The High Court · 2025

THE HON'BLE SRI JUSTICE T. VINOD KUMAR THE HON'BLE SRI JUSTICE PULLA KARTHIK AND TRC.No. 60 of 2OO4 O R D E R: (per llon'ble Si Justice T.Vinod Kumar)

1. This Ta-x Revision Case rs liled by the State-Revenue being aggrieved bl, tl-re order of the Sales Ta-x Appellate Tribunal (for shortthe Tribunal'), dt.15.11.2003 iir TA.No.115 of 1999. The assessment 1,ear involved is 1993-94 under the APGST Act, 19S7 (for short 'the Act').

2. Heard learned Special Standing Counsel appearing on behalf of the petitione r- S tate, Sri A.K.Jaiswa1, learned counsel appearing on behalf of the respondent-assessee, and perused the record.

3. On behall' of the petitioner-State it is mainly contended that the 'lribunal is not justified in allowing the appeal in treating the MS-Rol1s, Mill Scales and M.S.Broken rolls as scrap of iron and steel failing un<1er Entry 2,A. of the Ill-Schedule to the Act and not \ t 2 under defectives, rejects, cuttings or end pieces of items of iron and steel mentioned in Entry 2 of Ill-Schedule to the Act.

4. On behalf of the petitioner State it is alSo contended that the Tribunal was not justified in gralting setoff of tax on the total turnover without including the iron scrap arising from the finished products to arrive at the total turnover for granting setoff

5. In order to appreciate the submissions made on behalf of the petitioner-State it is to be noted that the respondent-assessee is a manufacturer of M.S.Bars, Rounds and Angles. In the process of mamrfacture of M.S.Bars, Rounds ald Angles, the scrap arising therefrom was treated as scrap of iron ald steel, and at the relevant point of time being liable to tax at the point of first purchase by registered dealer buying in the State or when purchased by an electric or furnace unit or an induction furnace units in the State at the point of purchase in the said unit, the petitioner-Revenue on the other hand treated the scrap generated l I I i I I I : I I i I I I , -, i. .t'=rf,F. ;J- 3 as defectives, rejects, cuttings or end pieces of goods of iron and steel mentionecl under Entry 2 of ill Schedule to the Act

6. The Tribtrnal hou,.ever taking note that Entry 2A of the III Schedule to the Act specifically deals with Iron and Steel Scrap as detailed therein and having regard to the nature of the goods arising in the pr:ocess of manufaclure of finished goods by the respondent-assessee, had held that the said products cannot be considered as <lefectives, rejects, cuttings or end pieces of any of the goods as specified in Sub-Clauses (i) to (xv) of Entry 2 of III Schedule to the Act 7 . Though on behaif of the petitioner-State it was sought to be eirgued before us that since, the scrap arising in the manufacture is out of M.S.Rol1s, Mill Scales, M.S.Broken rolls and thus, are to be considered AS cuttings and end pieces of iron & steel and therefore, are rightly ciassified by the Assessing Authority as well as the Appellatr: .{uthority as falling in Entry 2(xvi) of III Schedule to the Act, it is to be noted that the respondent-assess being a 4 manufacture of M.S.Bars, Rounds and Angles, being finished products, the process of manufacture of such finished goods would result in generation of scrap, which cannot be equated to defectives or rejects or cuttings or end pieces of finished goods of the category of goods mentioned under Entry 2 of III Schedule of the Act. B. In order to fall under Entry 2(xvi) of III Schedule to the Act, the product should be a final product arising out of the malufacturing process, but not a defective or a reject on account of not meeting the specifications or the cuttings or the end products of the finished product. On the other hand, M.S.Rolls, Mill Scales, M. S.Broken rolls cannot be treated as a finished product by itself, not meeting the standard specifications for it to be called as a defectives or rejects of cuttings of such finished products. 9 . The Tribunal by considering the above aspect had rightiy held that the M.S.Rolls, Mill Scales, M.S.Broken rolls, which are I I i i l l i . t &fii:ii 5 generated in the process of manufacture of final products namely M.S.Bars, Rouncls and Angles, are to be treated as iron and steel scrap, as the sa,id goods do not attatn the character of finished

10. Insofar as the claim of the petitioner-State of the Tribunal having erred in allowing the set-off of tax without including the iron scrap frorn the finished product, it is to be noted that the Tribunal u,hile allowing the appeal of the respondent assessee on the said aspect had followed its own order, dt.26.O6.2OO 1, 1n T.A.No.55O of 1998 in the respondent-assessee's orvn case for the year 1992-93, wJ-rich had attained finality. 1l. Though on behalf of the petrtioner-State rt is contended that the doctrine of res judicata would not be applicable in tax matters, it is to be noted that though doctrine of res judicata is not appiicable to tax matters, however, the principle of consistency needs to be followed unless it is shown that there is any change in I I 6 I the poiicy[See Radhasoami Satsang, Saomi Ba.gh, Agra a, Commissioner of Income Tdxll.

12. Inasmuch as it is not shown to this Court of any change in the policy or the scheme of the Act ald the order of the Tribunal in TA.No.550/7998, dt.26.O6.2OOl, having attained finality, in order to maintain consistency, this Court is of the view that the order of the Tribunal on this aspect does not call for any interference.

13. In view of the aforementioned reasons, this Court is of the view that the order of the Tribunal in holding that M.S.Rolls, Mi11 Scales, M.S.Broken rolls are liable to tax under 2,{ of the IIi Schedule to the Act as well as the eligibility of set-off of tax, does not suffer from any error giving rise to question of law, to be decided by this Court.

1.4. Accordingly, this Tax Revision Case is devoid of merit and is dismissed. No order as to costs. ' 1rssz1 r scc ess I \ l i I t I 1 Consequently, miscellaneous petitions pending, if any, shall stand closed. SD/. A,V.S.S.C.S.M.SARMA JOINT REGISTRAR c- //TRUE COPY// SEGTION OFFICER To, 1 2 J

4. q The Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad The Deputy Commissioner (CT), Secunderabad Division. Hyderabad The Commercial Tax Officer, Commercial Taxes Department, Barkatpura Circle, Hyderabad. One CC to Special Govt Pleader for Taxes [OPUC] One CC to Sri A. K. Jaiswal, Advocate [OPUC] L b. Two CD Copies VH/psl ,/ HIGH COURT DATED: 0410712025 ORDER TRC.No.60 of 2004 ..,,;',- \i\!'. .,'"Ll'- ,. .!. i'- ,.:\ tl .. ':, r;, -..1 r ll ' :'. $ B [tl ?0fr / DISMISSING THE TRC g /j rY ? -ar