2003 (1) TMI 680 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of whether steel rails purchased by the dealer fall under entry 2-A or item (xvi) of entry 2 of the Third Schedule to the Act.

Analysis:
1. The case involved an appeal by the assessee against the order of the Commissioner of Commercial Taxes revising the order of the Appellate Deputy Commissioner. The dispute arose from the purchase of steel melting scrap and the claim for set-off on the finished products, re-rolled M.S. angles, etc. The Appellate Deputy Commissioner granted partial relief based on a government order, which was later revised by the Commissioner, leading to the present appeal.

2. The assessee contended that the unused rails purchased were not iron scrap but steel scrap, falling under item (xvi) of entry 2, not under entry 2-A. The introduction of entry 2-A changed the taxable event, and the assessee argued that the rails were not meant for melting but for re-rolling, thus not liable for tax under entry 2-A. The Commissioner, however, held that the rails were iron and steel scrap, thus taxable as the last purchaser.

3. The Government Pleader supported the Commissioner, stating that entry 2-A covers all scrap types, including those not necessarily for melting. The contention was that the rails fell under entry 2-A and not item (xvi) of entry 2, as argued by the assessee. The Commissioner's revision was deemed justified based on the clarity of the entries in the Third Schedule.

4. The central issue was whether the steel rails purchased should be classified under entry 2-A or item (xvi) of entry 2. The assessment order indicated the dealer's activities in trading M.S. scrap and running a re-rolling mill. The Appellate Deputy Commissioner's relief was based on a government order, which the Commissioner found inapplicable, leading to the revision and subsequent appeal.

5. The Court analyzed the nature of the purchased rails, considering whether they qualified as scrap under the Act. The absence of a specific definition for "scrap" led to a common understanding of waste material no longer serving its original purpose. The Court concluded that the rails, though not necessarily for melting, fell under entry 2-A as iron and steel scrap, making the dealer liable as the last purchaser.

6. Ultimately, the Court dismissed the special appeal, upholding the Commissioner's revision and finding no legal basis to interfere. The judgment emphasized the clear classification under entry 2-A for iron and steel scrap, encompassing all types of scrap, regardless of their specific use, such as re-rolling without melting.