Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 1989 (4) TMI HC This

  • Login
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

1989 (4) TMI 305 - HC - VAT and Sales Tax

Issues:
Interpretation of entry in section 14 of the Central Sales Tax Act regarding G.I. barbed wire classification as a commercial commodity distinct from G.I. wires.

Detailed Analysis:
The case involved a reference under section 44(1) of the M.P. General Sales Tax Act, 1958, where the Board of Revenue referred a question of law to the High Court regarding the classification of G.I. barbed wire under the Central Sales Tax Act, 1956. The question was whether the conversion of G.I. wires into G.I. barbed wires constituted a process of manufacture, leading to a distinct commercial commodity not covered by the specified entry in section 14 of the Act.

The assessee, engaged in manufacturing G.I. barbed wire, contended that G.I. barbed wire fell under the category of declared goods, subject to a tax rate not exceeding 4 percent. However, the assessing authority rejected this claim, leading to appeals and ultimately the reference to the High Court. The Board of Revenue held that the conversion process resulted in a new commercial commodity not covered by the declared goods under section 14 of the Central Sales Tax Act.

In the legal arguments presented, the counsel for the assessee asserted that G.I. barbed wire should be considered under the entry "iron and steel" in section 14, thus qualifying as a declared good. On the other hand, the Deputy Advocate General contended that G.I. barbed wire constituted a different commercial commodity not specified under the declared goods in the Act.

The Court analyzed the relevant entry in section 14, particularly entry (xv) related to wire rods and wires, and referred to a Supreme Court judgment emphasizing the transformation of goods into a new marketable commodity as a key factor in determining tax liability. The Court noted that the process of converting G.I. wire into G.I. barbed wire involved substantial changes, creating a distinct commercial commodity with unique characteristics. Consequently, the Tribunal's decision that G.I. barbed wires did not fall under the specified entry in section 14 was deemed justified.

Ultimately, the High Court answered the referred question in the affirmative, supporting the Tribunal's decision and ruling against the assessee. The parties were directed to bear their own costs in the reference proceedings.

In conclusion, the judgment clarified the classification of G.I. barbed wire as a separate commercial commodity resulting from a manufacturing process, distinct from G.I. wires, and not falling under the declared goods category specified in section 14 of the Central Sales Tax Act.

 

 

 

 

Quick Updates:Latest Updates