The levy of tax on declared goods is a single-point levy and the point of levy is fixed by the State. If the State exempts the first sale from payment of tax, the particular seller or the goods sold may not be subjected to tax at either that point of first sale or any subsequent sale in the State.

ORDER

1. The appeals and the writ petitions raise a common question of law relating to the validity of a circular dated 29-1-1993 issued by the 1st respondents Commissioner, of Commercial Taxes. It needs to be reproduced in extenso :

"In the reference first cited, it was clarified that since the first sales of ferrous scrap by the Tamil Nadu Electricity Board are exempt from tax, no tax is leviable on the subsequent local sales of the scraps purchased from the Tamil Nadu Electricity Board. This clarification was reiterated in the references second and third cited in individual cases. These clarifications were issued on the basis of TA No. 240 of 1986 dated 30-9-1988 in the case of India Metal Industries v. State of T. N. But the High Court, Madras in the case of Vasu General Traders v. State of T. N. ((1987) 66 STC 358) held that since the exemption in relation to a particular sale would not be available to other subsequent sales, the taxing statutes had to operate in respect of other sales. The Government decided that the decision rendered by the High Court in the case of Vasu General Traders ((1987) 66 STC 358) can be restricted only to that case and need not be treated as a general proposition of law. The Government letter (MS No. 446 CT and RE dated 29-10-1991) in which the abovesaid decision was informed to the Commissioner of Commercial Taxes has been communicated to all DCs in the reference cited. On a further point raised by DC (OT) Madurai for reconsideration of the clarification issued in the reference cited that there was no need to revise the said clarification issued in the reference dated 30-7-1991.

2. The High Court of Madras in its judgment dated 13-3-1991 on TC No. 6 of 1991 filed by Royal Steel Traders, Madras ((1992) 1 MTCR 580) following its earlier judgment in the case of Vasu General Traders ((1987) 66 STC 358) has held that a sale has reference to taxable sale for the purpose of TNGST Act and not sales, which are exempted, and that since the Tamil Nadu Electricity Board was exempted, the first taxable sale was made only by the assessee. The clarification issued in the Commissioner of Commercial Taxes, reference cited are against the findings of the High Court of Madras in the case of Vasu General Traders ((1987) 66 STC 358) and Royal Steel Traders. ((1992) 1 MTCR 580)

3. In the circumstances stated, it is held that when a person purchases scrap from the Tamil Nadu Electricity Board and sells, he is effectively the first seller liable for tax. This may be earlier purchase tax under Section 7-A of the Tamil Nadu General Sales Tax Act on this further sale depending on what that purchaser is doing with scraps. At any rate, it can no longer be considered second seller in not liable to tax. The Deputy Commissioners are requested to instruct the Assessing Officers that from the date of issue of this clarification, they will have to do all fresh assessments under this clarification and they need not open old assessments already completed under the earlier classification.

4. The clarification issued in this office reference cited, exempt the fourth reference, are hereby cancelled."

2. Writ petitions were filed in the High Court of Madras challenging the validity of the circular. They were dismissed and the appeals, by special leave, are filed there against. The writ petitions filed in this Court also impugn the circular.

3. The goods in question are iron and steel and were sold by the Tamil Nadu Electricity Board to the appellants and petitioners. Being sold by the said Board, they were covered by a notification dated 1-12-1982 issued by the 1st respondent under the provisions of Section 17(1) of the State Act and, therefore, exempt from tax payable under the State Act.

4. Under Section 14 of the Central Sales Tax Act iron and steel are declared to be goods of special importance in inter-State trade and commerce. They are, by reason of the provisions of Section 15 of the Central Act, liable to tax at a rate that