2015 (11) TMI 940 - HC - VAT and Sales Tax

Classification - whether raw aluminum castings manufactured and sold by the Respondent herein, are covered by the residual Entry C-II-102 of the BST Act and exigible to tax @ 10% or whether they fall under Entry C-I-29 exigible to tax @ 4%. - Held that - what is manufactured by the Respondent herein is very much in the raw, unfinished and primary form and are not finished goods. These findings of fact have been arrived at by the MSTT after taking into consideration all the material placed before it and we do not think that these findings are in any way perverse and/or contrary to the record. Further it is not even the case of the Applicant Revenue that these Certificates are unreliable and therefore the MSTT was in error in placing reliance thereon. To be fair to Mr. Sonpal, he did not even urge such an argument - reliance placed by Mr Joshi on the decision of the Supreme Court in Vasantham Foundry s case 1995 (8) TMI 190 - SUPREME COURT OF INDIA is well founded. We find that the aluminum castings manufactured and sold by the Respondent herein to the automobile industry, are in its raw, unfinished and primary form which require further processes such as milling, drilling, tapping etc. by the purchaser before they are used in the manufacture of their motor vehicles / chassis. This being the case, we find that the ratio of the Supreme Court in the case of Vasantham Foundry would apply with full force and accordingly, the raw aluminum castings manufactured by the Respondent herein would fall within Entry C-I-29 of the Bombay Sales Tax Act, 1959 and not within the residual Entry C-II-102. We are unable to agree with the argument of Mr Sonpal that merely because the word castings is not found in Entry C-I- 29, the raw aluminum castings manufactured by the Respondent cannot fall within the aforesaid Entry - In any event, we do not think that the findings rendered by the MSTT on this aspect can by any stretch of the imagination be termed as perverse or suffering from any patent illegality giving rise to any substantial question of law that would persuade us to take a different view. - Decided in favour of assessee.

Summary

Issues Involved:
1. Classification of raw aluminum castings under the Bombay Sales Tax Act, 1959.
2. Applicability of Entry C-I-29 versus residual Entry C-II-102 for taxation purposes.
3. Interpretation of the term "ingots" in the context of raw aluminum castings.
4. Reliance on precedents and judicial interpretation from higher courts.

Detailed Analysis:

1. Classification of Raw Aluminum Castings:
The primary issue was whether the raw aluminum castings manufactured and sold by the Respondent fall under Entry C-I-29, which is taxed at 4%, or under the residual Entry C-II-102, taxed at 10%. The Respondent argued that their aluminum castings, which are unfinished and require further processing by the purchaser, should be classified under Entry C-I-29. The MSTT supported this view, categorizing the raw castings as non-ferrous metal ingots under Entry C-I-29.

2. Applicability of Entry C-I-29 versus Residual Entry C-II-102:
The MSTT's decision was challenged by the Revenue, which argued that the castings should be classified under the residual Entry C-II-102. The Revenue relied on the Supreme Court's decision in Bengal Oil Corporation, which distinguished between raw materials and finished products. However, the MSTT and subsequently the High Court found that the raw aluminum castings were not finished products and thus fell under Entry C-I-29.

3. Interpretation of the Term "Ingots":
The MSTT and the High Court examined whether the term "ingots" in Entry C-I-29 could include raw aluminum castings. The MSTT found that "casting" is essentially an "ingot" of a particular shape, based on dictionary definitions and previous judgments. This interpretation was upheld by the High Court, which agreed that the raw aluminum castings fit within the broader definition of "ingots."

4. Reliance on Precedents and Judicial Interpretation:
The High Court considered two key Supreme Court decisions: Bengal Iron Corporation and Vasantham Foundry. In Bengal Iron Corporation, the Supreme Court held that finished goods made from cast iron are distinct from cast iron itself. In Vasantham Foundry, the Court held that raw cast iron castings, which require further processing, should be treated as cast iron and taxed accordingly. The High Court found that the facts of the present case aligned more closely with Vasantham Foundry, as the aluminum castings required further processing by the purchasers.

Conclusion:
The High Court concluded that the raw aluminum castings manufactured by the Respondent were correctly classified under Entry C-I-29 and taxed at 4%. The Court found no merit in the Revenue's argument that the absence of the word "castings" in Entry C-I-29 precluded its application. The questions of law were answered in favor of the Respondent, affirming the MSTT's decision. The Sales Tax Reference was disposed of accordingly, with no order as to costs.