P.M.G. Cold Forming Pvt. Ltd. vs State of Andhra Pradesh

Yogeshwar Dayal, C.J. and Upendralal Waghray, J.—This revision u/s 22 of the Andhra Pradesh General Sales Tax Act, 1957, is filed by the dealer against the judgment of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad, in T.A. No. 299 of 1986 confirming the orders of the assessing authority and the first appellate authority.

The disputed turnover of Rs. 68,49,960 relates to levy of tax on "C purlins" manufactured by the petitioner from iron skelp and H.R. coils purchased from the branch offices of Steel Authority of India, Secunderabad. According to the petitioner, they had purchased iron skelp and H.R. coils which already suffered tax under the Andhra Pradesh General Sales Tax Act under the provisions of section 6 read with the Third Schedule as item 2 "iron and steel" as they are declared goods. The contention of the petitioner is that, even after manufacture the product made by them which according to the Indian Standards Institution is "channel with lips" or iron scrap does not amount to change in commodity and, therefore, these goods cannot be treated as different from the goods purchased as all of them fall under entry "iron and steel" in item 2 of the Third Schedule. It is contended by the counsel for the petitioner that, as they still continued to be "iron and steel", levy of tax on the goods is not only without authority but also violates the requirement of declared goods being not taxed at more than one point and that too at the maximum rates specified in the Central Sales Tax Act, 1956.

The Tribunal after considering the case of the petitioner and referring to the decisions relied upon by them, viz., Shree Ram Steel Rolling Mills Vs. State of Maharashtra, and Konark Steel Industries v. Sales Tax Officer [1988] 69 STC 187 Ori, as well as the decisions of the Supreme Court reported in State of Madhya Bharat v. Hiralal [1966] 17 STC 313 mp and State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319 held that because the goods manufactured and sold by the petitioners were different commodities from what was purchased by them justifies the action of the assessing authority.

Before us the learned counsel for the petitioner has made the same submissions and relied upon the two decisions, viz., Shree Ram Steel Rolling Mills Vs. State of Maharashtra, and Konark Steel Industries v. Sales Tax Officer [1988] 69 STC 187 (Ori). According to him, in Pyare Lal''s case [1976] 37 STC 319 though the Supreme Court has observed that each sub-item in the entry "iron and steel" u/s 14 of the Central Act was a different commodity but the Third Schedule of the Andhra Pradesh General Sales Tax Act does not indicate that the State Government proposed to tax sub-item as a separate commodity.

The Tribunal has considered the two decisions cited by the learned counsel for the petitioner and has found that the Bombay High Court''s decision was based on the specific provisions of section 2(26) of the Bombay Act defining the word "resale" and the definition of "manufacture" and the rules framed under that Act and came to a conclusion that the Bombay Act did not contemplate taxing of such separate commodities comprised in entry "iron and steel". There is no such provision in the Andhra Pradesh General Sales Tax Act. Nor is there any exemption granted by the State Government in respect of "resale" of the goods manufactured from any of the sub-items mentioned under the entry "iron and steel". The decision of the Bombay High Court does not help the petitioner. The Tribunal has also found that the judgment of the Orissa High Court did not apply to the controversy in this case. It is to be noticed that the Orissa High Court placed reliance on the earlier decisions of the Supreme Court reported in State of Madhya Bharat v. Hiralal [1966] 17 STC 313 and State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319. Tribunal has pointed out that the Supreme Court in the latter judgment in State of Tamil Nadu Vs. Pyare Lal Malhotra and Others, noticed that the interpretation put in the earlier judgment was based on the provision regarding grant of exemption. The Orissa High Court has also relied upon the decision of the Bombay High Court considered earlier. As discussed, the Bombay High Court judgment also is based upon specific provision of that Act. The Orissa High Court Judgment will have to be understood only with reference to the specific provision referred to in the earlier judgment.

Coming to our own Act, it is seen that the entry 2 in the Third Schedule, i.e., "iron and steel" is a reproduction of the entry relating to "iron and steel" in section 14 of the Central Sales Tax Act with some exceptions like in respect of "iron and steel" scrap the point of levy is shifted. The goods purchased by the petitioner come under entry 2(vi), i.e., skelp and what they sell is covered by other entries and according to the petitioner falls under item 2(v). Therefore, they are different commodities. The question is whether the scheme of the Act indicates that they should not be taxed ? No provision of the Act is brought to our notice which exempts sale of such goods made out of iron and steel. A reading of the Third Schedule indicates that the various sub-items in the entry "iron-and steel" are treated as different commodities for the purpose of levying sales tax. Wherever the State Legislature wanted to make a difference even in respect of declared goods it has done so as is seen from entry 9 of the Third Schedule relating to "hides and skins". While the entry in section 14 of the Central Act considers "hides and skins" whether dressed or not as one commodity, for the purpose of the Third Schedule they are split into untanned hides and skins and tanned hides and skins and some relief is granted in levy of tax. Therefore, it is clear that whenever Legislature wanted to grant any relief it has done so by making a specific provision. In the absence of any such provision, we cannot accept the contention of the petitioner that the scheme of the Act itself indicates that the goods sold by them are not liable to tax. The revision is, therefore, dismissed.

Petition dismissed.