1992 (4) TMI 222 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether stainless steel wires are declared goods falling under entry 4(xv) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959.
2. Whether stainless steel tubes are declared goods falling under item 4(xi) of the Second Schedule to the Act.

Detailed Analysis:

1. Stainless Steel Wires as Declared Goods:
The primary issue was whether stainless steel wires fall under entry 4(xv) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959. The court noted that the Tribunal had taken inconsistent views on this matter over different cases. The Revenue also had varying stands, sometimes considering stainless steel wires as declared goods and sometimes not.

The court referred to previous decisions, including R.K. Manufacturers v. Board of Revenue, which held that stainless steel wires are articles made of stainless steel and thus fall under item 109 of the First Schedule. However, this judgment was not considered binding as it was rendered at the admission stage without detailed arguments or materials.

The court examined the definition of "iron and steel" in various authoritative sources, including the Indian Standard Glossary, Wire Encyclopaedia, and Harmonized Commodity Description and Coding System. It concluded that "iron and steel" includes both alloy steel and non-alloy steel, which encompasses stainless steel.

The court rejected the argument that sub-item (ix) restricts the application of alloy and special steels to sub-items (i) to (viii) only. It held that sub-items (xi) and (xv) should also benefit from the inclusion of alloy steel in the main item "iron and steel."

2. Stainless Steel Tubes as Declared Goods:
The second issue was whether stainless steel tubes fall under item 4(xi) of the Second Schedule to the Act. The court applied the same reasoning as it did for stainless steel wires, concluding that stainless steel tubes are also covered under the main item "iron and steel."

The court referred to the Supreme Court's decision in Commissioner of Income-tax v. Krishna Copper and Steel Rolling Mills, which distinguished between raw materials and finished products. It noted that stainless steel wires and tubes are marketed in lengths and used for manufacturing other stainless steel articles, thus should not be treated as finished articles of stainless steel.

Binding Nature of Previous Judgments:
The court discussed the binding nature of the previous judgment in R.K. Manufacturers v. Board of Revenue and concluded that it is not binding as it was rendered at the admission stage without detailed arguments or materials. The court cited several authorities, including the Supreme Court's observation in B. Shama Rao v. Union Territory of Pondicherry, which emphasized that a decision is binding for its ratio and principle, not merely its conclusion.

Conclusion:
The court held that stainless steel wires and stainless steel tubes are declared goods exigible to tax under the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959. It allowed the tax cases filed by the assessees and dismissed those filed by the Revenue, aligning with the view that stainless steel wires and tubes fall under the declared goods category.