1997 (4) TMI 474 - HC - VAT and Sales Tax

Summary

Issues:
1. Taxability of iron and steel scrap sales by the dealer.
2. Taxability of turnover of timber sleepers sold by the dealer.

Analysis:
Issue 1: The main contention in this case was whether the sales of iron and steel scrap by the dealer were taxable under the U.P. Trade Tax Act. The assessing officer and appellate authorities held that the dealer was a manufacturer of scrap based on the cutting of goods purchased from the railway authorities. The dealer argued that unless it was established that they were a manufacturer or importer of iron and steel scrap, the turnover should not be taxed. The definition of "manufacture" was crucial in determining tax liability, as cutting goods for transport was considered a form of manufacturing. However, the High Court held that cutting scrap into smaller pieces did not amount to manufacturing scrap and that the turnover of iron and steel scrap by the dealer was not taxable under the Act.

Issue 2: The second issue involved the taxability of the turnover of timber sleepers sold by the dealer. The dealer purchased old railway sleepers from the railways in U.P. and sold them. The authorities had not provided any evidence that the dealer imported the sleepers from outside the state. The High Court ruled that since the dealer was not a Forest Department, U.P. Forest Corporation, private forest owner, or importer, the sale of old railway sleepers purchased within U.P. was not taxable under the Act.

In conclusion, the High Court allowed the revision petitions and partly set aside the Tribunal's order, holding that the turnover of iron and steel scrap and timber sleepers determined by the Tribunal was not liable to tax under the U.P. Trade Tax Act. The parties were directed to bear their own costs.