2003 (8) TMI 499 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957 regarding tax exemption on the sale of scrap.
2. Whether pig iron and its scrap are considered the same commodity for tax exemption purposes.

Analysis:

Issue 1:
The case involved a revision petition challenging the Sales Tax Appellate Tribunal's order dismissing an appeal and confirming the disallowance of exemption claimed on the sale of scrap by the petitioner, a registered dealer of iron and steel products. The petitioner contended that the turnover from the sale of scrap should be exempt from tax as it arose from pig iron, which had already suffered tax. The Appellate Deputy Commissioner and the Tribunal held that the pig iron and the scrap were different commodities under the Third Schedule to the Act. The petitioner argued that the pig iron used to manufacture the ingot moulds, which were later sold as scrap, should be considered a single commodity. The Tribunal upheld the authorities' decision, emphasizing that each commercial commodity is separately taxable in a series of sales unless proven otherwise.

Issue 2:
The petitioner relied on legal precedents, such as Telangana Steel Industries v. State of Andhra Pradesh, K.A.K. Anwar & Co. v. State of Tamil Nadu, and State of Tamil Nadu v. Pyare Lal Malhotra, to support their claim that items listed under the same sub-items should not be considered different commodities for second sales tax. However, the authorities argued that the identity of the pig iron was lost when it was used to manufacture ingot moulds, which were integral to the production process. The authorities maintained that the finished goods obtained after casting could not be considered cast iron, leading to the conclusion that the pig iron and the ingot moulds scrap were distinct commodities. Therefore, the Tribunal's decision to deny tax exemption on the second sale of scrap was upheld, and the revision petition was dismissed.

In conclusion, the judgment reaffirmed the Tribunal's decision, emphasizing that the pig iron and its ingot moulds scrap were distinct commodities, thereby justifying the denial of the tax exemption claimed by the petitioner on the second sale.