Ferro Alloys Corporation Ltd. vs State of Andhra Pradesh

B.P. Jeevan Reddy, J.—These tax revisions arise from a common order of the Sales Tax Appellate Tribunal in a batch of appeals. They are preferred by the assessee against the findings of the Tribunal on questions 1 and 4, referred to hereinafter, whereon the Tribunal held against the assessee.

The assessee-petitioner herein, Ferro Alloys Corporation Ltd., is engaged in the manufacture of ferro-manganese. It sold ferro-manganese to MMTC, which in turn exported it. According to the petitioner-assessee, the foreign buyer was identified by it and the price, quantity and quality were all settled by it only with the foreign buyer. However, on account of the canalisation policy in force, a direct sale could not be effected by the petitioner in favour of the foreign buyer. The mineral had first to be sold to MMTC, which in turn entered into a contract of sale with the foreign buyer.

The assessing authority sought to levy tax upon the turnover relating to ferro-manganese in the hands of the petitioner, on the ground that ferro-manganese is taxable as general goods u/s 5(1) of the Andhra Pradesh General Sales Tax Act. The petitioner disputed his liability on several grounds, viz., (1) that the sale is export sale within the meaning of sub-section (1) of section 5 of the Central Sales Tax Act and hence exempt form State sales tax; (2) that ferro-manganese is "manganese" within the meaning of entry 1 in Second Schedule to the A.P. General Sales Tax Act and therefore, cannot be taxed u/s 5(1) of the Act as general goods; (3) that a part of the turnover does not represent sale but a loan repaid to another similar manufacturer; (4) that the turnover relating to "ferro-manganese slag" is not taxable, since it is nothing but manganese ore. These are the very four questions framed and considered by the Tribunal.

On the first question, the Tribunal held that the sales effected by the petitioner cannot be treated as export sales in the course of export within the meaning of Section 5(1) of the Central Sales Tax Act. On the second question, it held that ferro-manganese is manganese as contended by the petitioner-assessee and therefore, the petitioner cannot be subjected to tax u/s 5(1) of the A.P. General Sales Tax Act. On the third question, the Tribunal opined that it is unnecessary to go into the said question which may require a further investigation, in view of its answer on question No. 2. On the fourth question, it held that manganese slag is an entirely different and distinct commodity from manganese ore.

In a connected matter in which judgment is pronounced today, i.e., T.R.C. 228 of 87, etc. (See Khandelwal Ferro Alloys Limited Vs. State of Andhra Pradesh, , we have held, agreeing with the Tribunal, that ferro-manganese is "manganese" within the meaning of entry 1 in Second Schedule to the A.P. General Sales Tax Act and for that reason the petitioner cannot be made liable to pay sales tax u/s 5(1) of the A.P. General Sales Tax Act. It has been held that only MMTC is liable to pay the tax being the last purchaser in the State. In view of the said judgment, the second question herein has to be answered in favour of the assessee. For that reason, we think it unnecessary to go into question No. 3.

So far as the first question is concerned, it is clear from the material placed before us, which is also found referred to in the Tribunal''s judgment, that the transactions in this case are clearly of the type referred to in the decision of the Supreme Court in Serajuddin and Others Vs. The State of Orissa, . The sales effected by the petitioner therefore do not fall either under the first limb or second limb of section 5(1) of the Central Sales Tax Act. Accordingly, the first question is answered against the petitioner.

So far as the fourth question is concerned, it is clear from the judgment of the Tribunal that "manganese slag" is an entirely different product, commercially speaking. In the commercially world, it is treated as a different product from manganese ore or for that matter, from ferro-manganese. It is a bye-product having altogether different use. The material placed before us shows that even the petitioner treated the manganese slag as separate goods and showed their turnover separately. In view of the said finding of the Tribunal, we see no reason to treat the "manganese slag" as synonymous with manganese ore. We agree with the Tribunal on the fourth question as well.

In view of the findings recorded by us, the tax revision cases are dismissed. No costs. Advocate''s fee Rs. 1,000 (consolidated).

Petitions dismissed.