TMI Blog2019 (7) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 6(4)(m)(i) provides for a deduction in respect of the goods which have already suffered tax and which are used in the same form. Thus, it appears to be in clear consonance with the charging provision and does not militate against Section 5B of KST Act, 1957. This Court in State of Tamil Nadu Vs. Pyare Lal Malhotra and Others [ 1976 (1) TMI 151 - SUPREME COURT ] has held that if the separate commercial commodities emerge out of the goods already taxed earlier, the new commercial commodity is liable to sales tax provided there is a law to this effect - It can be inferred from this case that Sales tax can be levied on the same goods only once so long as they retain their identity of goods of a particular type, and If separate commercial commodities emerge out of the (goods already taxed earlier), then the said new commercial commodity is liable to sales tax. What emerges from the scheme of the Act and Rules framed thereunder is that Rule 6(4)(m)(i) purports to grant benefit to the assessee by allowing deductions for the value of goods which have already suffered taxation and which goods substantially retain their original identity while being used in the execution of a wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1957 and used them in the execution of works contracts. The appellant claimed deduction from the total turnover of such purchases in terms of Rule 6(4)(m)(i) of the KST Rules, 1957 as per which all amounts received or receivable in respect of goods purchased from registered dealers and used in the execution of works contracts in the same form in which goods are purchased, can be claimed as deduction from the total turnover. 4. The assessing Officer issued notices for provisional assessment for the years 1998-99, 1999-2000, 2000-2001, 2001-2002 and 2002-2003 to deny the deduction of the value of timber, purchased from the local registered dealers claimed under Rule 6(4)(m)(i) on the ground that the timber was not used in the same form in which such goods were purchased, while executing the works contract. It was further observed that for carrying out the interior decoration, the appellant purchased timber in log forms, plaster of paris, plywood, glass sheets and the said purchases have been manufactured to produce the goods which are necessary for interior decoration. The Assessing Officer further observed that as per Rule 6(4)(m)(i), the registered dealer purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the form in which the goods are used in the execution of works contract. According to learned counsel, the Rule referred to is overstepping the substantive provision being unconstitutional is liable to be struck down. 8. Learned counsel further submits that the High Court of Andhra Pradesh in the case of Media Communications Vs. Government of Andhra Pradesh 1997(105) STC 227(AP) struck down a pari materia provision (Section 5F of the A.P. General Sales Tax Act, 1957) on the premises that the said levy is contrary to the single point system of tax and cannot be accepted. Appeal filed by the Government of Andhra Pradesh against the said Order in SLP(C ) Nos. 6804-6849 of 1998 has been dismissed by this Court on 29th October, 1998 and in the light of the judgment of the High Court of Andhra Pradesh, Rule 6(4)(m)(i) read with Explanation III is not sustainable and deserves to be quashed. 9. Learned counsel further submits that provisional assessment under Section 28 of the KST Act cannot be invoked unless there is an assessment pending either for finalisation or assessment for escaped turnover under Section 12A for the assessment years 1998-1999 and 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract, the same being a different commercial commodity, is indeed liable to be taxed and this being in the domain of the legislative competence of the authority cannot be held to be ultra vires as prayed for. 13. Learned counsel further submits that the judgment of Media Communications Vs. Government of Andhra Pradesh(supra) is wholly misplaced. In Media Communications(supra), the High Court relied on Telangana Steel Industries and Others Vs. State of A.P. and Others 1994 Supp(2) SCC 259 and recorded a finding that the first and second proviso to Section 5F of the A.P. General Sales Tax Act are ultra vires of the main provision. The fact is the High Court in Media Communications(supra) failed to notice that this Court in Telangana Steel Industries and Others(supra) has held that if two goods at hand be different commodities , the single point taxing principle would not debar realisation of tax once again. This what has been observed would not be construed as finding in affirmance in Media Communications case(supra) merely on dismissal of the special leave petition(s) preferred by the State of Andhra Pradesh. 14. Learned counsel further submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes of sub-rule (4), the expression in the same form used in sub-clause (i) of clause (m) shall not include such goods which, after being purchased, are either consumed or used in the manufacture of other goods which in turn are used in the execution of works contract. (emphasis added) 18. From the bare perusal of the provision of the KST Act and KST Rules, 1957 indicated above, it clearly envisages that Section 5B of the KST Act is a charging provision which empowers the State to levy tax on the transfer of property in goods involved in works contract. At the same time Rule 6(4)(m)(i) read with Explanation III to Rule 6(4) of the KST Rules clarifies that the same goods can be taxed only once and cannot be made subject matter of multiple incidence of tax and the goods which have suffered taxation undergoes transformation into a different commodity altogether and is then used in the execution of a works contract, the same being a different commercial commodity is liable to be taxed. The justification which has been tendered by the appellant in reference to five notices impugned in the instant proceedings for the assessment years 1998-1999 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Explanation III to Rule 6(4) of which a reference has been made. 22. In Vasantham Foundry Vs. Union of India and Others 1995(5) SCC 289, this Court reiterated the Prare Lal Malhotra and Others(supra) principle in para 25 as under: 25. Therefore, in our view cast iron casting in its basic or rough form must be held to be cast iron . But, if thereafter any machining or polishing or any other process is done to the rough cast iron casting to produce things like pipes, manhole covers or bends, these cannot be regarded as cast iron casting in its primary or rough form but products made out of cast iron castings. Such products cannot be regarded as cast iron and cannot be treated as declared goods under Section 14(iv) of the Central Sales Tax Act. This view is not in conflict with the view taken in the case of Bengal Iron Corpn. [1994 Supp (1) SCC 310: (1993) 90 STC 47], but it is in consonance with the decision in that case. 23. The same principle has been recently reiterated in B. Narasamma Vs. Deputy Commissioner of Commercial Taxes, Karnataka and Another 2016(15) SCC 167. In para 18 thereof, the principle of Pyare Lal M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered to be an approval of the view expressed by the High Court of Andhra Pradesh. That apart, para 7 of the judgment in Telangana Steel Industries and Others case(supra) has been noticed by the High Court in Media Communications(supra) and arrived to the conclusion that Telangana Steel Industries and Others(supra) lent support to the reasoning of the High Court. 28. Para 7 of the judgment of this Court in Telangana Steel Industries and Others(supra) in fact disseminate the reasoning recorded by the High Court in Media Communications(supra) to invalidate the first and second proviso to Section 5B. 7. The above shows complexity of the concept of a different commercial product coming into existence because of manufacturing process undertaken. It is because of this that we do not propose to decide the controversy at hand, which is whether iron wires are separate commercial goods from wire rods from which they are produced, by trying to answer whether they are one commercial commodity or separate. The point has however arisen for consideration because we are concerned with a single point sales tax, which would not allow taxing of the same commodity aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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