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2015 Supreme(Bom) 1904
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S. C. DHARMADHIKARI & B. P. COLABAWALLA, JJ.
Commissioner of Sales Tax - Applicant
Vs.
Jai Hind Industries Limited - Respondent
Sales Tax Reference No. 58 of 2012 In Reference Application No.54 Of 1997
Decided On : 30-10-2015
Advocate Appeared:
Mr. V. A. Sonpal, Special Counsel, for the Applicant State
Mr. P. C. Joshi a/w Mr. Piyush Shah, for the Respondent
The main legal point established in the judgment is the interpretation and application of the relevant entries in the Bombay Sales Tax Act, 1959, to determine the classification of raw aluminum castings for tax purposes.
Headnote:
Sales Tax - Aluminum Castings - Bombay Sales Tax Act, 1959, Entry C-I-29, Entry C-II-102
Fact of the Case:
The dispute revolved around the classification of raw aluminum castings for tax purposes. The respondent contended that the castings fell under Entry C-I-29, while the revenue argued for classification under the residual Entry C-II-102.
Finding of the Court:
The court found that the raw aluminum castings manufactured by the respondent fell within Entry C-I-29 of the Bombay Sales Tax Act, 1959, as they were in their raw, unfinished, and primary form, requiring further processes by the purchaser before use.
Issues: The main issue was the classification of raw aluminum castings for tax purposes, whether under Entry C-I-29 or the residual Entry C-II-102.
Ratio Decidendi: The court relied on the factual matrix, including the manufacturing process and the subsequent processes carried out by the purchasers, to determine that the castings fell within Entry C-I-29. It also considered the interpretation of the terms 'castings' and 'ingots' and found that the findings of the Sales Tax Tribunal were well-founded.
Final Decision: The court answered both questions of law in the affirmative and in favor of the respondent, disposing of the Sales Tax Reference accordingly.
B. P. Colabawalla, J.
1. By this Reference, the First Bench of the Maharashtra Sales Tax Tribunal (for short, the “MSTT”) has referred the following questions of law for a decision of this Court under Section 61 of the Bombay Sales Tax Act, 1959 (for short the “BST Act”):-
(a) Whether on the facts and circumstances of the case and on true and correct interpretation of Entry C-I-29 of Part I of Schedule-C, the Tribunal was justified in law in holding that the nonferrous metal castings as manufactured and sold by the respondents (original appellants) are nothing but non-ferrous metal ingots?
(b) Whether on the facts and circumstances of the case and on true and correct interpretation of Entry C-I-29, the Tribunal was justified in law in holding that the non-ferrous metal castings, namely aluminum castings manufactured and sold by the respondents (original appellants) are covered by Entry C-I-29?
2. The real dispute in the present Reference is whether raw aluminum castings manufactured and sold by the Respondent herein, are covered by the residual Entry C-II-102 of the BST Act and exigible to tax @ 10% or whether they fall under Entry C-I-29 exigible to tax @ 4%.
3. The brief facts giving rise to the present controversy are that the Respondent herein (M/s. Jai Hind Industries Limited) manufactures raw aluminum castings required by the automobile industry. It had sold such castings for cylinder head cover supplier part to M/s Tata Engineering and Locomotive Company Ltd (for short, “TELCO Ltd.”), vide invoice No.1682 dated 13th December, 1994. It is the case of the Respondent that they purchase aluminum alloy in the form of ingots which are then melted with the help of a melting furnace at 700° C. This molten metal is put into a dye through a special opening and considerable pressure is applied to the molten aluminum, due to which it reaches all the cavities inside the mould to form a necessary casting on solidification. This casting is then ejected and further cleaned, after which it is dispatched to their customers. At the time of making sale to their customers, the Respondent charged 4% sales tax on the sale of the aforesaid raw aluminum castings. This was done on the basis of a judgment of the MSTT in the case of M/s Ceepla Industries v/s The State of Maharashtra (Second Appeal No. 3 of 1991 dated 20th December, 1991). However, subsequently the Respondent learnt about the another judgment of the MSTT in the case of M/s B. S. J. Foundries and Works v/s the State of Maharashtra (S. A. No.1242 of 1991 dated 31st October, 1994), wherein the MSTT took a different view in respect of nonferrous raw castings. In this decision, the MSTT had diverted from the earlier view and non-ferrous castings were held to be covered by the residual Entry C-II-102.
4. In this view of the matter, the Respondent on or about 28th December, 1994 filed an application under Section 52 of the BST Act before the Commissioner of Sales Tax and sought determination regarding the rate of sales tax applicable on the sale of raw aluminum castings. The Commissioner, by his order dated 13th January, 1996 (under Section 52(2) of the BST Act) came to the conclusion that the sale of raw aluminum castings for cylinder head covers sold vide invoice No.1682 dated 13th December, 1994 by the Respondent to TELCO Ltd. were covered by Schedule Entry C-II-102 and liable to tax at 10%. This order further clarified that this determination would not affect the Respondent's previous liability up to 30th June, 1993 provided they had not collected more than 4% sales tax on the sale of the same goods i.e. the aluminum castings.
5. Being aggrieved by this order of determination, the Respondent approached the MSTT by filing Appeal No.33 of 1996. This Appeal, along with the Appeals filed by M/s Jay Bhawani Engineering Works (Appeal No.26 of 1996) and M/s Balwant Industries (Appeal
