1997 (1) TMI 508 - AT - VAT and Sales Tax

Issues Involved:
1. Legitimacy of levying both purchase tax and sales tax on the same transaction.
2. Whether the raw materials used in manufacturing and the finished goods are distinct for tax purposes.
3. Applicability of the judgment in Jindal (India) Ltd. v. State of West Bengal.
4. Relevance of the decision in Devi Dass Gopal Krishnan v. State of Punjab.
5. Compliance with Section 15(a) of the Central Sales Tax Act, 1956.

Issue-wise Detailed Analysis:

1. Legitimacy of Levying Both Purchase Tax and Sales Tax on the Same Transaction:
The applicant argued that he was not liable to pay both purchase tax and sales tax for the same transaction, contending that purchase tax was wrongly paid. The applicant had paid purchase tax at 2% on declared goods purchased locally, which were also subject to sales tax at 1%. The Commercial Tax Officer had ignored the applicant's evidence and determined the purchase tax at Rs. 18,501.71, treating the purchases as taxable specified purchases. The Assistant Commissioner and the West Bengal Commercial Taxes, Appellate and Revisional Board upheld this view, leading to the applicant's grievance.

2. Whether the Raw Materials Used in Manufacturing and the Finished Goods are Distinct for Tax Purposes:
The Board observed that the raw materials (steel ingots/billet/bloom) and the manufactured goods (steel round/flat) were distinct and separate goods. Therefore, sales tax was levied on the raw materials, and purchase tax was levied on the manufactured goods. The Board held that the tax was rightly charged at separate stages on separate goods.

3. Applicability of the Judgment in Jindal (India) Ltd. v. State of West Bengal:
The applicant contended that his case was identical to Jindal (India) Ltd. v. State of West Bengal, where it was decided that sales tax authorities could not tax the petitioner doubly in respect of the same declared goods. The Board, however, distinguished the two cases, noting that in Jindal, the imposition of sales tax and purchase tax was on the same declared goods, whereas in the applicant's case, the raw materials and manufactured goods were different.

4. Relevance of the Decision in Devi Dass Gopal Krishnan v. State of Punjab:
The Board relied on the decision in Devi Dass Gopal Krishnan v. State of Punjab, which held that the raw materials and the manufactured goods were distinct, and hence, the imposition of tax at different stages was justified. The applicant argued that this decision was not applicable to his case, as both sales tax and purchase tax were collected on the same commodities (raw materials).

5. Compliance with Section 15(a) of the Central Sales Tax Act, 1956:
The respondent argued that Section 15(a) prohibits the State from levying tax on declared goods at more than one stage. The applicant's advocate argued that the facts of the case were identical to Jindal (India) Ltd., where it was held that both sales tax and purchase tax could not be imposed on the same declared goods. The Tribunal agreed with this view, noting that the decision in Jindal (India) Ltd. was applicable and that the Board's decision to equate the facts with Devi Dass Gopal Krishnan was incorrect.

Conclusion:
The Tribunal set aside the order of the West Bengal Commercial Taxes Appellate and Revisional Board dated December 22, 1995, and directed the respondents to refund the purchase tax within six months. The application was allowed, and the prayer for stay of operation of the judgment was rejected. The Tribunal found no scope for reviewing the decision in Jindal (India) Ltd. and held that the facts and circumstances of the case were identical to Jindal, not Devi Dass Gopal Krishnan.

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