Allowed

Tube Investments of India v. Assistant Commissioner(Ct)

Madras HC18 Feb 2022WP/34875/2007

Case brief

AI extract

What is this about?

This High Court allowed two writ petitions challenging sales tax assessments classifying bent steel tubes as non-declared goods. Relying on a prior Division Bench decision stating Parliament's declaration binds states despite end-use, the court set aside orders treating the goods as non-declared and liable to higher tax rates.

What did the court decide?

The impugned orders dated 28.06.2006 and 09.08.2007 were set aside and the writ petitions were allowed.

Tube Investments of India Vs Assistant… — Constitutional and Fundamental Rights | Madras HC (2022)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 18.02.2022

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CORAM

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THE HONOURABLE MR.JUSTICE R.MAHADEVAN AND THE HONOURABLE MR.JUSTICE J.SATHYA NARAYANA PRASAD

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WRIT PETITION NOS.34875 & 34876 OF 2007

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Tube Investments of India Ltd., Represented by its Vice President–Taxation, Mr.M.R.Diwakar, No.234, N.S.C.Bose Road, Chennai - 600 001.

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... Petitioner in both the Writ Petitions

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Versus

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The Assistant Commissioner (CT), Zone IX, Greams Road, Chennai - 600 006.

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The Deputy Commissioner (CT) (Appeals), Third Floor, Wavoo Complex, 191, N.S.C.Bose Road, Chennai - 600 001.

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The Sales Tax Appellate Tribunal (Main Bench), Represented by its Secretary, City Civil Court Buildings, High Court Complex, Chennai - 600 104. ... Respondents in both Writ Petitions

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PRAYER IN W.P.NO.34875 OF 2007:-

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Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari, calling for the records of the 3^rd respondent in its proceedings in R.C.No.12918/2006 dated 09.08.2007 and quash the same.

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PRAYER IN W.P.NO.34876 OF 2007:-

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Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Certiorari, calling for the records of the 3^rd respondent in its proceedings in

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https://hcservices.ecourts.gov.in/hcservices/

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T.A.No.905/2001 dated 28.06.2006 confirming the proceedings of the 1^st respondent in TNGST.34/95-96 dated 17.02.2000 and quash the same in so far as it relates to assessment of a turnover of Rs.1,06,89,264/- being sales of bent steel tubes affected by the petitioner to M/s.Ashok Leyland Ltd., as non declared goods.

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For Petitioner : Mr.K.A.Parthasarathy For Mr.N.Inbarajan in both the Writ Petitions

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For Respondents : Mr.NRR.Arun Natarajan Special Government Pleader in both the Writ Petitions

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C O M M O N O R D E R

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(Order of the court was made by R.MAHADEVAN, J)

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These writ petitions are filed by the petitioners praying to (i) call for the records relating to the proceedings in R.C.No.12918/2006 dated 09.08.2007 and (ii) the order dated 28.06.2006 passed by the third respondent in T.A.No.905/2001, confirming the proceedings dated 17.02.2000 of the first respondent in so far as it relates to assessment of a turnover of Rs.1,06,89,264/- being sales of bent steel tubes affected by the petitioner to M/s.Ashok Leyland Ltd., as non declared goods and quash the aforesaid orders.

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The writ petitioner is a company incorporated under the Companies Act and are registered dealers under the provisions of the Tamil Nadu General Sales Tax Act (in short the Act), on the file of the first respondent. According to the petitioners, they are engaged in manufacture and sale of various items like Cycles, Cycle Parts, declared goods such as steel tubes, steel strips etc., During the year 1995-1996, the petitioners had manufactured and sold steel tubes, which according to them is a declared goods specified in Serial No.4 (xi) of the second schedule to the Act, to Ashok Leyland Limited. Though the sales effected by the petitioners is a declared goods taxable only at 4% falling under item No.4 of the second schedule of the Act, there was a dispute with respect to proper classification of such bent steel tubes. The petitioners therefore collected Form XVII declaration from M/s.Ashok Leyland Limited and effected sales to them at 3% as permitted under Section 3 (3) of the Act. However, the first respondent assumed that such sale of bent steel tubes effected to M/s.Ashok Leyland Limited cannot be treated as sale of declared goods but only as non-declared goods. For this purpose, the first respondent placed reliance on

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an order passed by the third respondent-Tribunal in T.A.No.157 of 1993 dated 27.05.1997 holding that bent steel tubes are non-declared goods. Therefore, a notice dated 14.12.1999 was issued by the first respondent proposing to bring to tax the sale of bent steel tubes effected by the petitioner under Section 3 (3) of the Act inter alia to impose additional sales tax under the provisions of Tamil Nadu Additional Sales Tax Act, 1971, besides levy of surcharge. The petitioners filed their objections on 24.12.1999 reiterating that the sale of bent steel are declared goods and should not be assessed under the first schedule. However, the first respondent rejected the objections and passed an order 17.02.2000 purportedly by relying on the order dated 27.05.1997 passed in T.A.No.157 of 1993 on the file of the third respondent.

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Challenging the order dated 17.02.2000, the petitioner filed A.P.No.69 of 2000 before the second respondent. By an order dated 06.07.2001, the second respondent observed that bent steel are declared goods. However, the second respondent, by placing reliance on the order dated 27.05.1997 of the third respondent passed in T.A.No.157 of 1993 rejected the appeal. Therefore, the petitioner preferred a second appeal in T.A.No.905 of 2001. During the pendency of the appeal, this Court passed an order dated 14.08.2002 in W.P.No.11321 to 11325 of 2000 relating to the assessment years 1982-1983 to 1986-1987 in respect of an identical issue in the case of petitioner itself in Tube Investments India Limited vs. Deputy Commercial Tax Officer reported in Volume 129 STC 238. Notwithstanding the same, the third respondent passed an order dated 28.06.2006 concluding that the petitioners had effected sales of tubes by manipulating the shapes to Ashok Leyland Limited and it cannot be treated as a declared goods. According to the petitioners, for coming to such a conclusion at the second appeal stage, there was no materials made available before the third respondent. Therefore, the petitioner has filed an application dated 19.10.2006 under Section 55 of the Act for rectification of certain defects, which according to them, are an error apparent on the face of the record. However, the third respondent passed an order dated 09.08.2007 holding that there is no error apparent on the face of the records warranting a review of the order dated 28.06.2006. Aggrieved by the aforesaid orders, the present writ petitions are filed by the petitioners.

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The learned counsel for the petitioners would vehemently contend that in respect of the very same issue in the case of the assessee, this Court passed an order dated 14.08.2002 in the case of Tube Investments India Limited vs. Deputy Commercial Tax Officer reported in Volume 129 STC 238 and the said decision will bind the third respondent. Even though the said decision was placed before the third respondent for consideration, it was

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not considered on an erroneous misconception that the steel goods were manipulated before effecting the sale to make it as if it is a bent steel, within the purview of declared goods. The learned counsel for the petitioners also submitted that decision rendered by this Court in the aforesaid decision has not been challenged by the Revenue and it has become final. While so, the decision of this Court in the case of the assessee in Tube Investments India Limited vs. Deputy Commercial Tax Officer reported in Volume 129 STC 238 would render the order passed by the third respondent vitiated.

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On the above contention of the learned counsel for the petitioner, we have heard the learned Special Government Pleader (Tax) appearing for the respondents and perused the materials placed on record.

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The only issue arise for consideration in these writ petitions is whether the bent steel supplied by the petitioner to Ashok Leyland Limited is a declared goods or not. This was answered by the Division Bench of this Court in the case of the petitioner in Tube Investments of India Limited vs. Deputy Commercial Tax Officer, Group III, Enforcement-I, Greams Road, Chennai and others reported in Volume 129 Sales Tax Cases 129 wherein it was held as follows:-

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"12. In the Harmonized Commodity Description and Coding System, which is adopted in the Central Excise Tariff, tubes and pipes, are referred to together. Tubes and Pipes therein would include tubes and pipes which are polished, coated, bent, threaded and coupled or not, drilled, waisted, expanded, cone shaped or fitted with flanges collars or rings.

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The fact that the buyer has used the steel tube supplied by the petitioner as part of a chassis/engine by fitting it into such engine/ chassis, for use as exhaust pipe, does not in any way alter the basic fact that what is supplied by the petitioner is in fact, a steel tube of certain shape and length. As held by the apex Court, the State Legislature has no authority to prescribe a higher rate of tax on declared goods by changing the description of those goods. Article 286 (3) of the Constitution obligates the States to be bound by the declaration made by Parliament regarding the goods which are of special importance in inter-state trade or commerce, as also the restrictions and conditions including the ceiling on rates, subject to which States may levy tax on such declared goods. The

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State, by subjecting parts and accessories of motor vehicles, at a higher rate, cannot impose such higher rate on goods which are declared goods. The end use of the declared goods will not have the effect of taking away the effect of the declaration made by Parliament regarding those goods.

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The fact that the specification of the tube or pipe supplied was given by the buyer would also make no difference, as what is supplied in fact, is the steel tube conforming to the specification given by the buyer and nothing more. The sales tax levied on steel tubes supplied by the petitioner, though put to use by the buyer as exhaust pipes, cannot exceed four per cent.

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The view taken by the Tribunal therefore, cannot be sustained. The writ petition is allowed."

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Thus, it is evident that the issue involved in these writ petitions is no longer res integra as it was already answered by the Division Bench of this Court in the decision mentioned supra.

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In the light of the above decision of this Court, the orders, which are impugned in these writ petitions, cannot be sustained and therefore, they are set aside. The writ petitions are allowed. No costs.

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Sd/-

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Assistant Registrar(CS IX)

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//True Copy//

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Sub Assistant Registrar

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gba/kas

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