2010 (11) TMI 896

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..... nt Pleader appearing for the respondent. The facts leading to the controversy are the following: The petitioner is a dealer in scrap materials having shop at Palakkad. In the course of business the petitioner purchased old vehicles from various persons, dismantled the same and sold the items as scrap taxable at four per cent. During the inspection the intelligence officer noticed that scrap portion of the dismantled vehicle is sold in the breaking yard itself and usable automobile spare parts are recovered by the petitioner from the dismantled vehicles and the same are brought to shop and sold as automobile spares. The petitioner's case is that old spares also are sold as scrap inasmuch as sale is by weight and so much so tax collected .....

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..... mmon knowledge that the spares and components recovered on dismantling an old automobile would not have suffered uniform erosion because items would have been replaced in the course of use of the automobile periodically and there may not be uniform erosion in the quality on all such items leaving sizable number of spare parts obtained on dismantling the vehicles as fit for re-use as such. Scrap is purchased only for melting and for re-rolling the primary metal. However, when old spare parts are sold as such, those are for use as spare parts in automobiles and so much so tax is leviable at the rate applicable for the commodity. However, the only difference is that the dealer of second hand spare parts will be liable to pay tax on those items .....

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..... tioner remitted the tax or whether the turnover is assessed to tax at higher rate. Since the petitioner is only a small scrap dealer, we feel the petitioner can be granted reduction of penalty provided the petitioner pays tax based on the assessment orders. We accordingly grant a conditional reduction of penalty to 50 per cent of the tax provided the petitioner pays the tax based under the assessment orders on the turnover involved at higher rate. The intelligence officer is directed to grant the relief after consultation with the assessing officer and after ensuring that the tax is collected based on assessment and if not, by making assessment and by recovering differential tax. The sales tax revision is allowed to the above extent.
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