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1973 (8) TMI 128 - HC - VAT and Sales Tax
Issues:
1. Whether G.I. pipes should be taxed as hardware at 3% or as an unclassified item at 2% for the assessment year 1964-65. Analysis: The judgment of the court was delivered based on a reference made by the Commissioner of Sales Tax regarding the tax treatment of G.I. pipes for the year in question. The Sales Tax Officer initially assessed the turnover of G.I. pipes at Rs. 48,000, applying a 3% tax rate as hardware. However, in appeal, the turnover was reduced to Rs. 17,000, and it was held that G.I. pipes, being an unclassified item, should be taxed at 2%. The Commissioner of Sales Tax challenged this decision in revision, arguing that G.I. pipes should be taxed at 3%. The judge in the revision relied on previous court decisions but referred the question to the High Court for clarification as there was no direct authority on whether G.I. pipes could be considered hardware. The Commissioner, in support of the 3% tax rate, referenced a notification dated 5th April 1961, and a subsequent notification from May 1963 raising the tax rate for certain metal wares. However, the judge in revision noted that the latter notification was not raised during the proceedings and therefore could not be considered. The High Court focused on interpreting the term "mill-stores and hardware" as used in the April 1961 notification to determine if G.I. pipes fell under this category for taxation at 3%. The court referred to a previous Full Bench decision which clarified that hardware typically referred to items made of base metal like nuts, bolts, hinges, etc., while mill-stores included small tools and spare parts of machinery. Applying this interpretation, the court found that G.I. pipes did not share common characteristics with items classified as hardware under the notification. Therefore, the court ruled in favor of the assessee, stating that G.I. pipes should not be taxed as hardware at 3% for the assessment year in question. In conclusion, the High Court answered the reference in favor of the assessee, determining that G.I. pipes should not be taxed as hardware under the notification in question.
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