ZENITH BUILDING CONTRACTORS Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE above tax cases are all appeals filed by the various assessees against the order of the Commissioner of Commercial Taxes made in exercise of suo motu powers of revision whereunder the Commissioner set aside the orders passed by the appellate authority and ordered the restoration of the order passed by the assessing authority. THE cases are dealt with in common since they involve identical questions of law and facts and submissions also have been made in common by the counsel.

(2.) THE relevant factual details necessary for the purposes of considering the appeals before us are as follows : THE appellants, who are the assessees, were engaged during the relevant assessment periods in question in the business of fabricating and supplying mild steel iron grills to the Tamil Nadu Electricity Board for use in the manufacture of RCC poles required by the electricity system to carry on their main lines. Originally, when assessments were made under section12 of the Tamil Nadu General Sales Tax Act, 1959, hereinafter referred to as "the Act", the various assessees claimed that what they supplied to the electricity system were only mild steel rods and rounds purchased in their turn by them and made in the form of grills to suit the purposes of the Electricity Board and, therefore, they were second sales and not liable to tax under the Act in their hands. THE said stand was accepted by the assessing officer and exemption claimed was allowed. Subsequently, the inspection of the business place of the assessees and some of their branches disclosed certain vital materials and records relating to the supply of the said goods to the Electricity Board. Among such records were the purchase orders placed by the Electricity Board on he dealers and the bills issued by the dealers themselves which disclosed that the dealers had fabricated and supplied grills as fabricated by them in terms of the specification given by the Electricity Board for their use in the manufacture of RCC poles by the Electricity Board. THE assessing authority, in the light of the said materials, initiated proceedings in exercise of the powers under section16 of the Act to bring to assessment the turnover which escaped assessment as referred to supra. In the said proceedings, it was contended by the assessees that they purchased M.S. rounds and rods locally, made changes in the materials as required by the Electricity Board in their purchase order and that the materials in spite of such changes effected, continued to be iron and steel and had not undergone any change. It was also their contention that in effect the sales by them to the Electricity Board were of M.S. rounds and rods locally purchased by them with mere alterations in their shape. Overruling the objections, the assessing authority confirmed the proposals and brought to assessment the turnover which escaped tax at the time of the earlier assessment. Appeals were filed before the appellate authority. In addition to reiterating the submissions that the supplies effected by the assessees to the Tamil Nadu Electricity Board were in substance second sales of mild steel M.S. rods and rounds, in some of the cases certain factual discrepancies were also pointed out. THE plea questioning the jurisdiction of the assessing authority for invoking the provisions of section16 of the Act was rejected by the appellate authority. But at the same time, relaying, upon an earlier decision of the Appellate Tribunal, Additional Bench at Coimbatore, the appellate authority came to the conclusion that what the assessees supplied in the form of grills were only M.S. rounds and rods falling under item 4 of the Second Schedule to the Act and consequently they stood exempt from tax by virtue of their being the second sales. It is the said orders passed by the appellate authority that was the subject-matter of suo motu proceedings by the Commissioner of Commercial Taxes in exercise of the powers under section34 of the Act.

(3.) MR. C. Venkataraman, learned counsel appearing on behalf of the assessees/applicants, while reiterating the submissions before the authorities below, submitted that what was supplied by the assessees to the Tamil Nadu Electricity Board was in fact and substance steel M.S. rods and rounds with certain modification in their shape, that there was no change in the commercial identity of the steel M.S. rods and rounds purchased by them when they again resold them to the Tamil Nadu Electricity Board in the form of grills and inasmuch as the revising authority itself was conscious of the fact that the goods did not undergo any manufacturing process in their hands after their purchase, no interference was called for with the orders of the appellate authority which took into account the nature of the transaction in the light of an earlier decision of the Additional Bench of the Sales Tax Appellate Tribunal. The learned counsel relied upon the decisions reported in 1968 (22) STC 294 (Bom) (Commissioner of Sales Tax v. Amar Wire & Rolling Mills), 1974 (33) STC 292 (Cal) (Phanindra Nath Manna and Company v. Commercial Tax Officer) and 1976 AIR(SC) 800, 1976 (2) SCR 168, 1983 (13) ELT 1582, 1976 (37) STC 319, 1976 (1) SCC 834, 1976 (3) SCR 168, 1976 UPTC 282, 1976 (5) CTR 278, 1976 TaxLR 1519, 1976 CTR(SC) 278, 1976 SCC(Tax) 102 (SC) (State of Tamil Nadu v. Pyare Lal Malhotra) in support of his plea.