2013 (12) TMI 1496 - HC - VAT and Sales Tax

Summary

Issues involved: Revision petitions against the order passed by the Karnataka Appellate Tribunal regarding the tax rate applicable to goods sold to MESCOM by the assessee.

Summary:
The assessee supplied iron and steel goods to MESCOM by bending them according to MESCOM's specifications. The assessing authority considered this as manufacturing activity and levied tax at 12.5 per cent under a residuary entry. The assessee appealed, and the Karnataka Appellate Tribunal held that the bending process did not amount to manufacturing activity, and the goods remained declared goods, thus tax liability was only at four per cent. The High Court, after reviewing the orders and evidence, agreed with the Tribunal's decision based on a previous case law precedent. The Court dismissed the revision petitions, ordered the tax refund to the assessee, and imposed interest for non-compliance.

In the detailed judgment, the High Court emphasized that the process of bending iron and steel goods did not result in the creation of a new product, as the goods remained in the same declared goods category even after the bending process. Citing a previous case, the Court clarified that unless the goods transformed into new goods at the time of sale, they should be taxed based on their original declared goods status, not as residuary goods. The Court found no merit in the petitions and upheld the Tribunal's decision to grant relief to the assessee.

The High Court dismissed the revision petitions and ordered the tax refund to the assessee within one month. In case of non-compliance, the authority was directed to pay interest at 12 per cent, to be collected from the party failing to refund the tax promptly.