1979 (2) TMI 183 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of sales tax rate on galvanised iron sheets.
2. Interpretation of entry 48 of Notification SRO No. 138 dated 28th March, 1963.
3. Application of relevant case laws in determining the tax liability on galvanised iron sheets.

Detailed Analysis:

1. The High Court addressed the issue of the assessment of the sales tax rate on galvanised iron sheets by a partnership firm engaged in the business of iron and steel trade. Initially, the assessing authority levied a tax rate of 7 per cent on the sales of galvanised iron sheets for a specific accounting period. Upon revision, the Commissioner of Sales Tax varied the tax rates for different periods. The firm challenged this assessment through a writ petition, leading to a remand by a single Judge for reconsideration by the Commissioner. Subsequently, the Sales Tax Commissioner reaffirmed the 7 per cent tax rate, prompting the firm to file another writ petition. The court consolidated the firm's petition with the State's appeal and delivered a common judgment.

2. The court delved into the interpretation of entry 48 of Notification SRO No. 138 dated 28th March, 1963, to determine the tax liability on galvanised iron sheets. The firm argued that galvanised iron sheets fell within the scope of entry 48 and should be taxed at 2 per cent ad valorem. Citing relevant case laws, including State of Andhra Pradesh v. Sri Durga Hardware Stores and Commissioner of Sales Tax v. Tata Iron and Steel Co. Ltd., the firm contended that galvanised iron sheets were forms of iron and steel, not iron goods. The court analyzed the language of entry 48 and the precedents cited to establish that galvanised iron sheets were encompassed within the definition of iron and steel under the notification.

3. In applying the principles derived from the case laws referenced by the firm, the court concluded that galvanised iron sheets retained their essential character as iron and steel even after undergoing processes like galvanisation and corrugation. The court aligned with the decisions in the aforementioned cases, emphasizing that the processing of iron sheets into galvanised or corrugated forms did not alter their fundamental nature as iron and steel. Consequently, the court held that the sales tax leviable on the firm for the sale of galvanised iron sheets should be at 2 per cent for the entire accounting period in question. The court set aside the Commissioner's order and directed the assessment of tax at the lower rate, thereby allowing the firm's writ petition and dismissing the State's appeal.