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TMI Blog1976 (11) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... erzi redraw rods are concerned, the process is as follows: Molten metal is poured directly from potroom crucible in the melting furnace and then transferred to holding furnace. It is then degassed, fed through a cast iron spout into the groove of a watercooled circular steel casting wheel, which rotates at a slow speed. The top portion of the grooved steel mould is covered by a steel belt and during one half rotation of the casting wheel, the metal gets solidified and comes out in the form of a continuous bar of about 12 sq. centimeter cross-section at a temperature of 440 degrees to 480 degrees centigrade. This bar is fed through a 13 strand properzi mill where the area of cross-section is progressively reduced and finally 9.5 mm. dia redraw rods come out which are wound in the drum of a mechanical coiler. So far as rolled products are concerned, they consists of hot rolled plates, hot rolled coil and cold rolled sheet/coil and corrugated sheets, etc. The hot rolled plates/coils are produced by using rolling ingots, which are cast by direct chill (D.C.) casting process. The ingots are scaled to smoothen the surface, heated in soaking pits and then rolled in a reversing hot mill to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Sales Tax Officer before approaching this Court. Thereafter, there was some correspondence between the Sales Tax Officer and the petitioner-company and, finally, the Sales Tax Officer by his letter dated 30th October, 1975, informed the petitioner that under the notification of 30th May, 1975, only aluminium ingots would be treated in the category of "metals" while the rest of the items of aluminium manufactured by the petitioner would be treated as unclassified items. It appears that shortly before this communication, the Commissioner of Sales Tax by a circular dated 15th October, 1975, had intimated all the sales tax authorities including the Sales Tax Officer that the department had sought the opinion of the Government on the question as to whether all categories of aluminium would fall within the description of the words "metals and alloys" as occuring in the notification dated 30th May, 1975, and the Government had after consulting the Law Department intimated that apart from aluminium ingots, nothing else should be treated as coming within the description of the word "metals". The circular directed the various authorities including the Sales Tax Officer concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at matter should also be taken into consideration while considering the feasibility of entertaining the petition. This contention would have force, if an effective alternative remedy is open to the petitioner; then it would not be proper exercise of judicial discretion to entertain a petition so as to enable the petitioner to by-pass the statutory remedy provided under the taxing statute. However, this is not an invariable rule of law, and the question as to whether the extraordinary jurisdiction conferred on a court under article 226 should be exercised in a particular case depends upon the facts and circumstances of each case. In the present case, we think that it would be appropriate to decide the question raised for the reasons now being set out. In the first place, it is not disputed that the Commissioner of Sales Tax has already issued a circular to all the Sales Tax Officers and the Assistant Appellate Commissioners on the interpretation to be put on the notification dated 30th May, 1975, and informing them that only aluminium ingots should be treated as falling in the category of "metals" and all the other items should be treated as unclassified items. The matter does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om ingots. The Sales Tax Officer has taken the same view in the assessment order. On the other hand, counsel for the petitioner contended that the words "metals and alloys" as used in the notification are wide enough to embrace "metals and alloys in all shapes and sizes so long as they did not assume the form of a new commodity". The argument raised by the parties had to be resolved on the principles laid down by the Supreme Court in three cases: (1) State of Madhya Bharat v. Hiralal1966] 17 S.T.C. 313 (S.C.)., (2) Devgam Iron Steel Rolling Mills v. State of Punjab(1) and (3) State of Tamil Nadu v. Pyare Lal Malhotra[1976] 37 S.T.C. 319 (S.C.); A.I.R. 1976 S.C. 800. In Hiralal's case[1966] 17 S.T.C. 313 (S.C.). , the Parliament had enacted the Essential Goods (Declaration and Regulation of Tax on Sales or Purchases) Act, 1952 (Act No. 52 of 1952). In Schedule I of the Act "iron and steel" were declared essential for the life of the community. The Government of Madhya Bharat in exercise of the power conferred on it by section 5 of the Act, issued a notification, the material part of which ran: "No tax shall be payable on the sale of the following goods: S. No. Description of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sections 14 and 15 of the Central Sales Tax Act which prohibited imposition of sales tax on declared goods at more than one stage. It was contended that under the punjab Act, tax was being imposed both on the purchase as well as sale. In order to decide the controversy whether the Act contravened the provisions of the Central Act, the point as to whether rolled steel was a new commodity distinct altogether from iron scrap was considered. This contention was dealt with by their Lordships at page 1905 of the Reports (page 447 of 20 S.T.C.) and rejected in the following words: "Now coming to Civil Appeals Nos. 39 to 43 of 1965, the first additional point raised is that when iron scrap is converted into rolled steel it does not involve the process of manufacture. It is contended that the said conversion does not involve any process of manufacture, but the scrap is made into a better marketable commodity. Before the High Court this contention was not pressed. That apart, it is clear that scrap iron ingots undergo a vital change in the process of manufacture and are converted into a different commodity, viz., rolled steel sections. During the process the scrap iron loses its identity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, was a separate item for taxation. It was observed that the principle laid down in Devgam Iron Steel Rolling Mills v. State of Punjab[1967] 20 S.T.C. 430 (S.C.); A.I.R. 1967 S.C. 1895. was more appropriate to the facts of Malhotra's case[1976] 37 S.T.C. 319 (S.C.); A.I.R. 1976 S.C. 800. After discussing these two cases, their Lordships laid down the following test which we think is vital to this case and, as such, we propose to quote it in extenso: "It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new marketable commodity, is the decisive test in determining whether an excise duty is leviable or not on certain goods. No doubt, in the law dealing with the sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the sales tax law, it may also become necessary to consider whether a manufacturing process, which has altered the identity of the commercial commodity, has taken place. The law of sales tax is also concerned with 'goods' of various descr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g ingots, and extrusions are manufactured from billets. It can hardly be doubted that ingots and billets are salable commodities as such. By subjecting them to further process of manufacture, i.e., either by rolling them or by processing them by the extrusion process, a new commercial commodity comes into existence, i.e., rolled products and extrusions. Thus, so far as rolled products and extrusions are concerned, since they are manufactured either from ingots or billets, they cannot come in the category of metals and alloys. They are new commercial commodities distinct from ingots and billets giving out the cast products. As regards cast products, we have already seen, as appears from annexure C, they consist of aluminium ingots, aluminium alloy ingots, wire bars, properzi redraw rods and billets. During the course of argument, it appeared that so far as aluminium alloy ingots, wire bars and billets are concerned, the process for manufacture of these items is similar to those of aluminium ingots. Standing counsel could not dispute this. There is no justification for treating aluminium alloy ingots, wire bars and billets as not coming within the description of "metals and alloys". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not cast products. We may at this stage dispose of the last contention made on behalf of the State. It was contended that the petitioner has been realising tax from its purchasers on the basis that all the products save ingots were unclassified items and, therefore, no relief should be granted. Counsel for the petitioner contended that it realised tax at a higher rate in order to safeguard its interest in case the matter was decided against it, and has given an undertaking to refund the excess tax to its purchasers. Now, it is not disputed that the State can charge only such tax as is permissible under the law. Liability to tax does not depend on the fact as to whether a dealer has or has not charged any sales tax from its customers, or has charged a higher amount. Thus, if a sale is liable to be charged at a lower rate, the State cannot insist on realising a higher amount solely on the ground of a larger amount being charged. Relief can be given when an illegal impost not authorised by the law is made. This apart, as the petitioner has all along been challenging the rate of tax and has undertaken to refund the excess amount to its purchasers, we see no ground for not interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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