1996 (7) TMI 513 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of entry 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act regarding machinery parts manufactured from cast iron.

Detailed Analysis:
1. The case involved the interpretation of whether machinery parts manufactured from cast iron are considered as "cast iron castings" under entry 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act. The central question was whether the machinery parts should be treated as separate commercial goods or as cast iron castings for the purpose of levy of sales tax.

2. The judgment referred to previous rulings, such as Telangana Steel Industries v. State of Andhra Pradesh, where the Supreme Court considered the distinction between related goods and Vasantham Foundry v. Union of India, where the Supreme Court clarified the classification of products made from cast iron castings. These cases provided guidance on determining the nature of goods for taxation purposes.

3. The petitioner contended that the machinery parts were essentially cast iron castings, relying on a clarification issued by the Government of India. However, the revising authority and the Sales Tax Appellate Tribunal disagreed, stating that the goods sold were distinct from cast iron castings and should be considered as machinery parts.

4. The Tribunal highlighted that the petitioner initially described the goods as "machinery parts" in their returns and only later claimed exemption by asserting that they undertook casting of machinery parts, tiles, and man-hole covers from pig iron and cast iron melting. This inconsistency in the petitioner's position was a factor in the decision.

5. The judgment also referenced a previous case, State of Andhra Pradesh v. Venkatesh Foundry, where it was established that when separate commercial commodities are produced from cast iron castings, such as machine parts, they no longer qualify as cast iron and cannot be treated as declared goods under the relevant entry in the Third Schedule.

6. Ultimately, the court applied the test laid down by the Supreme Court in Vasantham Foundry's case and concluded that the machinery parts sold by the petitioner were not merely cast iron castings but were distinct goods like machine parts. Therefore, the goods did not fall under the category of cast iron castings for taxation purposes.

7. The court dismissed the Tax Revision Case, upholding the decision of the Tribunal. The judgment concluded that when cast iron castings are refined into separate commercial goods like machine parts, they cannot be classified as cast iron castings under the relevant entry in the Third Schedule, and thus, are not considered declared goods for tax purposes.