2004 (8) TMI 653 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Deputy Excise and Taxation Commissioner could revise the assessments suo motu based on a subsequent judicial pronouncement.
2. Whether the electricity conductor manufactured by the applicant-firm qualifies as a wire and is entitled to a concessional rate of tax under the Government Notification dated July 7, 1972.

Issue-wise Detailed Analysis:

Issue 1: Suo Motu Revision of Assessments
The primary question was whether the Deputy Excise and Taxation Commissioner could revise the assessments suo motu based on an audit objection and a subsequent judicial pronouncement. The court examined Section 40 of the Haryana General Sales Tax Act, 1973, read with Section 9(2) of the Central Sales Tax Act, 1956, which grants the Commissioner the power to revise orders to ensure legality and propriety. The court referenced the judgment in Prem Raj and Sons v. Sales Tax Officer [1967] 19 STC 531, which established that a subsequent decision by a superior court, such as the Supreme Court, could serve as a valid ground for revision. The court also cited R.B. Bansilal Abirchand Firm v. Commissioner of Income-tax [1968] 70 ITR 74, which supported the notion that new information from judicial decisions could justify reopening assessments. Consequently, the court concluded that the suo motu revision by the Deputy Excise and Taxation Commissioner was valid. Therefore, the answer to the first question was in favor of the Revenue and against the assessee.

Issue 2: Classification of Electricity Conductor as Wire
The second issue revolved around whether the electricity conductor manufactured by the applicant-firm could be classified as a wire and thus be eligible for a concessional tax rate under the Government Notification dated July 7, 1972. The Tribunal held that the conductors, made by twisting multiple strands of aluminum and steel wires, were not covered by the notification applicable to wires. The court noted that the process of converting simple wire into an electricity conductor involved substantial manufacturing, changing the end use from raw material to a medium for transmitting electricity. The court emphasized that the basic character of the wire changed significantly through this process, making it a finished product distinct from wire. The court referenced the Supreme Court's decision in State of Andhra Pradesh v. Modern Proteins Ltd. [1994] 95 STC 181, which stated that separate commercial commodities emerging from manufacturing processes become separately taxable entities. The court also cited Lal Kunwa Stone Crusher's case [2000] 118 STC 287 (SC) and Park Leather Industry's case [2001] 122 STC 82 (SC), which supported the principle that commercially distinct commodities arising from processing are taxed separately. Consequently, the court concluded that electricity conductors could not be classified as wires and thus were not entitled to the concessional tax rate. Therefore, the answer to the second question was in favor of the Revenue and against the assessee.

Conclusion:
The court upheld the validity of the suo motu revision of assessments by the Deputy Excise and Taxation Commissioner based on subsequent judicial pronouncements. Additionally, the court ruled that electricity conductors manufactured by the applicant-firm were not classified as wires and thus were not eligible for the concessional tax rate. Both questions were answered in favor of the Revenue and against the assessee.