1990 (5) TMI 225 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Taxation of HDC turnout sleepers.
2. Levy of tax on disposal of old and discarded furniture and fixtures.
3. Legislative competence to enact section 6C and estimation of purchase tax.
4. Jurisdiction and authority of the Assistant Commissioner in hearing appeals.

Issue-wise Detailed Analysis:

1. Taxation of HDC Turnout Sleepers:
The applicant contested that HDC turnout sleepers, made from iron and steel and used by railways, should be taxed as declared goods under section 14(iv)(xiii) and section 15 of the Central Sales Tax Act, 1956, limiting the tax rate to four percent. The respondents argued that HDC turnout sleepers are distinct commercial commodities, not enumerated in section 14(iv)(xiii). The process of manufacturing these sleepers involved significant alterations, making them different from crossing sleepers. The Tribunal concluded that HDC turnout sleepers are distinct commercial commodities and not declared goods under the Central Sales Tax Act, 1956, thus rightly taxed at the general rate.

2. Levy of Tax on Disposal of Old and Discarded Furniture and Fixtures:
The applicant argued that the disposal of old and discarded furniture and fixtures should not be taxed, citing the Supreme Court decision in [1976] 38 STC 577 (SC) (Board of Revenue v. A.M. Ansari). The respondents countered that the applicant is engaged in business, and such disposals are incidental and ancillary to its business activities, falling under the definition of "business" in section 2(1a) of the Bengal Finance (Sales Tax) Act, 1941. The Tribunal agreed with the respondents, stating that the sale of old and discarded items used in business constitutes a taxable transaction.

3. Legislative Competence to Enact Section 6C and Estimation of Purchase Tax:
The applicant challenged the legislative competence to enact section 6C of the Bengal Finance (Sales Tax) Act, 1941, and the estimation of three percent as the value of materials in works contracts. The Tribunal held that the State Legislature was competent to enact section 6C by virtue of entry 54 of List II of the Seventh Schedule to the Constitution, independent of article 366(29A). The Tribunal also noted that the applicant did not press the issue of the three percent estimation during the hearing, thus not addressing its propriety.

4. Jurisdiction and Authority of the Assistant Commissioner in Hearing Appeals:
The applicant initially contested the jurisdiction of the Assistant Commissioner in hearing the appeal, claiming improper transfer of the appeal. However, this point was not pressed during the hearing. The Tribunal noted that the Commissioner of Commercial Taxes had the authority to transfer cases and that the appeal was filed before the Assistant Commissioner, Central Section, thus dismissing this issue.

Conclusion:
The Tribunal dismissed the application, upholding the findings of the authorities below. The Tribunal found no merit in the applicant's claims regarding the taxation of HDC turnout sleepers, the levy of tax on the disposal of old and discarded furniture and fixtures, the legislative competence to enact section 6C, and the jurisdiction of the Assistant Commissioner. The application was dismissed without any order as to costs.