1985 (2) TMI 231 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the sale of "nails" made of iron and steel is exempt from sales tax under the Andhra Pradesh General Sales Tax Act.
2. Interpretation of item 2 of the Third Schedule of the Sales Tax Act in relation to the taxation of iron and steel products.
3. Classification of "nails" under the relevant categories for taxation purposes.
4. Determination of whether "nails" qualify as declared goods to avoid multiple taxation.

Analysis:
The case involves a tax revision filed by a dealer against an order rejecting the exemption claim for the sale of "nails" under the Andhra Pradesh General Sales Tax Act. The petitioner argued that since "nails" are made of iron and steel, which have already suffered sales tax, they should be exempt from further taxation. However, the court referenced a Supreme Court judgment to reject this argument, emphasizing that each iron product is liable to separate taxation regardless of the material used. The court noted the amendment in the law post-1972, detailing iron products but maintained that "nails" do not fall under any specific category in the Third Schedule, thus subjecting them to general sales tax.

Regarding the interpretation of item 2 of the Third Schedule, the court dismissed the petitioner's claim that "nails" could be considered under the category of "wires" mentioned in clause (xv), emphasizing the distinct commercial use and characteristics of "nails" compared to wires. The court rejected the comparison with other cases involving different products to establish a separate identity for "nails" and concluded that they do not fit under the specified categories for taxation.

Furthermore, the argument that "nails" could be classified as defectives or end-pieces under item 2 of the Third Schedule was also dismissed by the court, as "nails" were not explicitly included in the enumerated items. The court emphasized that the classification of "nails" did not align with the intended scope of the provision. Additionally, the petitioner's claim that "nails" should be considered declared goods to avoid multiple taxation was rejected, as per the Supreme Court's ruling that "nails" do not fall under declared goods, leading to the dismissal of the tax revision case with costs.