The State of Andhra Pradesh v. M/S. Martopearl Alloys Pvt. Ltd

Counsel for the Respondent: None Appeared Tax Revision Ca se No.71 of 2003 Tax Revisicn case under section 22(1)See Rule 10 LIiAPGST Act to revise the order dated lB-10-2002 in T.A.No. 1399 of 2001 on the fite of the sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad. Between: The State of l,ndhra Pradesh, Rep. by the State Representative before S.T.A.T D.No.5-4404 o 408, Nampally, Andhra pradesh, Hyderabad. AND ...PET|T|ONER M/S. Martopea rl Alloys Pvt. Ltd., Heat Treaters & Alloys, plct No.17, phase lV. Patancheru, Medak District. Counsel for the t,etitioner: SPL GP FOR TAXES Counsel for the tlespondent: None Appeared The Court made l:he following: COMMON ORDER ...RESPONDENT THE HON,BLE SRI JUSTICE T. VINOD KUMAR AND THE HON'BLE SRI ]USTICE PULLA KARTHIK T.R.C. Nos.60. 68 and 71 of 2003 COMMON ORDERi(per Hon'ble Si lustice T.Vinod Kuma) Since all these Tax Revision Cases raise common question of law and the assessee in all these matters is one and the same, these Revision Cases are being disposed of by this common order'

2. T.R.C.No.60 of 2003 is filed by the Revenue under Section 27(l) ot the Andhra Pradesh General Sales Tax Act, 1956 (for short, 'the Act'), being aggrieved by the order of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (for short, 'the Tribunal) in Tax Appeal, vide T.A.No.139B of 2001 dt.18.10.2002. The Assessment Year involved is t99L-92.

3. T.R.C.No.6B of 2003 is filed by the Revenue under Section 22(1) of the Act being aggrieved by the order of the Tribunal infax Ap1eal, vide T.A.No.1397 of 2001 dt.18.10.2002. The Assessment Year involved is 1990-91. i 2

4. T.R.tl.No.7l of 2003 is filed by the Revenue under Section 22(l) ot the Act being aggrieved by the order of the Tribunal ir Tax Appeal, vide T.A.No.1399 of 2001 dt.18.10.2002. The Assessmcnt Year involved is 1992-93.

5. Heard learned Special Standing Counsel for Commercial Taxes appearing on behalf of the petitioner - Revenue in all these revisions and perused ttre record. There is no representaticn on behalf of the respondent - assessee.

6. The short point that arises for consideration in these !'evision cases is as to ( ) whether the 'rough casting' made by l:he respondent - assessee ort of iron scrap are one and the same; and (ii) whether the respondent - assessee is entitled to claim exemption in respect of its tax suffered purchases of iron scrap?

7. The respondent - assessee during the. years 1990-91, 1991-92 and 1992-93, h,ld claimed that the turn over relating to sale of rough casting is exempt from tax under the Act, as these castings ar<l made out oF tax suffered ra'ru material i.e. iron scrap. The said claim of the respondent - assessee hlwever was not accepted and the Assessing Authority who treated the rough castings are Cifferent commodity from iron scrap and levied tax CD 4%. 3 B. Aggrieved by the aforesaid orders of assessment levying tax on rough castings sold, the respondent - assessee preferred appeals under Section 19 of the Act to the Appellate Authorlty; and that the Appellate Authority having regard to the judgment of the Apex Court in the case of Vasantham Foundry v/s. Union of Indial, had held that the iron scrap and rough iron castings are one and the same commodities and as such, the respondent - assessee is entitled for exemption.

9. The Joint Commissioner found the said orders of the Appellate Deputy Commissioner allowing the appeals of the respondent - assessee to be prejudicial to the interest of revenue, revised the said orders of the Appellate Deputy Commissioner and subjected the disputed turnover to tax at the rate applicable to unclassifled goods by stating that alloy steel castings are different from sale of steel castings mentioned in sub-entry (viii) of Entry 2 of III Schedule to the Act and therefore, are to be treated as unclassified goods.

10. Aggrieved by the aforesaid orders of the loint Commissioner passed in exercise of powers under Section 20 of the Act, the respondent - assessee preferred appeals before the Tribunal. '1tsss1 zt nesl rou 4 -\.

11. The Tribunal, by considering the case of the respondent - assessee as well a:; the stand of the revenue, had helcj that the respondent - assessee had established that the orders passed by the loint Commissitlner in exercise of powers under Section 20('l) of the Act on the appeals a|e barred by limitation'

12. Agr;rieved by the aforesaid orders of the Tribunal in allowing the appeals, the revenue has filed these revision cases'

13. Or behalf of the petitioner - revenue, it is contended that the iron scrap fror and out of which, the respondent - assessee manufactures rough iron castings is not entitled to claim benefit of set oFf of purchase tax paid by it on purchase of iron scrap in respect of sale of rough iron castings effected by iU and that G'O'Ms'No'130 dt'04'12'1989' is not applicabl: to castings made frorn iron and steel scrap and is only available when intlots/billets or re-rolled finished products are manufactured from out of irtrn and steel scraP.

14. On behalf of the petitioner - revenue, it is futher contended that since, the Appellate Deputy Commissioner did not consider these aspects' while allowing the appeals filed by the respondent - assessee' the loint commis;ioner in exercise of powers conferred under section 20(2) of the 5 Act, had revised the orders oF assessment withdrawing the exemption claimed by the respondent - assessee on purchase of iron scrap.

15. On behalf of the petitioner - revenue, it is further contended that the Tribunal had erroneously held that steel castings and alloy castings are same commodities and thus, the revisional authority was not justified in setting aside the orders of the Appellate Authority allowing exemption on the disputed turn over treating rough cast iron castings made out of tax suffered iron scrap as being eligible for set off of tax paid.

16. On behalf of the petitioner - revenue, it is further contended that the Tribunal also held that the excise of revisionary powers by the Joint Commissioner is barred by limitation from the date of the orders of assessment without noticing that the orders of assessment have merged into appellate order and thus, limitation of four years would run from the date of the appellate order and not from the date of order of assessment.

17. On the aforesaid submission being made on behalf of the petitioner - revenue, we have perused the order of assessment dt.22.03.1995 and revised order dt.07.06.1996, for the assessment year t99l-92, order of assessment dt.13.06.1994 for the assessment year 1990-91 and the order of assessment dt.30.03.1996 for the year 6 \ assessment year 1992-93 as well as the orders of the loint Commissioner revising th: orders of the Appellate Deputy Commissioner.

18. The Assessing Authority, while making assessnrent had held that iough cast iron castings manufactured out of tax suffered cast iron scrap to be a different commodity and as such not being eliqible for exemption of set off cf tax paid on the purchase of cast iron scrap.

19. Aggrieved by the aforesaid orders, on the respcndent - assessee filing appt:als before the First Appellate Authority, the First Appellate Authority l)y considering the scope of entries under tlre III Schedule to the Act he,ld that the rough cast iron castings made out of tax suffered cast iron :;crap is to be treated as one and the same and as such, the respondent - assessee is eligible for exemption of set oFt of tax paid on purchases of cast iron scrap.

20. The First Appellate Authority in holding as above, had placed reliance orr the decision of the Apex Court in the case of Vasantham Foundry 'supra), wherein it was held that'cast iron ciastings'in its basic rough forrr are'cast iron'. The said order of the First r\ppellate Authority was howe';er, found to be prejudicial to the interest crf revenue and the Joint Comrnissioner by his order dt.01.08.2001 had revised the orders of the Appellate Authority. The revisional authority by his revisional orders 7 dt.01.08.2001 while setting aside the order of the First Appellate Authority, whereby it was held that cast iron castings in its basic rough form made out of cast iron scrap to be the one and the same had disallowed the claim of exemption/set off made by the respondent - assessee on the goods manufactured by it. 2L. The Tribunal considering the above aspect that the change in the description of the goods manufactured by the respondent - assessee by the revisional authority in its revision orders dt.01.08.2001 was not in issue before the Assessing Authority or the Appellate Authority had found that the revisional order altering the description of the goods is barred by limitation, since, the assessment in respect of the year 1990-91, 7991-92 and 1992-93 was completed on 13.06.1994, 22.03.1995 retaxed on

07.06.1996 and 30.03.1996 respectively and thus, exercise of revisional powers is being beyond the period of four years as provided under Section 20(2) of the Act.

22. Fufther, Entry 2-A(iii) of III Schedule to the Act deals with the products of iron and steel' including defectives, rejects, cuttings, or end pieces of any of the categories of items (i) to (xv) of Entry 2, while Entry 2-A(i) thereof deals with iron and steel scrap that is to say, iron scrap, cast-iron scrap, runner scrap and iron skull scrap. ---.1 8

23. Sirrce, the respondent - assessee had claimed of it having purchasel tax sulfered cast-iron scrap from which it had manufactured rough ca:;t iron castings which are not finished goods by themselves and require fr rther processing rike subjecting to further machining or porishing or any other processes, the same cannot be treated as finished goods for them to be classified as falling under Entry 2 of IIIrd srchedule to the Act.

24. Further, the Government by issuing G.O.Ms.Nc.130 dt.14.02.1989 had granted exemption/set off of tax paid on iron and steel scrap used in manufactrrre of various firiished goods falling under Entry 2 of III schedule ':o the Act. By virtue of the said G.o. arso, tax suffered cast iron scrap pu|chased by the respondent - assessee and used in the manufactr re of rough iron castings even if crassifiabre under Entry 2 of III schedule to the Act, wourd be erigibre to be set off against the tax payable olt the rough iron castings manufactured by the respondent _ assesSee.

25. By lhe aforesaid G.O. issued, the State in exerr:ise of the powers conferred lty sub-section (1) of Section 9 of the Act, directed that where in respect r:f the sales dr purchase inside the state of iron and steel scrap referred to in Item 2-A of the Third schedure to the sairj Act and has met tax under the said Act, the amount of tax paid on such scrap shall be reduced fnlm the tax payable under Section 6 of the Act on the sale 9 inside the State of IngoflBilleS or re-rolled finished products manufactured from out of such scrap.

26. So also, by G.O.Ms.No.575 dt.09.06.1989, it was directed that in respect of the sale or purchase inside the State of iron and steel ingots/billets referred to in item 2 or iron and steel scrap referred to in item 2-A including re-rollable scrap on which tax is paid under the Act, the amount of tax paid on such ingots/billets or such scrap including re- rollable scrap shall be reduced from the tax payable under the Act on the sale inside the State of the re-rolled finished products manufactured from out of such ingots/billets or such scrap including re-rollable scrap by the steel re-rollers.

27. The Tribunal, taking note of the Three Judge Bench Judgment of the Apex Court in the case of Vasantham Foundry (supra), wherein it was held that cast iron castings in its basic or rough form must be held to be cast iron, unless the same is subject to further process like machining or polishing to produce things like pipes, manhole covers or bends cannot be regarded as products made out of cast iron castings had held that treating the rough cast iron castings made out of tax suffered cast iron scrap are not different commodities. The Tribunal by holding as above had set aside the orders of revision passed by the Joint Commissioner, thereby, restoring the orders of the Appellate Deputy Commissioner. _l 10

28. The said order of the Tribunal in our considered view is in consonance ,vith the decision of the Apex court in the case of Bengal Iron Corpol'ation v/s' Commercial Tax Officer2' as considered in the case of Vas;tntham Foundry (1 supra)' Thus' this Court is of the view that the or<lers of the Tribunal cannot be said to be e!'roneous or perversity gi'ring rise to a question of law'

29. Thoullh on behalf of the petitioner - revenue' it was contended that the Trirunal having erred in holding that the orders of the loint Commissionr:r as barred by limitation, learned Special titanding Counsel did not press the issue seriously on account of this Court coming to the conclusion that the revisional authority had changed the classification of the goods from rough cast iron castings to alloy steel casting de hors any material on record to substantiate the said claim, and as such' the orders of revision treing clearly hit by limitation prescribed under Section l4(4) of the Act.

30. Hen(;e, this Court is of the view that these Tax Revision Cases are devoid of a ry merit and they are accordingly dismissed' ' 1199+1 Suppl l SCC 310 AL Miscellaneous petitions, if any, pending shall stand closed. No order as to costs. //TRUE COPY// SD/. A.V.S.S.C.S.M. SARMA JOINT REGISTRAB- @oNo SECTI FFICER To,

1. The Telangana Value Added Tax Appellate Tribunal at Hyderabad- 2 Two CCs to SPL GP for taxes , High Court for the State of Telangana at I Hyderabad. [OUTI

3. Two CD Copies Kam/gh HIGH COURT DATED:0410712025 . .: l -,1 \,. \., 'L,,.'r. rJ r\ f1, <..r/ 1S SEP 20t5 ,)_ \. -,, \:i COMMON ()RDER TRC.Nos.60, 68 andTl of 2003 DISMISSIN.G OF THE TAX REVISION CASES 6 s{ bol8