Judgment · High Court · 2009
Case at a glance
Provisions considered
- Constitution of India art. 226
Judgment
IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 03.07.2009CORAMTHE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJAW.P.Nos.6152 & 6153 of 2007 andM.P.Nos.1 of 2007 M/s Indo Shell Cast Private Ltd.,No.A-9, SIDCO Industrial Estate, Coimbatore 21. ... Petitioner Vs.
The Tamil Nadu Sales Tax Appellate Tribunal (AB), rep. By its Secretary, Coimbatore 18.
The Additional Appellate Assistant Commissioner (CT) Coimbatore.
The Commercial Tax Officer, Podanur Assessment Circle, Coimbatore 18. .. Respondents Prayer: This Writ Petition is filed under Article 226 of the Constitution of India seeking for the relief of issuance of writ ofcertiorari to call for the records of the 1st respondent in CTSANos.22/2003 and 23/2003 respectively, quash the order dated20.09.2006 made in relation to TNGST 1996-97 and 1997-98respectively. For Petitioner : Mr.V.Ravindran for Mr.K.J.ChdnaranFor Respondents: Mr.R.Tholgapian, SGPORDER(Order of the Court was made byK.RAVIRAJA PANDIAN,J)These writ petitions are filed questioning the correctness ofthe order of the Tamil Nadu Sales Tax Appellate Tribunal, Additional Bench, Coimbatore made in five State Appeal Nos.22 to24, 65 and 75 of 2003 filed against the order of the Additional https://hcservices.ecourts.gov.in/hcservices/ Appellate Assistant Commissioner, Coimbatore in Appeal Nos.1217/00(96-97), 1016/01 (97-98), 1017/01 (98-99) dated 05.09.2002, 1209/00(94-95) and 1208/00 (95-96) dated 31.12.2001.
2. The brief facts of the case are as follows:-(i)The respondent is a dealer and manufacture of Cast Ironrough castings. He is an assessee on the file of the CommercialTax Officer, Podanur Circle. The assessee paid tax at the rate of4% on their sale of certain specified goods under Entry 4(i) of theII Schedule of the TNGST Act claiming it to be declared goods. Aninspection was carried out in the place of business of the assesseeby the department, which revealed that the commodity sold by theassessee to certain specified customers were not rough castings, but patterns assessable at 8% as residual item classified under Entry 63 of Part D upto 16.07.1996 and at the rate of 11% under Entry 67 of Part D of the I Schedule with effect from 17.07.1996.The Assessing Officer therefore revised the assessment order forthe year 1994-95, 1995-96, 1996-97 and 1997-98. For the assessmentyear 1998-99, regular assessment order has been passed assessingthe goods at higher rate of tax as applicable as mentioned above.
The Assessing Authority has also invoked the penal provision undersection 16(2) of the Act in respect of assessments which wererevised and Section 12(3)(b) in respect of the year where theoriginal assessment was made. (ii) The assessee went on appeal before the AdditionalAppellate Commissioner, Coimbatore, who allowed the appeals byholding that Cast Iron Moulds or patterns dealt with by theassessee were only Rough and un-machined cast iron castings liableto tax at 4% under Entry 4(i) of the II Schedule of the TNGST Act. (iii) Thus as already stated, the State carried the matter onappeal to the Tribunal. The Tribunal, after taking intoconsideration of the records available, particularly the invoicesunearthed from the office of the assessee, wherein it was foundthat the sale has been made to BHEL, Trichy, TVS Susuki, Hosur andother customers, goods were manufactured as per the descriptiongiven by the purchaser.
The goods supplied on different occasionswere shown as Gear Wheel, Body Castings, Crank Shaft, Disc. Castings, Lever Castings, Body and Covers, Cleeves, Plug Covers, Levers, Bus Rods, Cylinders, Flywheels, Bearing Frames etc. andalso on verification of the records such as Form XXIV, wherein alsothe same sort of goods as stated above has been entered upon. TheTribunal found that the goods had been sold on clear specificationsor dimensions and measurements of minute nature with reference tothe requirement of their customers and thus allowed the appeals. However, the penalty imposed under Sections 16(2) as well as 12(3)(b) of the Act were set aside by the Tribunal. The correctness ofthe same is now canvassed before us by filing these writ petitions. https://hcservices.ecourts.gov.in/hcservices/
3. Mr.Ravindran, learned counsel for the assessee has placedmuch reliance upon the finding recorded by the Additional AppellateAssistant Commissioner in its order, wherein it is stated that theassessee have manufactured dies or patterns as per thespecifications given by the customers out of the Cast Iron by theprocess of moulding the molten metal. The same goods haveundergone no other mechanical process further and were delivered tothe customers as such as moulds in rough form. But the saidfinding was reversed without any material whatsoever by the Tribunal, it is impermissible in law.
One more contention raised by Mr.Ravindran, learned counselfor the petitioner is that in respect of earlier assessment year, the order of the appellate authority has been accepted by thedepartment. Hence, filing of appeal cannot be legally sustained.
On the other hand, the learned counsel appearing for therevenue submitted that the finding arrived at by the highest factfinding authority is final. The assessee cannot rely on the lowerauthority's finding as against the finding recorded by the highestfact finding authority. The Tribunal has also not given such afinding of fact without any basis or without any material. Thesale bills issued to BHEL, Trichy and the invoice of the customershave been taken into consideration. On the basis of therequirement shown in the invoice and the sale bills, the Tribunalhas recorded a finding that what was sold by the assessee to theircustomers is not in the rough form but machined and finished form. 6. We have heard the argument of Mr.Ravindran, learned counselappearing for the assessee and Mr.Tholgappian, learned SpecialGovernment Pleader representing the revenue and perused thematerials available on record.7. The fact is that the cutomers of the assessee are BHEL,manufacturer of heavy electrical goods and TVS Suzuki, manufacturerof Two Wheelers and other manufacturers like that of them placedorders on the assessee for some parts i.e., components for thepurpose of manufacturing their products in heavy electrical goodsand T.V.S. Suzuki Motor Cycle. Instead of they themselvesmanufacturing those components, they give orders to the personslike that of the assessee and get the goods manufactured from themand used it in the manufacture of their product. If the contentionof the assessee that what was sold to the customers is only therough casting and rough mould and these mould must undergo furthermechanical process of polishing and machining at the hands of thecustomers to suit the manufacturing activities of their product iscorrect, then, there is no necessity for them to give a purchaseorder to the persons like that of the assessee to get the materialsin the rough form and further doing the exercise of making itsuitable for the goods manufactured by themselves, then, they wouldhave themselves manufacture these minor items in their plant. https://hcservices.ecourts.gov.in/hcservices/
Apart from that, the invoice dated 25.03.1998 issued to theassessee's customers clearly gives the description of the goods asdevelopment and supply of pattern equipment including matchplatemounting, gating and modification of our existing core shooting dieto suit our equipment, suitable for shell moulding of intermediatehousing (drg. No.190098) – Manufacture and Die (2 cavity) and CAPSTpatterns – housing (Drg. No.606744)- Housing Drg. No.606745). Fromthe invoice, it is evident that the goods are manufactured to theprescription of the purchaser. In addition to that the findingrecorded by the Tribunal is that sales have been made to BHEL,Trichy, TVS, Suzuki, Hosur and other customers and the descriptionof the goods supplied on different occasions has been shown as GearWheel, Body Castings, Crank Shaft, Disc. Castings, Lever Castings, Body and Covers, Cleeves, Plug Coves, Levers, Bus Rods, Cylinders, Flywheels, Bearing Frames etc. The Form XXIV as well as the salebills available with the assessment file also revealed that thegoods had been sold on with clear specifications of dimensions andmeasurements of minute nature with reference to the requirement oftheir customers. Thus it is manifestly shown that the goodssupplied are finished products capable for immediate use.
When that being the factual position, in the light of the Judgment of the Supreme Court in the case of State of Tamil Naduvs. Phyarelal Malhotra reported in 37 STC 319, and in the case of Vasantham Foundry vs. Union of India reported in 99 STC 87, whichexamined the difference between the cast iron and other finishedproducts in the context of Entry 4 to II Schedule, and uniformlyheld that Cast Iron Casting in its basic or rough form must be heldto be cast iron, but, if thereafter any machining or polishing orany other process is done to the rough cast iron casting to producethings like pipes, manhole covers or bends, these cannot beregarded as "cast iron castings" and cannot be treated as "declaredgoods" under Section 14(iv) of the CST Act, in as much as we havecome to the conclusion that the goods supplied are to theprescribed specifications and dimensions and measurements of thepurchaser for their immediate use in their manufacturing activityin all finished form, the one and only conclusion that could bearrived would be that the goods supplied by the assessee would notcome within the purview of item 4(i) of the II Schedule to theTNGST Act. Hence, we are not able to take a different view than theone taken by the appellate Tribunal.
As regards the contention of the learned counsel for thepetitioner regarding filing of appeal, despite the fact for earlieryears the department accepted the contrary view, we are not able toconcur with the argument of the learned counsel for the petitioneras the issue is well settled that each assessment year is a unit byitself and non filing of appeal in respect of one assessment yearcannot be a bar or cannot prevent the State from filing an appealin respect of other assessment year (Vide BSNL vs. Union of India2006 (3) SCC 1). https://hcservices.ecourts.gov.in/hcservices/
The writ petitions deserve dismissal and as such they aredismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petitions are also dismissed. Sd/Asst. Registrar/true copy/Sub Asst. RegistrarrgTo1. The Secretary, The Tamil Nadu Sales Tax Appellate Tribunal (AB), Coimbatore 18.2. The Additional Appellate Assistant Commissioner (CT) Coimbatore.3. The Commercial Tax Officer, Podanur Assessment Circle, Coimbatore 18.1 cc To Mr.J.Chandran, Advocate, SR.28394.1 cc To The Special Government Pleader (Taxes), SR.28362.W.P.Nos.6152 & 6153 of 2007
Questions this judgment answers
Which statutory provisions did this judgment involve?
Constitution of India — art. 226.
Which court decided this case, and when?
Madras High Court, on 03 Jul 2009. The bench was K RAVIRAJA PANDIAN, P P S JANARTHANA RAJA.
Precedent status how later indexed judgments have treated this case
No known negative treatment found in the Courts & Cases corpus.
This is a result about the indexed corpus, not a finding that the judgment remains good law. Coverage may be incomplete.