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SUPREME COURT OF INDIA
A.N. RAY C.J.I., M.H. BEG, R.S. SARKARIA AND P.N. SHINGHAL JJ.
State of T.N., Appellant
Versus
M/s. Pyare Lal Malhotra etc., Respondents.
Civil Appeals Nos. 58-59 and 880-883 of 1971
Decided on 19-1-1976.
Advocates appeared
Mr. P. Ram Reddy, Sr. Advocate, (In C. As. Nos. 58-59 of 1971), (Mr. A. B. Rangam and Miss A. Subhashini, Advoates with him), for Appellant; Mr. Sachin Chandra Chaudhury, Sr. Advocate, (Mrs. S. Gopalakrishnan Advocate with him), for Respondent; (M/s. Durga Steel), Mr. Gobind Das Sr. Advocate, (Mr. P. G. Parekh and Miss. Manju Jetley, Advocates with him), for Intervener.
Central Act – Section 14,14(iv),15 - Tamil Nadu Sales Tax Act - Section 4 - Constitution of India,1950 - Articles 132 and 133 (1) (a) and (c) - High Court of Madras had certified cases as fit for appeal to this Court under Articles 132 and 133 (1) (a) and (c) of Constitution Although Writ Petitions had been dismissed on ground that they involve an investigation into question of fact whether iron and steel scrap out of which the manufactured goods, sought to be subjected to Sales Tax had been made were already taxed or not yet State of Tamil Nadu was aggrieved by decision of Madras High Court holding that the manufactured goods said to consist of a steel rounds, flats, angles, plates, bars" or similar goods in other forms and shapes, could not be taxed again if material out of which they were made had already been subjected to sales tax once as iron and steel scrap as both were "Iron and steel" - It was possible to lease assessing authorities free to decide all questions which 802 they had jurisdiction to consider - But it appears that Madras High Court thought it proper to decide the question as the Sales tax authorities had already adopted the view, in other case, that such goods, though covered by the broad genus "Iron and Steel", were separately taxable commodities because each kind of "Iron and Steel" goods was a commercially different and separately taxable species or category - Civil Appeals Nosarise out of four petitions for revision under the provisions of the Tamil Nadu Act for the years 1964-65 and 1965-66, which were allowed by the Madras High Court setting aside assessment orders by following its Judgment and decision mentioned above given on 24-6-1970 on Writ Petitions Nos. 437 - Madras High Court had also granted certificates of fitness for appeal to this Court under Article 132 read with Art. 133 (1) (a) and (c) in four cases before it on revision petitions. Hence, six cases were connected and heard together by us -Same question of law decided by the Madras High Court on grounds contained in one judgment under Appeal in Civil Appeals Nos. 58-59 of 1971 before this Court arise in all of them – Held, Court all know sales tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of - Where commercial goods, without change of their identity as such goods, are merely subjected to some processing 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 - Now coming to Civil Appeals first additional point raised is that when iron scrap is converted into rolled steel it does not involve the process of manufacture. It is contended that the said conversion does not involve 806 any process of manufacture, but the scrap is made into a better market - Before High Court this contention was not pressed- That apart, it is clear that scrap iron ingots undergo a vital change in the process of manufacture and are converted into a different commodity, viz., rolled steel sections. During the process the scrap iron loses its identity and becomes a new marketable commodity - Process is certainly one of manufacture – Court think that Madras High Court had committed an error in applying to decision of cases now before us which turns really on a correct interpretation of Section 14 of the Central Act. On the question now before us, we approve of the reasoning adopted by a Division Bench of the Punjab High Court in Devgun Iron & Steel Rolling Mills v. State of -Section 4 of the Tamil Nadu Act lays down - Tax in respect of declared goods. - Notwithstanding anything contained in Section 3 tax under this Act shall be payable by a dealer on the sale or purchase inside State of declared goods at the rate and only at point specified against each in Second Schedule on the turnover in such goods in each year whatever be quantum of turnover in that year - Item 4 of second schedule specifies the rates of tax in accordance with Central Act - It reproduces Section 14 (iv) of Central Act - On an amendment of Section 14 (iv) of Central Act, serial No. 4 of the second schedule of Tamil Nadu Act was also correspondingly amended so as to reproduce the sixteen items found in Section 14 (iv) of Central Act - Hence decision of these cases really depends on an interpretation of Sec. 14 of Central Act which we have already given above - Other provisions only fortify Court conclusion - Order accordingly
JUDGMENT
BEG, J. :—The two Civil Appeals Nos. 58-59 of 1971 arise out of a judgment of a Division Bench of the Madras High Court dismissing two Writ Petitions filed against notices issued by a Commercial Tax Officer showing institution of Sales Tax Assessment proceedings in respect of certain iron and steel goods for the assessment year 1965-66 in Writ Petition No. 437 of 1967 and for the assessment year 1966-67 in Writ Petition No. 520 of 1968. The High Court of Madras had certified the cases as fit for appeal to this Court under Articles 132 and 133 (1) (a) and (c) of the Constitution. Although, the Writ Petitions had been dismissed on the ground that they involve an investigation into the question of fact whether the iron and steel scrap, out of which the manufactured goods, sought to be subjected to Sales Tax, had been made, were already taxed or not, yet, the State of Tamil Nadu was aggrieved by the decision of the Madras High Court, holding that the manufactured goods, said to consist of a "steel rounds, flats, angles, plates, bars" or similar goods in other forms and shapes, could not be taxed again if the material out of which they were made had already been subjected to sales tax once as iron and steel scrap as both were "Iron and steel". It was possible to lease the assessing authorities free to decide all the questions which 802 they had jurisdiction to consider. But it appears that the Madras High Court thought it proper to decide the question as the Sales tax authorities had already adopted the view, in other cases, that such goods, though covered by the broad genus "Iron and Steel", were separately taxable commodities because each kind of "Iron and Steel" goods was a commercially different and separately taxable species or category. Moreover, this very question was also before the High Court in regular revision petitions under the Tamil Nadu Sales Tax Act (hereinafter referred to as the Tamil Nadu Act ).
2. Civil Appeals Nos. 880-883 of 1971 arise out of four petitions for revision under the provisions of the Tamil Nadu Act for the years 1964-65 and 1965-66, which were allowed by the Madras High Court setting aside assessment orders by following its Judgment and decision mentioned above given on 24-6-1970 on Writ Petitions Nos. 437 of 1967 and 520 of 1968. The Madras High Court had also granted certificates of fitness for appeal to this Court under Article 132 read with Art. 133 (1) (a) and (c) in the four cases before it on revision petitions. Hence, six cases were connected and heard together by us. The same question of law, decided by the Madras High Court on grounds contained in one judgment under Appeal in Civil Appeals Nos. 58-59 of 1971 before this Court, arise in all of them.
3. All the six cases before us relate to what known as "declared goods" under section 14 of the Central Sales Tax Act (hereinafter referred to as "the Central Act"). It was claimed, on behalf of the dealers, sought to be assessed in each case, that by reason of the restrictions imposed by Section 15 of the Central Act, the levy of tax under the Tamil Nadu Act was not permissible.
4. Section 14 of the Central Act declares certain goods enumerated there to be "of special importance in inter-State trade or commerce." The list of goods given there at No. (iv), as it stood in 1968, was;
"(iv) iron and steel, that is to say, -
(a) pig iron and iron scrap;
(b) iron plates sold in the same form in which they are directly produced by the rolling mill;
(c) steel scrap, steel ingots, steel billets, steel bars and rods;
(d) (i) steel plates. (ii) Steel sheets, (iii) Sheet bars and thin bars, (iv) rolled steel sections, (v) tool alloy steel; sold in the same form in which they are directly produced by the rolling mill;"
By the Central Sales Tax (Amendment) Act 61 of 1972, Clause (iv) was redrafted. It now reads as follows:
"(iv) iron and steel, that is to say -
(i) pig iron and cast iron including ingot, moulds, bottom plates, iron scrap, cast iron scrap,
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