1968 (7) TMI 67 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sale of corrugated sheets by the opponent-firm was covered by entry 80 of Schedule B or entry 15 of Schedule B to the Bombay Sales Tax Act, 1953, prior to its amendment by Bombay Act 16 of 1957.

Detailed Analysis:

Issue 1: Interpretation of Entry 15 and Entry 80
Keywords: Iron and steel, corrugated sheets, Schedule B, Bombay Sales Tax Act, 1953, amendment

Facts and Background:
The opponent-firm, a registered dealer dealing in various commodities including corrugated iron sheets, was assessed for the period from 1st April, 1956, to 31st March, 1957. The Sales Tax Officer, Godhra, assessed the firm according to best judgment, and this assessment was later upheld by the Assistant Commissioner of Sales Tax. However, the Deputy Commissioner of Sales Tax partially allowed the firm's revision, holding that corrugated sheets fell under entry 80 of Schedule B, which is a residuary entry. The Tribunal, in further revision, held that corrugated sheets were covered under entry 15 of Schedule B, which pertains to "iron and steel."

Legal Provisions:
- Entry 15 (Pre-Amendment): "Iron and steel."
- Entry 15 (Post-Amendment): Includes specific forms like pig iron, iron plates, steel scrap, steel plates, steel sheets, etc.
- Entry 80: Residuary entry covering items not specified in other entries.

Tribunal's Decision:
The Tribunal held that corrugated sheets were "iron and steel" within the meaning of entry 15, thus not falling under the residuary entry 80.

Analysis by Mehta, J.:
- Literal Interpretation: The term "iron and steel" in entry 15 should be interpreted in its broad sense, covering all forms of iron and steel unless they are manufactured into a different finished product.
- Supreme Court Precedents: Cited cases like Tungabhadra Industries Ltd. v. Commercial Tax Officer and State of Gujarat v. Sakarwala Brothers to emphasize that the essential character of the commodity should not change merely due to processing.
- Conclusion: Corrugated sheets retain their essential character as iron and steel despite the corrugation process. Therefore, they should fall under entry 15.

Analysis by Divan, J.:
- Technical Process: Emphasized the elaborate process involved in converting flat iron sheets into corrugated sheets, which gives them distinct characteristics.
- Supreme Court Precedents: Relied on the test of substitutability from Tungabhadra Industries Ltd. v. Commercial Tax Officer, arguing that corrugated sheets cannot be substituted for flat sheets and vice versa.
- Conclusion: Corrugated sheets are a distinct article of iron and steel, not merely a form of iron and steel. Therefore, they should fall under the residuary entry 80.

Final Judgment by Bhagwati, C.J.:
- Nature of Commodity: Corrugated iron sheets are iron sheets with altered shape for increased rigidity and stiffness, used for specific purposes like roofing and walling.
- Essential Character: The essential character of iron is retained even after corrugation, similar to how hydrogenated groundnut oil retains its essential character as groundnut oil.
- Precedents: Supported by decisions in Tungabhadra Industries Ltd. v. Commercial Tax Officer and Kapildeoram Baijnath Prosad v. J.K. Das.
- Conclusion: Corrugated iron sheets fall within entry 15 of Schedule B as they retain their essential character as iron. They do not fall under the residuary entry 80.

Final Decision:
The sale of corrugated iron sheets by the opponent-firm is covered by entry 15 of Schedule B to the Bombay Sales Tax Act, 1953, prior to its amendment by Bombay Act 16 of 1957. The State shall pay the costs of this reference to the assessee.