntarily filed a return offering the value of non-ferrous metal scrap brought by it into the local area to entry tax or that it had paid the entry tax on the said value or that the assessing authority had accepted the said return and passed the assessment orders. But the question is whether the said action on the part of the appellant bars the appellant from challenging the order of assessment in appeal when once it realises that the goods in question were exempt from tax. 13. The question is covered by the decision of a division Bench of this Court in Narsepalli Oil Mills v. State of Mysore [1973] 32 STC 599; (1973) 2 Mys LJ 367 where an identical question was considered. The division Bench held: "The petitioner cannot ascribe any error in the order of the Commercial Tax Officer since his own return was accepted by the assessing authority and there was no dispute that the sales were not exigible to tax under the Central Sales Tax Act. If the assessee makes a mistake in submitting a return and submits to be assessed to tax before the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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