Sheet Metal Industries Pvt. Ltd Vs. State of Kerala  Insc 312 (28 February 2008)
Bhan & J.M. Panchal
APPEAL NO.2789 OF 2002 WITH CIVIL APPEAL NO.4158 OF 2003 J.M.PANCHAL,J.
These appeals are directed against Judgments rendered by High Court of Kerala
at Ernakulam in Tax Revision Case No. 467 of 2000 and 10 of 2001 by which the
view taken by the Assistant Commissioner (Assessment) Sales- Tax Office Cochin
and confirmed by Additional Deputy- Commissioner (Appeals) II, as well as The Kerala
Sales-Tax Appellate Tribunal that the Copper Sheets and Brass Sheets in which
the appellant deals fall within the ambit of Entries No. 116A and 116D which
provide tax at the rate of 8% on the total turnover, of Copper and Brass
respectively, is upheld.
appellant company is a dealer registered under the provisions of the Kerala
General Sales-Tax Act, 1963 (the 'Act' for short). It inter-alia deals in
Copper Sheets and Brass Sheets. While completing the assessment for assessment
years 1984-85 and 1985-86, the Assessing Officer assessed the turnover of
Copper Sheets and Brass Sheets at the rate of 8% holding that the same are
covered by Entries Nos. 116A and 116D of the Schedule I to the Act which
provide tax on turnover of Copper and Brass respectively. The Assessing
Authority rejected the claim of the appellant that copper sheets and brass
sheets are unclassified items taxable at the rate of 5%. In appeals, the
Deputy-Commissioner (Appeals) confirmed the rate of tax in respect of those
items. Feeling aggrieved, the appellant filed second appeals before the Kerala
Sales-Tax Appellate Tribunal. The Tribunal dismissed the appeals upholding the
view taken by the Assessing Officer and the Appellate Authority. Thereupon the
appellant invoked the revisional jurisdiction of the High Court by filing
T.R.C. No.467 of 2000 and 10 of 2001. The High Court has dismissed the same by
giving rise to the instant appeals.
This Court has heard the learned counsel for the parties at length and in great
detail. This Court has also considered the documents forming part of the
common contention of the appellant in both the appeals is that Entries No. 116A
and 116D take within their sweep only virgin copper and brass in solid form but
not Copper Sheets and Brass Sheets and therefore tax at the rate of 8% on the
turnover, could not have been levied.
order to determine the question posed for consideration of this Court, it would
be advantageous to refer to the entries in question. Aluminium, Tin, Copper,
Brass etc. are classified under the general head 'Non-ferrous metals' which
comprises Entries 115 to 116G. The relevant Entries read as under:-
"Non-Ferrous metals 115. Aluminium, aluminium alloys At the point of and
all articles made of aluminium first sale in or/and aluminium alloys. the State
by a dealer who is liable to tax under Section 5.
Tin including tin sheets and tin plates do. 8 116A. Copper At the point of
first sale in the State by a dealer who is liable to tax under Section 5. 8
116B. Zinc At the point of first sale in the State by a dealer who is liable to
tax under Section 5. 8 116C. Manganese do. 8 116D. Brass do. 8 116E. Bronze do.
8 116F. Magnesium do. 8 116G. Forrosilicon do. 8''
bare perusal of the above quoted Entries makes it clear that Entry 116A deals
with copper whereas Entry 116D deals with Brass. The short question which
arises for determination of this Court is whether the Copper Sheets and Brass
Sheets would fall under the Entry 116A and 116D respectively. There is no
manner of doubt that Copper and Brass are metals. In ordinary temperature and
pressure these metals occur in solid form. The fact that commercially, these
metals are produced in rolling mills in the form of sheets, circles, ingots,
strips or rods is not in dispute. It is also not in dispute that copper and
brass being metals in solid form, are available in the market in one of the
above forms only. Therefore, the argument of the appellant that the words
'copper' and 'brass' occurring in Entry 116A and 116D would not take within its
sweep Copper Sheets and Brass Sheets, cannot be accepted.
From the record of the case, it is evident that the appellant had relied upon
Government Order dated August
4, 1982 to contend
that Copper, Brass and Zinc Sheets, circles, ingots, flats and rods were
treated as unclassified items and therefore would not fall within Entry 116A
and 116D. On perusal of the said Order this Court is of the opinion that the
clarification made by the State Government related to the position prior to 01-04-84. This clarification was with reference to Entry No.
121 which dealt with metallic products and did not relate to copper and brass
sheets. Schedule I to the Act was amended by Finance Act, 1984 and along with
other entries, Entries No. 116A and 116D were introduced with effect from 01-04-84 to bring in metals like copper and brass. In fact,
the clarification made by the Government weakens the case of the appellant. The
clarification made by the Government would go to show that Copper and Brass
Sheets, circles, ingots etc. are not Copper or Brass products. If these items
are not Copper or Brass products the same will have to be regarded as Copper
and Brass metals falling within the ambit of Entry No. 116A and 116D.
reliance placed by the learned counsel for the appellant on the decision of the
Supreme Court in Hindustan Anr. (1981) 3 SCC 578 to contend that Copper Sheets
and Brass Sheets are distinct commercial items from Copper and Brass and,
therefore, would not fall under Entries 116A and 116D, is misplaced. In the
said case the appellant was carrying on the business of manufacturing and
dealing in Aluminium metal as well as various aluminium products. The State
Government had issued several Notifications from time to time which indicated
that the expression 'Metal' had been generally employed to refer to the matter
in its primary sense i.e. the metal in the form in which it is marketable as a
primary commodity. In these circumstances, the subsequent forms evolved from
the primary form and consisting distinct commodities marketable were regarded
as new commercial commodities. As observed earlier Copper and Brass metals are
produced in rolling mills in the form of sheets, circles, ingots, strips or
rods and are available in the market in one of the above forms only as the
metals are in solid from. Therefore, the principle laid down by the Supreme
Court in Hindustan Aluminium Corporation Ltd. (Supra) cannot be made applicable
to the facts of the instant case. This Court notices, that in the State of M.B.
vs. Hiralal (1966) 2 SCR 752 this Court held that scrap iron when put through
the process of re- rolling to produce attractive and acceptable forms of iron
and steel in the shape of bars, flats and plates, must be regarded as
continuing to be "iron and steel'' for the purpose of the notificatiosn
issued under the Madhya Bharat Sales Tax Act.
Having regard to the nature of evidence produced before the Assessing Authority
in both the cases, the Court is of the opinion that the Authorities below as
well as the High Court were justified in concluding that Copper Sheets and
Brass Sheets in which the appellant deals would fall within the scope of
Entries No. 116A and 116D liable to be taxed at the rate of 8% of the turnover.
case is made out by the appellant to interfere with the view taken by the High
Court and therefore the appeals must fail.
Therefore, the appeals fail and are dismissed. There shall be no order as to