1993 (4) TMI 277 - SC - VAT and Sales Tax

Whether the cast iron castings manufactured by the petitioner in that case are cast iron within the meaning of item 2(i) of the Third Schedule to the A.P. Act/item (iv)(i) of section 14 of the CST Act? Held that - Appeal dismissed. The cast iron castings manufactured by the appellants do not fall within the expression cast iron in entry 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act or within section 14(iv)(i) of the Central Sales Tax Act.

Summary

Issues Involved:

1. Whether the products manufactured by the appellant (cast iron pipes, man-hole covers, bends, etc.) are classified as "declared goods" under the Andhra Pradesh General Sales Tax Act, 1957, and thus liable to tax at the rate of 4%.
2. The validity and effect of the Government Order (G.O. Ms. No. 383) and various clarifications issued by the Central and State Governments regarding the classification of "cast iron castings" as "cast iron."
3. The applicability of the principle established in Deccan Engineers v. State of Andhra Pradesh [1992] 84 STC 92 to the appellant's case.
4. The statutory interpretation of "cast iron" under the Andhra Pradesh General Sales Tax Act, 1957, and the Central Sales Tax Act, 1956.

Issue-wise Detailed Analysis:

1. Classification of Products as "Declared Goods":

The appellant contended that their products (cast iron pipes, man-hole covers, bends, etc.) should be classified as "declared goods" under the Andhra Pradesh General Sales Tax Act, 1957, and thus liable to tax at the rate of 4%. The Commercial Tax Officer, however, treated these products as general goods and taxed them accordingly. The appellant's appeal before the Appellate Deputy Commissioner was pending, and a writ petition was filed in the High Court of Andhra Pradesh, which was dismissed based on the earlier decision in Deccan Engineers v. State of Andhra Pradesh [1992] 84 STC 92. The Supreme Court upheld the High Court's decision, stating that "cast iron" is different from "cast iron castings" manufactured by the appellant. The products manufactured by the appellant are distinct commercial commodities from "cast iron" and thus do not fall under the category of "declared goods" liable to tax at 4%.

2. Validity and Effect of G.O. Ms. No. 383 and Clarifications:

The appellant relied on various clarifications and circulars issued by the Central and State Governments, particularly G.O. Ms. No. 383, which stated that "cast iron castings" are covered within the term "cast iron." The Supreme Court held that while these clarifications represent the understanding of the statutory provisions by the Government, they are not binding on the courts. The power under section 42 of the Andhra Pradesh General Sales Tax Act cannot be used to alter the provisions of the Act but only to give effect to them. The Government cannot use this power to exempt a class of goods from the levy created by the Act. The Court emphasized that there can be no estoppel against the statute, and the understanding of the Government does not bind the quasi-judicial functioning of the authorities under the Act.

3. Applicability of Deccan Engineers Principle:

The principle established in Deccan Engineers v. State of Andhra Pradesh [1992] 84 STC 92 was applied to the appellant's case. In Deccan Engineers, it was held that "cast iron" does not include "cast iron castings" such as pipes, man-hole covers, and bends. The Supreme Court affirmed this view, stating that the products manufactured by the appellant are different and distinct from "cast iron" and thus do not qualify as "declared goods." The Court dismissed the appellant's argument based on the application of G.O. Ms. 383 in another case (Pratap Steel), noting that the matter was not argued in the same manner as in Deccan Engineers.

4. Statutory Interpretation of "Cast Iron":

The Court examined the statutory interpretation of "cast iron" under the Andhra Pradesh General Sales Tax Act, 1957, and the Central Sales Tax Act, 1956. It referred to various dictionary definitions and technical opinions to conclude that "cast iron" is a material used to manufacture other products and is distinct from "cast iron castings." The Court held that the products manufactured by the appellant do not fall within the expression "cast iron" in entry 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act or section 14(iv)(i) of the Central Sales Tax Act.

Conclusion:

The Supreme Court dismissed the appeal and the writ petition, holding that the cast iron castings manufactured by the appellant do not fall within the expression "cast iron" as defined under the relevant statutory provisions. The products are distinct commercial commodities and are not entitled to the tax rate applicable to "declared goods." The clarifications and Government Orders relied upon by the appellant do not have the force to alter the statutory provisions. The appeal and petition were dismissed with no order as to costs.