9911796707
TMI Blog1994 (1) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany is a registered dealer under both the Acts. No tax is payable on the sale of manufactured steel wires, since tax was already paid at the time of purchase of steel wire rods and since the steel wire rods and the steel wires were the same commodity within the meaning of section 14(iv) of the 1956 Act. Wires and wire rods being declared goods, no tax is allegedly payable on the sale of wires, drawn out of wire rods on which tax was already paid at the time of purchase. A clarification on this issue was sought for by the Small Scale Wire Manufacturing Association of Calcutta by a letter dated November 21, 1992, in reply to which the Public Relations Officer of the Directorate of Commercial Taxes, West Bengal, informed by letter No. 137 LT dated January 4, 1993 that M.S. wires drawn out of M.S. wire rods which suffered tax at an earlier point in the State of West Bengal, should not attract sales tax again, as those two were declared goods within section 14(iv) of the 1956 Act. In the returns for the period of 4 quarters ending March 31, 1980, the applicant showed a gross turnover of Rs. 11,61,93,814.53. Out of that, the applicant claimed deduction under section 5(2)(a)(va) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased) and wires (which were manufactured) are separate commodities for the purpose of taxation. 5.. Applicant-company used an affidavit-in-reply, in course of which the original case of the applicant has been reiterated and it has been asserted that wires drawn out of wire rods did not bring about a new commercial commodity for the purpose of section 14(iv)(xv) of the 1956 Act. Wire rods are said to be bigger in "size" and wires are said to be of smaller "size". According to the applicant, wire rods and wires, being within the same group, cannot be treated as different commodities for the purpose of section 14 of the 1956 Act, and accordingly, the authorities below wrongly applied the decision in the case of Pyare Lal Malhotra [1976] 37 STC 319 (SC). 6.. At the time of arguments, Mr. Asit Kumar Chakraborty, learned advocate for the applicant, made his submissions on the same lines as in the application and the affidavit-in-reply, and he tried to explain that the applicant-company collected some tax and accepted declaration forms from purchasers merely out of abundant caution, although no sales tax was payable on the sales of wires manufactured out of wire rods or rods und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Nadu v. India Metal Industries) in which the ratio of the decision in Pyare Lal Malhotra's case [1976] 37 STC 319 (SC) was discussed. Therefore, there was no departure in the affidavit-in-opposition from the grounds taken by the authorities below in their impugned orders. 8.. Section 15(a) of the 1956 Act runs as follows: "Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed four per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage." The relevant portion of section 14 of the 1956 Act is extracted below: "It is hereby declared that the following goods are of special importance in inter-State trade or commerce: ............... (iv) iron and steel, that is to say,- (iv) steel bars (rounds, rods, squares, flats, octagons and hexagons, plain and ribbed or twisted, in coil form as well as straight lengths); ................. (xv) wire rods and wires-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently taxable under the 1941 Act, of course, subject to the maximum rate of 4 per cent as laid down in section 15(a) of the 1956 Act. In other words, where the raw material is a declared goods but enumerated in one sub-clause of section 14(iv), and the product manufactured out of it, falls under another sub-clause of section 14(iv), the two are treated as different commercial commodities for the purpose of sales tax. This is well-settled in the decision of the Supreme Court in Pyare Lal Malhotra's case [1976] 37 STC 319 and two decisions of this Tribunal in the cases of Indian Wire Steel Products, reported in [1991] 80 STC 21 and Hindusthan Development Corporation Ltd. reported in [1992] 84 STC 450. In the case of Hindusthan Development Corporation Ltd. [1992] 84 STC 450 (WBTT) turn out steel sleepers or turn out sleepers manufactured out of crossing sleepers or other sleepers were held by this Tribunal as commercial commodities different from the materials out of which those were manufactured. In the case of Pyare Lal Malhotra [1976] 37 STC 319 the Supreme Court observed that "plates" which come under sub-clauses (i), (vii), (xii) and (xiii) of section 14(iv), when melted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. There is no denying the fact that the sales tax laws deal with commercial characters of goods. The difference of one goods from another is made, in the absence of a statutory provision, according to the understanding of the trade circle or according to common parlance. If, in the market where such goods are bought and sold, the raw material and the manufactured product are understood as different commodities, then the two goods are generally treated as different commercial commodities and they are separately subjected to sales tax, even under a single point sales tax law. It is also true that generally, where manufacture is involved, the end-product is considered in a sales tax law to be a commercial commodity different from the raw material. By such criteria, "wire rods" and "wires" are to be treated generally as different commercial commodities for the purpose of sales tax law. But we are faced with the problem whether the raw material and finished product both coming under the same sub-clause (xv) of section 14(iv), should be treated as different commercial commodities. All the authorities below decided that in spite of the fact that "wire rods" and "wires" fall under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within itself a particular category of taxable commodities for the purpose of section 14 of the 1956 Act. There also, M.S. wires drawn out of M.S. wire rods on which tax had already been paid, came up for consideration. It was held that such M.S. wires cannot be taxed again, when sold, by virtue of sub-clause (xv) of section 14(iv) and section 15 of the 1956 Act read with the relevant provision in the Karnataka Act. Mr. Chakraborty relied on the decisions of the Supreme Court in [1970] 25 STC 52 (State of Punjab v. Chandu Lal Kishori Lal), [1989] 74 STC 1 (State of Punjab v. Seth Ganpat Ram Cotton Ginning and Pressing Factory) and [1989] 73 STC 228 (State of Tamil Nadu v. Mahi Traders). The first two cases related to purchase of unginned cotton and after ginning the same, sales of cotton seeds obtained. Therefore, in our view those decisions do not apply. In [1989] 73 STC 228 (SC) (State of Tamil Nadu v. Mahi Traders) it was held that item (iii) of section 14 of the 1956 Act being "hides and skins, whether in a raw or dressed state", is comprehensive enough to include the products emerging from hides and skins until the process of dressing or finishing is done. It was further held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case, the question was whether flour, maida and suji derived from wheat, are "wheat" within the meaning of item (iii) of section 14(i) of the 1956 Act. The court held that they are goods different and distinct from wheat and they are not also declared goods. The court further held that the provisions of sections 14 and 15 of the 1956 Act, being restrictions upon the plenary power of the State Legislatures to levy tax on sale/purchase of goods, must be construed strictly. In other words, the restrictions imposed are limited to the goods expressly mentioned and nothing more must be read into it except what it clearly says. It was also held, following [1976] 37 STC 319 (SC) (State of Tamil Nadu v. Pyare Lal Malhotra) that the expression, "that is to say" is employed in section 14(i) of the 1956 Act to make clear and fix the meaning of what is to be explained or defined. Such words are not used, as a rule, to amplify a meaning, and, in the context of single point sales tax, the expression is meant to exhaustively enumerate the kind of goods in a given list. 14.. Following several other decisions, the Supreme Court laid down in the case of Mahi Traders [1989] 73 STC 228, that a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
