1998 (4) TMI 484 - SC - VAT and Sales Tax

Whether the single point should be the point of first sale in the State or the last sale in the State or any intermediate sale in the State? Held that - Appeal allowed. We do not think that the conclusion reached by the Madras High Court in the order under appeal can be upheld. The goods with which we are concerned being declared goods they can only be taxed at a single point; that is only one sale in the State can be subjected to tax. It is for the State to determine whether the single point should be the point of first sale in the State or the last sale in the State or any intermediate sale in the State. If the single point is fixed by the State at say the point of first sale and the State exempts the first sale from payment of tax either by a general provision or a specific provision applicable to a class of seller a particular seller or the goods sold may not be subjected to tax at either that point of first sale or any subsequent sale in the State. There is no warrant for the emphasis that would appear to have been placed by the Madras High Court on the phrase taxable sale

Summary

Issues:
Validity of circular dated January 29, 1993 regarding taxation on sales of ferrous scrap by the Tamil Nadu Electricity Board.

Analysis:
1. The judgment deals with the validity of a circular issued by the Commissioner of Commercial Taxes concerning the taxation of sales of ferrous scrap by the Tamil Nadu Electricity Board. The circular was challenged in writ petitions filed in the High Court of Madras and subsequently appealed to the Supreme Court.

2. The goods in question, iron and steel, were sold by the Tamil Nadu Electricity Board to the appellants and petitioners. These sales were covered by a notification exempting them from tax under the State Act. However, the circular under scrutiny shifted the tax incidence to second or subsequent sales, contrary to the statutory provisions requiring tax only at the point of first sale.

3. The appellants argued that iron and steel, being declared goods, are subject to single-point tax at the first sale, as per the Central and State Acts. They cited a previous judgment emphasizing that exempting the first sale means subsequent sales cannot be taxed, as it would violate the principle of single-point levy.

4. The Supreme Court referred to relevant case laws, including judgments of the Madras High Court, to support its decision. It emphasized that declared goods can only be taxed at a single point, as specified in the State Act, which in this case was the first sale by the Tamil Nadu Electricity Board, exempted by a notification.

5. The Court concluded that the circular unlawfully shifted the point of levy from the first sale to subsequent sales, contravening the legal framework. As a result, the appeals and writ petitions were allowed, and the circular dated January 29, 1993, was set aside. No costs were awarded in the matter.