2007 (7) TMI 575 - HC - Indian Laws

Circular dated 31.08.1998 issued by the Commissioner, Trade Tax, U.P., Lucknow challenged - Held that - The impugned Circular dated 31.08.1998 issued by the Commissioner, Trade Tax U.P., Lucknow is in clear disregard to the law declared by Hon ble the Supreme Court in the case of Telangana Steel Industries v. State of Andhra Pradesh (1994 (3) TMI 108 - SUPREME COURT OF INDIA). The impugned Circular is also against the provisions of Section 14(iv)(xv) of the Central Sales Tax Act and is legally not sustainable. In the result, the writ petition succeeds and is hereby allowed. A writ in the nature of certiorari is issued quashing the impugned Circular dated 31.08.1998 issued by the Commissioner, Trade Tax, U.P. Lucknow, a copy of which is contained in Annexure-3 to the writ petition.

Summary

Issues Involved:
1. Validity of the Circular dated 31.08.1998 issued by the Commissioner, Trade Tax, U.P.
2. Interpretation of Section 14(iv)(xv) of the Central Sales Tax Act, 1956.
3. Whether 'iron wires' and 'wire rods' are to be treated as a single commercial commodity.
4. Applicability of the Supreme Court's decision in Telangana Steel Industries v. State of Andhra Pradesh.
5. Whether the impugned Circular violates Article 19(1)(g) of the Constitution of India.

Issue-wise Detailed Analysis:

1. Validity of the Circular dated 31.08.1998 issued by the Commissioner, Trade Tax, U.P.:
The petitioners challenged the Circular dated 31.08.1998, arguing that it was illegal and violated Article 19(1)(g) of the Constitution of India. They contended that the Circular wrongly interpreted the Supreme Court's decision in TVL K.A.K. Anwar and Company v. State of Tamil Nadu, which allegedly declared the Telangana Steel Industries case per incurium. The Court concluded that the Circular was issued in disregard of the law declared by the Supreme Court in Telangana Steel Industries v. State of Andhra Pradesh and was not sustainable.

2. Interpretation of Section 14(iv)(xv) of the Central Sales Tax Act, 1956:
Section 14(iv) of the Central Sales Tax Act defines iron and steel, including wire rods and wires. The petitioners argued that according to Section 14(iv)(xv), wire rods and wires should be treated as a single commodity. The Court upheld this interpretation, stating that wire rods and wires mentioned in one sub-item should be treated as one commodity, not different goods.

3. Whether 'iron wires' and 'wire rods' are to be treated as a single commercial commodity:
The petitioners referenced the Supreme Court's decision in Telangana Steel Industries, which held that wire rods and wires form a single commercial commodity. The Court agreed, emphasizing that the two goods are so closely knit in the sub-item that any separation is not permissible. Thus, iron wires cannot be taken as a separate taxable commodity if wire rods have already suffered sales tax.

4. Applicability of the Supreme Court's decision in Telangana Steel Industries v. State of Andhra Pradesh:
The Court examined the relevance of the Telangana Steel Industries case, which concluded that once wire rods have suffered sales tax, the same could not be realized from the sale of wires. The Court found that the Telangana Steel Industries decision was binding and not per incurium, as argued by the respondents. The Court also referenced other judgments, such as Collector of Central Excise v. Technoweld Industries and Commissioner of Sales Tax v. Vora Wires, which supported the same view.

5. Whether the impugned Circular violates Article 19(1)(g) of the Constitution of India:
The petitioners argued that the Circular violated their right to practice any profession or to carry on any occupation, trade, or business under Article 19(1)(g). The Court, by quashing the Circular, implicitly upheld this argument, reinforcing that the Circular was arbitrary and illegal.

Conclusion:
The High Court allowed the writ petition, quashing the impugned Circular dated 31.08.1998 issued by the Commissioner, Trade Tax, U.P. The Court held that the Circular was in clear disregard of the law declared by the Supreme Court in Telangana Steel Industries v. State of Andhra Pradesh and was against the provisions of Section 14(iv)(xv) of the Central Sales Tax Act. There was no order as to costs.