1991 (4) TMI 415 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of fabricated mild steel grills supplied to Tamil Nadu Electricity Board.
2. Jurisdiction of the assessing authority under section 16 of the Tamil Nadu General Sales Tax Act, 1959.
3. Interpretation of "iron and steel" under sales tax law.
4. Limitation period for the exercise of suo motu revision powers under section 34 of the Act.
5. Accuracy of the reassessment figures.

Detailed Analysis:

1. Taxability of Fabricated Mild Steel Grills:
The appellants, who were engaged in fabricating and supplying mild steel grills to the Tamil Nadu Electricity Board, initially claimed that these grills were merely modified steel rods and rounds, and thus, were second sales exempt from tax. The assessing officer initially accepted this claim. However, upon further inspection, it was found that the grills supplied were fabricated according to specific requirements, making them commercially different from the original steel rods and rounds. Consequently, the assessing authority reassessed the turnover and subjected it to tax, which was upheld by the Commissioner of Commercial Taxes. The court agreed with the revisional authority's view that the fabricated grills were commercially distinct from the raw materials, thus justifying the tax imposition.

2. Jurisdiction of the Assessing Authority:
The appellants challenged the jurisdiction of the assessing authority under section 16 of the Act. The appellate authority initially rejected this plea but later ruled in favor of the appellants, treating the grills as second sales of steel rods and rounds. The Commissioner of Commercial Taxes, however, reversed this decision, and the court upheld the Commissioner's jurisdiction, stating that the reassessment was valid as the fabricated grills were commercially different products.

3. Interpretation of "Iron and Steel":
The appellants relied on several judicial precedents to argue that the fabricated grills retained their identity as steel rods and rounds. However, the court referred to the Supreme Court's decision in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319, which clarified that each item specified under "iron and steel" forms a separate species for sales tax purposes. The court concluded that the fabricated grills were a new commercial commodity, distinct from the raw steel rods and rounds, thus subject to tax.

4. Limitation Period for Suo Motu Revision:
The appellants contended that the Commissioner's order was passed beyond the five-year limitation period stipulated under section 34 of the Act. The court found that the order was indeed passed within the permissible period, as the common order of the Appellate Assistant Commissioner was dated September 2, 1975, and the Commissioner's order was dated September 1, 1980. The court dismissed the appellants' claim of backdating the order.

5. Accuracy of Reassessment Figures:
The appellants argued that the reassessment figures were imaginary and not based on actual records. The court dismissed this claim, noting that no substantial evidence was provided to support the allegation. The court emphasized that without proper, sufficient, and relevant material, it could not render findings on such factual averments.

Conclusion:
The court dismissed the tax appeals, upholding the Commissioner's order that the fabricated grills supplied by the appellants were commercially distinct from the raw steel rods and rounds, and thus subject to sales tax. The court also affirmed the jurisdiction of the assessing authority under section 16 of the Act and found no merit in the appellants' claims regarding the limitation period and the accuracy of reassessment figures. Consequently, the appeals were dismissed with no order as to costs.