UTRACON STRUCTURAL SYSTEMS PVT. LTD. Vs. STATE OF KARNATAKA REPRESENTED BY THE ASSISTANT COMMISSIONER AND COMMERCIAL TAXES

JUDGEMENT

(1.) The assessee has preferred this appeal against the concurrent finding recorded by the three authorities rejecting the request of the assessee to treat the stranded rods as items of iron and steel falling under Section 14 of the Central Sales Tax Act and to grant the benefit of reduced rate. The assessee is a Private Limited Company, engaged in the business of works contract of design and construction of post tensioning structure involving transfer of property in goods. The assessee is a registered dealer under the Karnataka Value Added Tax Act with effect from 01.03.2006. The assessee opted for payment of tax under the composition scheme as provided under Section 15 of the Kar. VAT Act. The assessee has been filing its VAT returns regularly. The assessee purchases or brings certain materials from outside State for the execution of works contract. The assessee has purchased/brought iron and steel from outside the State which are treated as 'goods of special importance' under Section 14 of the Central Sales Tax Act. The assessee offered the same to tax at the rate of 4%.

(2.) The Assessing Authority reassessed the tax liability in respect of the said iron and steel and levied tax at the general rate of 12.5% in his reassessment order under Section 39(1) of the Karnataka VAT Act dated 31.07.2008. Against the said order of reassessment, the assessee sought rectification of mistake apparent from the order, by filing a letter dated 31.10.2008. The rectification order came to be passed on 18.12.2008 maintaining the tax rate at the general rate of 12.5%. Against the said order, the assessee preferred an appeal before the Joint Commissioner of Commercial Taxes (Appeals). The said appeal came to be dismissed by order dated 13.10.2009, by upholding the order of the Assessing Authority. Aggrieved by the said order, the assessee preferred an appeal to the Karnataka Appellate Tribunal. The Tribunal also dismissed the appeal. Aggrieved by the said order, the present Revision is filed.

(3.) Sri Chythanya, learned Counsel appearing for the assessee assailing the impugned order contended that the Section 14(iv)(xv) of the Central Sales Tax Act,. 1956 (for short hereinafter referred to as 'the Act') refers to Wire Rods and Wires Rolled. A Stranded rod does not cease to be a rod and becomes a goods not elsewhere specified, merely because it consists of a number of wires. Stranded rods are known in the market as wire rods. It is not a new product in the market parlance and it is not dealt with or treated as different from a wire rod. Therefore, a stranded rod is a wire rod. Therefore, it is a declared goods of special importance which falls under Section 14 of the Act and rate of tax payable is only 4% and not 12.5% as claimed by the authorities. He also contended that the Tribunal has wrongly relied on the Central Excise Tariff Act. Various items of iron and steel are enumerated in Chapter 72 of Central Excise Tariff Act. The suppliers of strands to the assessee have indicated that the Tariff Code in their invoices as 7312.10.30 and cleared the goods by paying relevant Duties to the concerned department and this entry is for stranded Wire. Therefore the stranded wire cannot be equated with the wires falling under Chapter 72 of the Central Excise Tariff Act. Incidence of tax in the case of Central Excise is at the manufacturing point, whereas the incidence of tax under the Central Sales Tax is at the time of sales. This aspect has been completely missed by the Tribunal and therefore the said order requires to be set aside, extending the benefit to the assessee.