STATE OF TAMIL NADU Vs. INDIA METAL INDUSTRIES

JUDGEMENT

(1.) W. P. No. 689 of 1968 was filed in this Court praying for quashing of the sales tax assessment order for the assessment year 1966-67 dated 27th January, 1968 , passed by the Commercial Tax Officer, Sowcarpet I Division, Madras . The writ petition was disposed of by a judgment of this Court dated 10th April, 1970. The writ petition was allowed and the matter was remanded for fresh disposal. The writ petitioners were carrying on business of re-rolling steel. They bought iron and steel scraps from other registered dealers in this State and converted them into mild steel rounds, flats, angles, etc. , by rolling them. The assessing authority assessed to tax the turnover in M. S. rounds, flats and angles at 2 per cent. The objection raised by the writ petitioners was that the iron and steel scraps from which M. S. rounds, flats and angles were made had already suffered tax in this State as first sale of declared goods and that as such, such goods were not liable to tax, because such declared goods were, under section 14 of the Central Sales Tax Act, not liable to tax on second and subsequent sales. It was also their contention that the rolled mild steel rounds, flats and angles were not goods different from the iron and steel scraps purchased by them. The prayer was for issue of a writ of certiorari for quashing the sales tax assessment. In the main writ petition, which was heard along with this petition, the matter was remanded for investigation as to whether the tax had been paid in this State in respect of iron and steel scrap. If the tax had been so paid, it would follow in the view of this Court, that the turnover in M. S. rounds, flats and angles would not be liable to further tax. Tax main judgment is reported in Pyarelal Malhotra v. Joint Commercial Tax officer, T. Nagar Division, Madras.

(2.) THE State of Madras filed an appeal before the Supreme Court against the judgment in the case of Pyarelal Malhotra and also in the present case. THE supreme Court in the case reported in State of Tamil Nadu v. Pyare Lal Malhotra reversed the decision of this Court. In the appeal in the present case the Supreme Court set aside the judgment of this Court and the matter was remitted with the direction that the matter would be disposed of in accordance with law and particularly in the view of the decision of the Supreme court in State of Tamil Nadu v. Pyare Lal Malhotra THE matter has been posted in pursuance of the direction of the Supreme Court. W. P. No. 966 of 1969 was filed by a firm, India Metal Industries, praying for a writ of certiorari for quashing the assessment order for the assessment year 1967-68 dated 11th March, 1969, passed by the Joint Commercial Tax Officer, Peddunaickenpet (South)Division, Madras-1. That case was also herd along with W. P. No. 689 of 1968 and other cases mentioned above and this Court by its judgment dated 10th April, 1970, allowed the writ petition and remitted the subject-matter to the assessing authority for fresh disposal in the light of the observations made in w. P. No. 520 of 1968, which was heard along with the Pyarelal Malhotra's case and which was disposed of by the judgment in Pyarelal Malhotra v. Joint commercial Tax Officer, T. Nagar Division, Madras THE State of Tamil Nadu filed an appeal before the Supreme Court and the judgment of this Court was set aside and the matter was remitted for being dealt with in accordance with law, and in accordance with the directions given by the Supreme Court in State of Tamil nadu v. Pyare Lal Malhotra this matter is again posted before us. Similarly, W. A. Nos. 344 and 349 of 1972 came to be filed against the disposal of the corresponding writ petitions filed in this Court. THE writ appeals were disposed of in the light of the judgment of this Court in pyarelal Malhotra v. Joint Commercial Tax Officer, T. Nagar Division, Madras against the orders in these writ appeals there were appeals to the Supreme court which have been again remitted for disposal in the manner described already.

(3.) MR. Chari relied in support on the following passage occurring at page 323 of the judgment of the Supreme Court "on the other had, the note against the brackets in front of the five smaller sub-divisions of (d) makes it clear that even each sub-category of a sub item retains its identity as a commercially separate item for purposes of sales tax so long as it retains the sub-division. " * The reference in this passage is to section 14, sub-clauses (a) to (d) of clause (iv ). This passage afforded the learned counsel an occasion to dwell on the words "sub-item", " sub-category"and" sub-division" occurring therein. We think the terminology employed in the above passage is not liable to be mistaken. By a "category" the Supreme Court intended to refer to the major clauses in section 14, that is so say, sub-clauses (a) to (d) of clause (iv) in the words of the Supreme Court, are sub-divisions. What each sub-division dealt with, in the language of the Supreme Court is a "sub-item". In sub-clause (d) there is a further classification found in (i) to (v ). In the words of the Supreme Court, these are "sub-categories". Employing distinctive vocabulary, the Supreme Court laid down that so long as a commodity retained its identity as a sub-category of a sub-item in a sub-division, it must be dealt with as retaining its identity as a commercially separate item for the purposes of sales tax. The Supreme Court underlined this construction by a reference to the marginal words which bracketed all the sub-divisions of sub-clause (d) of clause (iv ). The words relied on by the court were "sold in the very form Whatever be the precise signification of the language employed by the Supreme Court in construing section 14 (iv) (d), there is no justification for holding that in the particular passage relied on by the learned counsel the court had laid down any different principle from the one which it had laid down in the rest of the judgment which we have earlier quoted. As we understand the principle, the enumeration of the several commodities in clause (iv) must be regarded as each having a separate identity of its own; different items brought together under a single sub-clause or sub-division cannot be regarded as one single type of commercial commodity having a single identity for the purpose of single point taxation. The real ratio decidendi of the Supreme Court's decision has been set out in the earlier bench decision of this Court in State of Tamil Nadu v. S. Syam Steel Rolling mills (P.) Ltd. to which we have made reference earlier. In that decision it was observed :" *