K YEGNASANKARANARAYANA IYER Vs. GOVERNMENT OF MADRAS

JUDGEMENT

(1.) THESE revision cases are filed against the order of the Sales Tax Appellate Tribunal in T.A. Nos. 1419 and 1338 of 1961 respectively. They relate to the assessment of the same assessee for 1956-57 and 1957-58 respectively. The nature of the business of the assessee has been described at more than one stage in the course of the assessment proceedings. It appears to be as follows : The assessee is a merchant dealing in brass and copper vessels. In the course of his business, he accumulates scrap out of old brass and copper vessels and these are delivered from time to time to a firm that is engaged in the melting of such brass and copper scrap and adding zinc to it wherever necessary in a prescribed proportion of copper to brass (roughly 60 : 40) to melt them into brass alloy, which is thereafter beaten into discs and sheets, according to the requirements of the vessel merchant, and supplied to him. The manufacturer (Nellai Metal Rolling Mills Private Limited) produced a running account for such supply of scrap and delivery of brass discs and sheets. The nature of the supply, the manner in which the running account is maintained, and the way in which the contract between the vessel merchant and the rolling mills is performed, are more clearly described in an affidavit which was filed before us by the assessee. In the course of the hearing of the revision cases, a copy of this affidavit was supplied to the learned Government Pleader. The facts stated in the affidavit are not now in controversy.

(2.) THE procedure adopted in this business, as revealed by the affidavit appears to be this : THE assessee sends scrap of copper and brass to the Nellai Metal Rolling Mills Private Limited for being converted into discs or sheets as required by him. When the scraps are received, the receipts are entered by the mills in "own conversion account", and the name of the metal as also its weight are shown in the entry. In the assessee's folio also they are shown to the credit of the assessee. THEre is no sale of scrap at this stage. No price or consideration or even the value of the scrap supplied is entered in the books of the rolling mills. THEreafter, when the mills have received similar scrap from other dealers, they are melted, and circles or sheets according to requirement, of equal weight, to the scrap supplied (up to the date of delivery of brass sheets or circles) are delivered to the vessel merchants. THE rolling mills levy a fixed conversion charge therefor, the charge being for the conversion of copper scrap or brass scrap into brass sheets or brass dics. In the melting process, zinc and borax are added. When the brass scrap itself goes into the melting pot, no addition of zinc is required, but where the copper scrap goes into the melting pot a proportionate weight of zinc has to be added. If the zinc scrap supplied by the assessee is sufficient it is no doubt used, but where it is not sufficient, or if there is no supply at all of zinc scrap, the rolling mills add zinc of their own, to make up the quantity of zinc required in proportion to the copper supplied. After being melted, the metals are rolled in the mills and the required sizes of sheets, etc., have to be cut, and the pieces remaining after the required sizes are cut out, are again melted and the required sizes of sheets etc., are formed out of them also.

(3.) THE department has picked out the occasions in the respective assessment years where the vessel merchant has supplied copper scrap only and treated such deliveries of copper scrap as sales for consideration, the consideration being the value of brass discs and circles plus manufacturing charges as well as the rebate just now referred to for the addition of zinc made during the process of melting. So far as deliveries of brass scrap are concerned, the department, relying upon the decision of this Court in South India Metal Works and Rolling Mills v. State of Madras has exempted them from assessment. In both the years of assessment, copper scrap and brass scrap as well as zinc scrap have been supplied.