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TMI Blog2010 (2) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 - - - Dated:- 26-2-2010 - GOKHALE H.L. C.J. AND SASIDHARAN K.K., JJ. The judgment of the court was delivered by K.K. SASIDHARAN J. These two writ appeals are directed against the order dated March 17, 2008 in W. P. Nos. 15072 of 2007 and 28254 of 2007 Reported in Chitrahar Traders v. Commissioner of Commercial Taxes [2008] 14 VST 439 (Mad). whereby and whereunder, the learned single judge was pleased to quash the proceedings of the Commissioner of Commercial Taxes, Chepauk dated April 16, 2007 and directed the Commercial Tax Officer, Cuddalore to refund the excess amount of sales tax. Background facts: M/s. Neyveli Lignite Corporation (hereinafter referred to as NLC) was having a briquetting and carbonization plant producing leco which is a form of lignite. This factory was established in the year 1965. Since there were frequent breakdowns and as the factory was incurring huge losses, NLC found that it was not viable to continue the operation. Accordingly, the factory was closed and an intimation to that effect was given to the Deputy Chief Inspector of Factories and the Central Excise Department. The factory licence was surrendered by NLC on July 10, 2002. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Commercial Taxes with respect to the basis for arriving at the percentage of tax, the successful bidder submitted an application for clarification once again to the Commissioner of Commercial Taxes. Accordingly, the matter was examined by the Commissioner and as per proceedings dated April 16, 2007, the Commissioner opined that sale was in respect of B C plant and machinery on as is where is and no complaint basis and as such, is taxable at 12 per cent under entry 20 of Part D of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 with a surcharge at five per cent on tax. The proceedings dated April 16, 2007 on the file of the Commissioner of Commercial Tax were challenged by Neyveli Lignite Corporation in W.P. No. 28254 of 2007. Chitrahar Traders challenged the said communication in W.P. No. 15072 of 2007. Before the learned single judge, the appellants contended that the goods sold have been described as B C plant and machinery on as is where is and no complaint basis and as such, it was an outright sale of plant and machinery. Since the sale was characterized as old plant and machinery, there was no question of payment of sales tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha v. State of Tamil Nadu [1986] 62 STC 432. The learned senior counsel for the respondent in the respective writ appeals justified the order passed by the learned single judge. According to the learned senior counsel, it was the admitted case of the parties that the successful bidder was made to dismantle the machinery and it was transported only as scrap. Therefore, the purchaser was liable to pay the appropriate sales tax treating it as scrap and not as machineries. Analysis There are certain admitted facts in the present case. M/s. Neyveli Lignite Corporation is a public sector undertaking. They have established an industry in the year 1965 to produce leco, which is a form of lignite. The corporation sustained huge losses and ultimately, the factory was closed on April 4, 2001. In view of the closure of the factory, licence was surrendered on July 10, 2002. The corporation took a decision to auction the machinery as metal scrap and accordingly, MSTC was appointed as a selling agent for disposal of iron and steel scrap. MSTC on their part invited e-tenders and in the said tender, M/s. Chitrahar Traders became the successful bidder. Accordingly, the bid was confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was dismantled and it was taken by the auction purchaser only as scrap. The sale in question was effected by a public sector undertaking. The selling agent was none other than another public sector undertaking engaged in the business of metal scrap. The machineries were installed as early as in the year 1965 and the factory was ultimately closed in the year 2001. The agreement entered into between Neyveli Lignite Corporation and MSTC clearly shows that it was intended to be an agreement for sale of scrap. The other documents enclosed in the typed set of papers also clearly show that the sale was intended to be one of scrap. Neyveli Lignite Corporation was not having the facilities for dismantling the machinery and as such, the auction purchaser was permitted to dismantle the entire machinery and to transport the same as scrap. There are no materials on record to suspect the bona fides of the transaction. The transaction was considered at all points of time as a sale of scrap and it was never intended to be a sale of old machinery. In Uma Devi Sizing Industries v. State of Tamil Nadu rep. By the Commercial Tax Officer II, Rajapalayam case [1993] 4 MTCR 265, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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