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2013 (6) TMI 260 - HC - VAT and Sales TaxReassessment - sanction granted to reopen the assessments by the Additional Commissioner - held that - Apex Court has clearly laid down in the case of TVL K.A.K. Anwar and Company (1997 (11) TMI 489 - SUPREME COURT OF INDIA) that the decision rendered by it in the case of Telangana Steel Industries (1994 (3) TMI 108 - SUPREME COURT OF INDIA) cannot be treated as a binding precedent for the simple reason that the said decision was delivered without taking into account the earlier binding precedent of larger bench in the case of Hajee Abdul Shakoor (1964 (5) TMI 40 - SUPREME COURT OF INDIA). In TVL K.A.K. Anwar and Company (1997 (11) TMI 489 - SUPREME COURT OF INDIA) the Apex Court has laid down clearly that raw hides and skins and dressed hides and skins both are different commodities. It has also been laid down that merely because in an Entry the separate items are mentioned, they cannot be treated as one. Reliance was placed upon its earlier judgment in the case of State of Tamil Nadu Vs. Pyare Lal Malhrotra 1976 (1) TMI 151 - SUPREME COURT OF INDIA that sales tax law is intended to tax sales of different commercial commodities and not to tax the production or the manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. With regard to the second point, the learned standing counsel submits that, as a matter of fact, the assessing authority while framing the assessment order failed to examine the relevant issue and preferred to follow the judgment of the Apex Court in the case of Telangana Steel Industries (1994 (3) TMI 108 - SUPREME COURT OF INDIA). The said approach of the assessing authority is clearly erroneous in view of two authoritative pronouncements of the Apex Court of the larger bench referred to above. - We are leaving this question open to be considered if so raised by the authority concerned in the reassessment proceedings. - Decided against the assessee.
Issues Involved:
1. Interpretation of the notification dated 13th September 1990 and Section 14(iv)(xv) of the Central Sales Tax Act regarding whether steel wire and steel rod are the same commodity. 2. Legality of reopening the assessment under Section 21(2) of the U.P. Trade Tax Act. Issue-wise Detailed Analysis: 1. Interpretation of Notification and Section 14(iv)(xv) of the Central Sales Tax Act: The petitioner argued that steel wire and steel rod should be considered the same commodity under Section 14(iv)(xv) of the Central Sales Tax Act. The petitioner purchases steel rods within the State of U.P. and manufactures wire from these rods. Since the steel rods were tax-paid goods, the petitioner claimed that no Central Sales Tax should be payable on the interstate sales of the wire manufactured from these rods. The Assessing Officer had initially exempted the turnover of interstate sales of steel wire on the grounds that it was manufactured from tax-paid steel rods. However, the Additional Chief Standing Counsel for the department contended that steel wire and steel rod are distinct commodities. The Apex Court, in various pronouncements, had held that steel wire is different from wire rod, and thus, the exemption from tax on interstate sales of wire was unjustified. The assessment order relied on the judgment in Telangana Steel Industries v. State of Andhra Pradesh, which was later deemed not to be good law by the Apex Court in TVL K.A.K. Anwar & Co. Vs. State of Tamil Nadu. The subsequent decision clarified that separate commercial commodities that emerge or come into existence become separately taxable goods. 2. Legality of Reopening the Assessment: The petitioner challenged the sanction for reopening the assessments under Section 21(2) of the U.P. Trade Tax Act, arguing that the issue of taxability had already been examined by the Assessing Authority in the original assessment orders. They contended that even if the original assessment was legally erroneous, it could not be re-examined under Section 21. The department argued that the Assessing Authority had not applied its mind to the taxability issue and had incorrectly granted exemption based on the Telangana Steel Industries judgment. The department emphasized that the attention of the Assessing Authority was not drawn to the subsequent binding precedent of the Apex Court, which invalidated the Telangana Steel Industries decision. Court's Conclusion: The court reviewed the assessment orders and found that the Assessing Authority had not adequately addressed the taxability of interstate sales of steel wire, relying instead on the outdated Telangana Steel Industries judgment. The court noted that the decision in TVL K.A.K. Anwar & Co. clarified that steel wire and steel rod are not the same commodity for tax purposes. The court left open the question of whether the decision in Telangana Steel Industries remains good law, to be considered by the relevant authority in reassessment proceedings. Ultimately, the court dismissed the petitions, upholding the department's position that the reassessment proceedings were justified due to the failure of the Assessing Authority to consider the correct legal precedents.
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