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High Court Of Calcutta
Aloke Chakrabarti, Joytosh Banerjee
JINDAL (INDIA) LTD. - Appellant
Versus
ASSISTANT COMMISSIONER, COMMERCIAL TAXES - Respondent
WPTT 534 Of 2002
Decided On : 09/11/2003
SALES TAX - Levy and Rates of Tax - Taxability of cold rolled strips manufactured from hot rolled strips - Whether cold rolled strips and hot rolled strips are two different commodities - Interpretation of Section 14 and 15 of the Central Sales Tax Act, 1956 and Section 17 of the West Bengal Sales Tax Act, 1994 - Applicability of judgments of the Supreme Court in A. Hajee Abdul Shakoor and Co., State of Tamil Nadu v. Pyare Lal Malhotra, Telangana Steel Industries, K. A. K. Anwar and Co., Park Leather Industry (P.) Ltd. and Hyderabad Wire and Allied Products - Whether the omission of the expression "in the same form" in Section 17 of the West Bengal Sales Tax Act, 1994 alters the effect of the interpretation of law made by the Supreme Court.
Fact of the Case:
The petitioner, a steel pipe manufacturing company, challenged the assessment of sales tax on cold rolled strips manufactured from hot rolled strips. The petitioner claimed exemption from tax under Section 17(3)(a)(vi) of the West Bengal Sales Tax Act, 1994, arguing that hot rolled strips were not purchased for resale and were not sold in the same form. The Tribunal dismissed the petitioner's application, holding that the cold rolled strips were a different commodity from hot rolled strips and therefore not entitled to the exemption.
Finding of the Court:
The court held that cold rolled strips and hot rolled strips are two different commodities, and therefore the petitioner was not entitled to the exemption under Section 17(3)(a)(vi) of the West Bengal Sales Tax Act, 1994. The court relied on the judgments of the Supreme Court in A. Hajee Abdul Shakoor and Co., State of Tamil Nadu v. Pyare Lal Malhotra, Telangana Steel Industries, and K. A. K. Anwar and Co., which held that different items specified in different sub-clauses under any clause in Section 14 of the Central Sales Tax Act, 1956 are different commodities and therefore, sales tax can be charged for the sale of a commodity though it emerges from another commodity mentioned in the same sub-clause.
Issues: 1. Whether cold rolled strips and hot rolled strips are two different commodities. 2. Whether the petitioner is entitled to the exemption under Section 17(3)(a)(vi) of the West Bengal Sales Tax Act, 1994.
Ratio Decidendi: 1. The court held that cold rolled strips and hot rolled strips are two different commodities, relying on the judgments of the Supreme Court in A. Hajee Abdul Shakoor and Co., State of Tamil Nadu v. Pyare Lal Malhotra, Telangana Steel Industries, and K. A. K. Anwar and Co. 2. The court held that the petitioner was not entitled to the exemption under Section 17(3)(a)(vi) of the West Bengal Sales Tax Act, 1994, because hot rolled strips were not purchased for resale and were not sold in the same form.
Final Decision: The writ petition was dismissed.
( 1 ) THIS writ petition was filed by the petitioner No. 1 company along with its one Joint Managing Director, being the petitioner No. 2 challenging the judgment and order dated February 28, 2002 of the Tribunal as also challenging the power of the respondents to levy tax on sale of cold rolled strips manufactured out of hot rolled strips and the assessment made on that basis.
( 2 ) PETITIONER No. 1 company carries on business, inter alia, of manufacturing steel pipes. In extension of its business, the company was manufacturing cold rolled strips from hot rolled strips since September, 1993 and it is registered dealer under Section 26 (7) of the West Bengal Sales Tax Act, 1994. On an application made by the petitioner, the Assistant Commissioner, Commercial Taxes granted an eligibility certificate to the company on January 20, 1995 for the purpose of availing remission under Section 10g of the Bengal Finance (Sales Tax) Act, 1941 which was initially valid for a period of one year ending on October 29, 1994 and was thereafter renewed up to October 29, 1995 and, therefore, the company was eligible for remission of tax to the prescribed extent.
( 3 ) UPON expiry of the eligibility period, the company no more was entitled to exemption from tax on the purchase of hot rolled strips in West Bengal. By a notice dated December 13, 1999 the company was asked to show cause why the amount specified in the notice should not be demanded from it. An order dated December 6, 1999 was also served on the company, whereby it was stated that tax was leviable on the sale of cold rolled strips manufactured out of hot rolled strips purchased locally and the claim of the company that no tax was payable on the cold rolled strips by virtue of Section 15 (a) of the Central Sales Tax Act, 1956 was held to be not correct.
( 4 ) THE company thereafter filed an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987 challenging the legality and validity of the said notice as also the said order and by order dated March 16, 2000, the Tribunal quashed the said notice and the order and the respondent-Assistant Commissioner, Commercial Taxes, was directed to make assessment of tax payable by the petitioner-company according to law for the period of four quarters ending on March 31, 1998 and the said authority was given liberty to decide the question of taxability of cold rolled strips.
( 5 ) FOLLOWING the aforesaid order of the Tribunal, the Assistant Commissioner, Commercial Taxes, passed order of assessment dated May 12, 2000 for the four quarters ending on March 31, 1998 levying tax on sales of cold rolled strips manufactured by the petitioner-company from hot rolled strips for which taxes were already paid. The said authority disallowed the claim of the petitioner-company for deduction of tax on sales of cold rolled strips under Section 17 (3) (a) (vi) of the 1994 Act on the ground that hot rolled strips from which cold rolled, strips were manufactured were not purchased for resale and were not sold in the same form.
( 6 ) THE said order was challenged before the Tribunal and ultimately by its judgment dated February 28, 2002, the Tribunal dismissed the said application filed by the petitioner. Challenging the said order, the present writ petition was filed.
( 7 ) HEARD Mr. R. N. Bajoria, learned counsel for the petitioner and Mr. L. K. Gupta, learned counsel for the respondents.
( 8 ) THE contention of the petitioner is that in Section 14 of the Central Sales Tax Act, 1956 both hot and cold rolled strips have been included in Sub-clause (vi) within Clause (iv) and therefore, both the items are to be treated as one commodity. Section 15 of the said Act was relied on for showing that intention of the Legislature is to levy taxes on any item at not more than one stage. It is contended that the two commodities mentioned in same sub-clause under any clause of Section 14 cannot be treated as two different commodit
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