JAIRAJ ISPAT LIMITED Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS appeal is preferred by M/s. Jairaj Ispat Limited, Hyderabad aggrieved by the order of Appellate Deputy Commissioner (CT)., Hyderabad Rural Division, Hyderabad dated 22.12.1997 in Appeal No. R/15/96 -97 dismissing the appeal filed against the final assessment made by the Commercial Tax Officer for the year 1991 -92 vide order dated 24.2.1996 in Assessment No. 11014/91 -92/APGST. The Appellants are registered dealers on the rolls of Commercial Tax Officer, Jeedimetla and they are manufacturers of M.S. Ingots and C.T.D. Bars consuming and utilising Iron Scrap and Sponge Iron as raw -material in the manufacture of M.S. Ingots etc., The Commercial Tax Officer levied tax on a turnover of Rs. 98,660/ - relating to the sales of capital assets like machinery parts, old car, capacitors and B.P. Sets. Further, the Commercial Tax Officer while calculating set -off of tax paid on the raw material scrap, as per G.O. Ms. No. 130, dt. 14.2.1989 did not allow set -off of tax paid on the raw -material Sponge Iron consumed in the manufacture of finished goods stating that Sponge Iron is not enumerated in Entry 2 -A of the IIIrd Schedule and the G.O. allows set -off only in the case of Items enumerated in this Entry.

(2.) AGGRIEVED by the order of the Commercial Tax Officer levying tax on the turnover relating to sale of capital assets and rejecting the claim for set -off of tax paid on Sponge Iron, the dealer preferred appeal before Appellate Deputy Commissioner. The A.D.C. dismissed the appeal in respect of these two issues. In respect of levy of tax on capital assets he held that the sale of such items is a regular feature in the course of business as the appellant is selling them almost every year. He held that the sale of these items is ancillary and incidental to the main activity of the Appellant and therefore liable to tax. Regarding the claim of set -off of tax on Sponge Iron the Appellate Deputy Commissioner confirmed the view taken by the Commercial Tax Officer in rejecting the set -off stating that, Sponge Iron is not enumerated either in G.O. Ms. No. 130 or in Item 2 -A of the III Schedule and therefore the Appellant is not eligible for any set -off on Sponge Iron.

(3.) HEARD arguments of both sides and perused the entire material on record. The point arises for consideration is whether the impugned order passed by the Appellate Deputy Commissioner is not proper and sustainable.