1995 (5) TMI 252 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Tax liability on sales of hardened and tempered cold rolled strips.
2. Classification of goods under Section 14(iv)(vi) of the Central Sales Tax Act, 1956.
3. Eligibility for tax exemption and issuance of declaration forms.
4. Refund of taxes already paid.
5. Revision of assessments for periods with unpaid taxes.

Detailed Analysis:

1. Tax Liability on Sales of Hardened and Tempered Cold Rolled Strips:
The primary issue is whether the sales of hardened and tempered cold rolled strips by Applicant No. 1 are subject to sales tax under the Bengal Finance (Sales Tax) Act, 1941. Applicant No. 1 argued that these finished goods remain cold rolled strips and no new commercial commodity comes into existence through the process of hardening and tempering. The Tribunal concluded that the goods purchased and sold by Applicant No. 1, though commercially different, must be treated as the same commodity under Section 14(iv)(vi) of the Central Sales Tax Act, 1956. Therefore, no further tax is payable under the 1941 Act on sales of these finished goods if tax had already been paid on the purchased cold rolled strips.

2. Classification of Goods under Section 14(iv)(vi) of the Central Sales Tax Act, 1956:
Applicant No. 1 contended that both the purchased cold rolled strips and the hardened and tempered cold rolled strips fall under the same sub-item (vi) of Section 14(iv) of the 1956 Act. The Tribunal agreed, stating that all qualities of strips, including those processed for hardening and tempering, are covered by the same sub-item. The Tribunal emphasized that the purpose of Sections 14 and 15 of the 1956 Act is to prevent multiple taxation on declared goods within the state.

3. Eligibility for Tax Exemption and Issuance of Declaration Forms:
Applicant No. 1 sought a declaration that no tax is payable on its sales and requested the issuance of declaration forms. The Tribunal directed the respondents not to charge any tax under the 1941 Act on sales of the finished goods by Applicant No. 1, provided that tax had already been paid on the purchased cold rolled strips. The respondents were also instructed to issue declaration forms to Applicant No. 1 based on this decision.

4. Refund of Taxes Already Paid:
Applicant No. 1 initially sought a refund of taxes already paid but later, through their advocate, chose not to press for this refund. The Tribunal, therefore, rejected the prayer for a refund of all taxes already paid up to the date of the judgment.

5. Revision of Assessments for Periods with Unpaid Taxes:
The Tribunal directed the respondents to revise the assessments for the periods where no tax had been paid by Applicant No. 1, in accordance with the judgment. The respondents were also ordered not to demand further tax on the sales of the finished goods from the period for which tax had not been paid.

Conclusion:
The application was allowed, declaring that no tax is payable under the 1941 Act on the sales of hardened and tempered cold rolled strips by Applicant No. 1, provided tax had already been paid on the purchased cold rolled strips. The respondents were directed to issue declaration forms and revise assessments accordingly. The prayer for a refund of taxes already paid was rejected based on the applicant's concession. The Tribunal also rejected the respondents' request for a stay of the judgment.