1993 (4) TMI 292 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of grinding media (balls and cylinders) as steel castings under the Central Sales Tax Act, 1956.
2. Tax exemption claims on sales of declared goods.
3. Interpretation of commercial commodities under the Central Sales Tax Act, 1956.

Detailed Analysis:

1. Classification of Grinding Media as Steel Castings:
The primary issue was whether grinding media (balls and cylinders) manufactured by the applicant could be classified as steel castings under item (viii) of clause (iv) of section 14 of the Central Sales Tax Act, 1956. The applicant argued that these grinding media, used for crushing and pulverizing materials like limestone, cement, and coal, should retain their classification as steel castings. However, the Tribunal held that grinding media are distinct commercial commodities and not merely steel castings. The judgment emphasized that "grinding media" denotes a specific type of implement used in various industries and is recognized as a separate commercial commodity in trade circles. The Tribunal concluded that grinding media could not be classified under section 14(iv)(viii) of the 1956 Act.

2. Tax Exemption Claims on Sales of Declared Goods:
The applicant claimed tax exemptions under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941, for sales of declared goods, including steel cast grinding media and cast iron spun pipes. The Commercial Tax Officer allowed exemptions for ingot castings but rejected claims for steel cast grinding media and cast iron spun pipes. The Assistant Commissioner and the Tribunal upheld this decision, asserting that grinding media and spun pipes were different commercial commodities and not covered by the declared goods provisions. However, the Tribunal later recognized spun pipes made of cast iron as retaining the character of "cast iron" under section 14(iv)(i) of the 1956 Act, thus qualifying for tax exemption.

3. Interpretation of Commercial Commodities:
The interpretation of what constitutes a new commercial commodity was central to the judgment. The Tribunal relied on the Supreme Court's decision in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319; AIR 1976 SC 800, which held that each item enumerated under section 14(iv) of the 1956 Act forms a separate species of commercial commodity. The Tribunal found that grinding media, despite being made from steel castings, are recognized as distinct commercial commodities due to their specific use and trade nomenclature. Consequently, grinding media could not be classified merely as steel castings for tax purposes.

Conclusion:
The writ application was partly allowed. The Tribunal ruled that:
1. Spun pipes made of cast iron are to be treated as cast iron within the meaning of section 14(iv)(i) of the Central Sales Tax Act, 1956, and thus qualify for tax exemption.
2. Grinding media (balls and cylinders) are distinct commercial commodities and do not fall under the classification of steel castings as per section 14(iv)(viii) of the 1956 Act.
3. Claims regarding sleeve, gear, hammer, etc., were dismissed as these items were not pressed during the hearing.

The Commercial Tax Officer was directed to modify the assessment order accordingly, and the interim order was vacated. There was no order for costs.