2024 (8) TMI 1324 - HC - VAT and Sales Tax

Clarification of the galvanized iron sheets - whether the Deputy Commissioner, could have refused deferment of hearing despite the said question being before this Court? - HELD THAT - Under Section 14 (iv) of the CST Act, the various products of Iron Steel were sub-categorised into (i) to (xvi). The issue before the Hon ble Supreme Court in the case of STATE OF TAMIL NADU VERSUS PYARE LAL MALHOTRA 1976 (1) TMI 151 - SUPREME COURT was whether a product, which is created or procured from another product within the same sub-category, can be treated commercially as a different product, whose sale is exigible to tax. The Hon ble Supreme Court replied in the negative - This entry under the Central Sale Tax, Act has now been shifted as the Entry 70 (vi) of the IV Schedule of the AP VAT Act. Entry 70 (vi) of the IV Schedule of the AP VAT Act includes sheets, hops, strips and skelp, which could be black or galvanished or hot and cold rolled or plain and corrugated. This would mean that corrugating plain sheets resulting in corrugated iron sheets or corrugated coil from iron or steel into sheets would not move any of the products out of the sub-entry. The view of the Calcutta High Court in the case of PHANINDRA NATH MANNA AND COMPANY VERSUS COMMERCIAL TAX OFFICER AND OTHERS 1973 (9) TMI 85 - CALCUTTA HIGH COURT can also be taken into account. The Calcutta High Court while dealing with a similar issue had held ' In commercial parlance galvanised sheet includes both corrugated and plain sheets. The certification marks scheme formulated by the Indian Standard Institute for steel products shows that galvanised sheet includes corrugated and plain sheets. Such sheets after corrugation do not lose their character as iron sheets.' Petition disposed off.

Summary

Issues:
1. Clarification of galvanized iron sheets.
2. Refusal of deferment of hearing by the Deputy Commissioner.

Detailed Analysis:
1. The judgment addressed multiple Writ Petitions concerning the clarification of galvanized iron sheets. The petitioners, dealing with iron and steel products, contended that corrugated iron sheets should be treated as falling within a specific entry of the Andhra Pradesh Value Added Tax Act, allowing them to pay tax at a lower rate. However, the assessing officers revised the assessments, leading to a higher tax rate for the petitioners. The central issue revolved around whether corrugating plain sheets into corrugated sheets created a new product falling outside the relevant tax entry.

2. The judgment discussed legal precedents, including a case from the Calcutta High Court and judgments from the Supreme Court of India, to determine the commercial classification of corrugated iron sheets. The Government Pleader for Commercial Tax argued that customization of plain sheets into corrugated sheets for customer requirements constituted a new product not covered by the tax entry. Conversely, the petitioners relied on interpretations that corrugation did not change the fundamental nature of the product. The court analyzed the statutory provisions and legal principles to decide on the classification issue.

3. The judgment cited Entry 70 (vi) of the IV Schedule of the AP VAT Act, which included various iron and steel products, including corrugated sheets. The court interpreted the entry and considered the requirement for products to be in straight lengths or coil form. It rejected the argument that bending corrugated sheets for customer needs altered their classification, emphasizing that the sheets remained within the defined sub-entry. The court also referenced the Calcutta High Court's view on the matter, concurring with the interpretation that corrugated sheets did not lose their character as iron sheets even after the corrugation process.

4. Ultimately, the court set aside the impugned revision orders, allowing the Writ Petitions related to the clarification of galvanized iron sheets. It also disposed of a separate Writ Petition concerning the refusal of deferment of hearing by the Deputy Commissioner. The judgment established that any further revision or assessment should align with the legal principles outlined in the decision. The court concluded by granting relief to the petitioners in the specified Writ Petitions and closing pending miscellaneous petitions, with no order as to costs.