9911796707
TMI Blog1994 (5) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased locally within the State of Assam. On March 12, 1987, the Superintendent of Taxes issued a notice to show cause as to why the sale of corrugated iron sheets should not be treated as taxable sale and assessed accordingly. Annexure I is at page 28 of the writ application which reads as follows: "Sub: Show cause notice against imposition of tax on the sale of corrugated iron sheet produced from the locally purchased rolled plain sheet during the period ending on September 30, 1986, under the Assam Finance (Sales Tax) Act, 1956. Whereas, it appears on examination of y our books of account for the period ending September 30, 1986, under the Assam Finance (Sales Tax) Act, 1956, you have sold C.I. sheets processed and produced out of locally purchased plain sheets amounting to Rs. 98,25,056.47 and have shown that sale in the return of turnover as sales of goods secured within the State of Assam and have not paid any tax on such sales. Since the C.I. sheets which is produced after some processing of plain sheet is commercially different and distinct commodity which cannot be regarded as original commodity, viz., plain sheet and moreover the general commercial use of plain shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in clause (iv) of the Central Sales Tax Act, 1956. Item 40 reads: "40. Iron and steel as defined in clause (iv) of section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956)." 5.. In the instant case, it is apparent that iron sheets of all varieties plain or corrugated, black or galvanised fall under the same sub-item, namely, sub- item (vi) of item (iv) of section 14 of the Central Sales Tax Act. Plain sheets and corrugated sheets are not two separate declared commodities. The declared commodity is "iron sheets" and till it ceases to be "iron sheets" the same cannot be taxed at more than one stage simply because it has been corrugated. 6.. That in view of the aforesaid legal position, well-settled by the decisions of the Supreme Court and also accepted and acted upon by the Sales Tax Department in Assam all throughout there is no scope for trying to interpret sub- item (vi) of item (iv) of section 14 of the Central Sales Tax Act in a different way to authorise the department to levy tax on the same declared goods at more than one stage. Such an interpretation would be contrary to the scheme and provisions of the Central Sales Tax Act, 1956 and the principles of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of another sub-category. The facts as stated in the J.C.T.'s letter constrain one to lean to the view that [1976] 37 STC 319 (SC); AIR 1976 SC 800 (State of Tamil Nadu v. Pyare Lal Malhotra) is no bar to levy of tax on corrugated iron sheets made out of plain iron sheets purchased after paying tax." On June 4, 1988, the Superintendent of Taxes informed that the clarification regarding taxability of corrugated iron sheets made out of the plain sheets purchased locally after paying first point tax under the Assam Finance (Sales Tax) Act, 1956, has been received from the Government and the item is taxable under the aforesaid Act at 4 per cent. The petitioner was directed to furnish the purchase figures after corrugation for the purpose of assessment for the period mentioned in the notice, i.e., annexure III to the writ application which is quoted below: "Sub: Taxability of corrugated iron sheets made out of the plain sheets purchased within the State of Assam by paying first point tax under the Assam Finance (Sales Tax) Act, 1956- a clarification thereof. With reference to the subject cited above, you are hereby informed that clarification regarding taxability of corrugated iron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to bring to your kind notice humbly, that due to over- sight your goodself is misinterpreting the said AIR. We have taken several legal opinions in respect of the said [1976] 37 STC 319 (SC); AIR 1976 SC 800 (State of Tamil Nadu v. Pyare Lal Malhotra) which also does not allow you to impose further tax on sale of corrugated iron sheets made out of locally tax-paid iron plain sheets. It has been clearly mentioned in the said AIR that if there is no change of categories amongst the items under different heads and sub-heads mentioned in the Schedule of section 14 of Central Sales Tax Act, the same cannot be taxed double. As such your goodself will be kind enough to go in agreement with our opinion that there should not be imposition of further tax on sale of corrugated iron sheets made out of locally tax-paid plain sheets." Another letter was written to the Deputy Commissioner of Taxes, Assam, Gauhati, on August 20/28, 1988, in the same line. A letter was also written to the Commissioner of Taxes, Assam, Gauhati on March 2, 1989, in the same line. By annexure IX on March 27, 1989, the Deputy Commissioner of Taxes sent a reply that the clarification was already given to the concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainability of this application on the ground that the Assam Finance (Sales Tax) Act, 1956, is a self-contained legislation and provides for appeal and revision and as such this application is not maintainable as the petitioner has approached this Court without exhausting the remedies provided under the statute. On the other hand, Dr. Saraf contends that when he has challenged the very jurisdiction of the sales tax authority to impose or levy taxes, he can file the application under article 226 and for this purpose he relies on a number of Division Bench decisions of this Court. After perusing the same and after hearing the learned counsel, I do not find that this contention of the learned Advocate-General has any force. [See [1990] 79 STC 51 (Gauhati) (Shri Chitta Ranjan Saha v. State of Tripura)]. Accordingly, this point is rejected. Article 286 provides certain restrictions as to imposition of taxes on the sale or purchase of goods. Article 286: Restrictions as to imposition of tax on the sale or purchase of goods.-(1) No law of a State shall impose, or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place- (a)............. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Iron and steel are items taxable under the Assam Finance (Sales Tax) Act, 1956 and the same is covered by item No. 40 of the Schedule attached to the Assam Finance (Sales Tax) Act, 1956. The said item originally read as under: (b) The iron and steel were subject to tax from time to time by the State Government as under: (i) Originally it was taxable at the rate of 2 paise in the rupee. (ii) From January 3, 1967, iron and steel were made taxable at the rate of 3 paise in the rupee by Assam Act 1 of 1967. (c) The aforesaid original item was substituted by the Assam Act 22 of 1974 with effect from April 1, 1973 by the following: Iron and steel as defined in clause (iv) of section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) and the same was made taxable at the rate of 3 paise in the rupee. (d) By Assam Act 21 of 1977 the said item 40 was substituted with effect from December 15, 1977 and the substituted item as at present runs as follows: 40.. Iron and steel as defined in clause (iv) of section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956). The main thrust of argument of the petitioner is that the petitioner-company purchases plain iron sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the State for the manufacture of wire had been subjected to tax under the State Act." In this case the Supreme Court was considering the point as follows: The point has, however, arisen for consideration because we are concerned with a single point sales tax, which would not allow taxing of the same commodity again. It is also not in dispute that if the two goods at hand be different commodities the single point taxing principle would not debar realisation of tax once again from the sale of wires. In this case the Supreme Court was considering the earlier 4 (four) Judges' decision of the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319; AIR 1976 SC 800. [1976] 37 STC 319 (SC); AIR 1976 SC 800 (State of Tamil Nadu v. Pyare Lal Malhotra), the case was examined whether steel rounds, flats, plates, etc., were to be taxed under the provisions of the Tamil Nadu General Sales Tax Act. These products were also declared goods, and so, an argument was advanced that the iron scrap from which the goods had been manufactured having suffered sales tax, tax could not be realised once again from the sale of plates, flats, rounds, etc., The Supreme Court did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity and it becomes a new marketable commodity and it is sold at much higher price to the consumer and as such subject to further sales tax. He further submits that the case of Pyare Lal [1976] 37 STC 319 (SC); AIR 1976 SC 800 is a decision of larger Bench and that will be binding on this Court. In this connection, the learned Advocate-General draws my attention to the observation of the Supreme Court in the case of Pyare Lal [1976] 37 STC 319 (SC); AIR 1976 SC 800 where the argument which is put forward in the present case was specifically turned down in the following terms: "........The purpose of an enumeration in a statute dealing with sales tax at a single point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute a separate class for a series of sales. Otherwise, the listing itself loses all meaning and would be without any purpose behind it. Learned counsel appearing for an intervener argued that the chemical composition of iron and steel affords a clue to the meaning of 'iron and steel' as used in section 14 of the Central Act. We are unable to agree that this could be what Parliament or any legislature would be thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a series of sales, so long as they retain their identity as goods of a particular type." The contention of the Advocate-General in short is that the judgment of two judges in Telangana Steel [1994] 93 STC 187 (SC) is inconsistent with the decision of the larger Bench in Pyare Lal's case [1976] 37 STC 319 (SC); AIR 1976 SC 800 and therefore this Court should not follow the decision in Telangana Steel [1994] 93 STC 187 (SC). The judgment of the Telangana Steel [1994] 93 STC 187 (SC) makes it quite clear that it was rendered after considering the earlier decision of the Supreme Court, i.e., judgment of the larger Bench in Pyare Lal's case [1976] 37 STC 319 (SC); AIR 1976 SC 800. When the Supreme Court after considering the earlier decision explains as to what those decisions have laid down the interpretation of the earlier judgment made by the Supreme Court in a subsequent judgment is binding on me. The judgment in Telangana Steel [1994] 93 STC 187 (SC) clearly explained as to what has been laid down in the earlier decision in Pyare Lal's case [1976] 37 STC 319 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re goods declared, as different commodities for the purposes of sales tax law of the State, the treatment as two different commodities cannot prevail over section 14 of the Central Act. This being the position, if the raw petroleum coke is purchased inside the State and the calcined petroleum coke is also sold inside the State, after calcination, and if the State law imposes tax on the raw petroleum coke as well as the calcined petroleum coke, it would be imposition of tax on a sale or purchase inside the State of goods declared at more than one stage, which is not permissible under clause (a) of section 15 of the Central Act. In that view of the matter, the Assam Act cannot impose tax on raw petroleum coke as well as calcined petroleum coke if a sale or purchase of both the raw petroleum coke and calcined petroleum coke takes place within the State of Assam as such imposition of tax will be unconstitutional in view of article 286(3) of the Constitution read with the Central Act. We are, therefore, of the view that the doctrine of 'reading down' shall be attracted in the present case in order to save unconstitutionality when such a situation arises, and that, in entry (vii) of clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been decided in favour of the petitioner, point No. II is also decided in favour of the petitioner and it is held that the action of the authority seeking to tax corrugated iron sheets again under the Assam Act is illegal and void. Point Nos. III and IV: Dr. Saraf on behalf of the petitioner submits that the Superintendent of Taxes being a quasi-judicial authority ought to have decided the taxability of the item independently and he cannot act on the basis of the directions of the superior authority and in this connection he relies on the following decisions: (i) AIR 1969 SC 48 (Orient Paper Mills Ltd. v. Union of India) wherein the Supreme Court in paragraph 8, has pointed out as follows: "If the power exercised by the Collector was a quasi-judicial power-as we hold it to be-that power cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi-judicial authority. That is the essence of our judicial system. There is no provision in the Act empowering the Board to issue directions to the assessing authorities or the appellate authorities in the matter of deciding disputes between the persons wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Tax Officer) where the Supreme Court pointed out as follows: "Held, that the order which the Commercial Tax Officer ultimately passed showed that he was merely voicing the opinion of the Assistant Commissioner without any conviction of his own. This was hardly a satisfactory way of dealing with the matter. The Assistant Commissioner however, had delegated the work of assessment to the Commercial Tax Officer and then it was the duty of the latter to make the assessment order giving his own reasons for doing so. The appellants had no opportunity of meeting the point of view which had been adopted by the Assistant Commissioner and the Commercial Tax Officer quietly followed these instructions and advice of the Assistant Commissioner. It was clear that he did not exercise his own judgment in the matter and faithfully followed the instructions conveyed to him by the Assistant Commissioner without giving the appellant an opportunity to meet the points urged against him. The whole procedure was contrary to the principles of natural justice. The procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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