Vijai Metal Udyog Pvt. Ltd. Vs. Commissioner, Trade Tax, U.P. Lucknow  INSC
283 (16 April 2010)
APPELLATE JURISDICTION CIVIL APPEAL NO.95 OF 2009 M/s. Jai Vijai Metal Udyog
Pvt. Ltd. ... Appellant Industrial Estate, Varanasi VERSUS The Commissioner,
Trade Tax, ... Respondent U.P. Lucknow ORDER Challenge in this appeal, by
special leave, is to the final judgment and order dated 12th August, 2005
rendered by the High Court of Judicature at Allahabad in Trade Tax Revision
No.945 of 1998. By the impugned judgment, the High Court has allowed the
Revision Petitions filed by the Commissioner, Trade Tax, U.P., Lucknow (for
short "the Commissioner") against a common order passed by the Trade
Tax Tribunal, Varanasi (for short "the Tribunal") in appeals
preferred by the Commissioner against the order passed by the Deputy
Commissioner (Appeals) in favour of the appellant (hereinafter referred to as
"the Dealer") in respect of the assessment year 1988-89.
stated, the material facts giving rise to the present appeal are as follows:
Dealer, incorporated as a private limited company, is engaged in the
manufacture of aluminium `properzi' redraw rods from aluminium ingots. The word
`properzi' is the name of the person who had invented the process of
manufacturing redraw rods. According to the Dealer, the process involves
pouring of molten metal from pot room crucible directly in the melting furnace,
which is then transferred to holding furnace. The material is then degassed,
fed through a cast iron spout into the groove of a water cooled circular
steel-casting wheel, which rotates at a slow speed.
portion of the grooved steel mould is covered by steel belt and during one half
rotation of the casting wheel, the metal gets solidified and comes out in the
form of a continuous bar of about 12 sq. cms. cross section at a temperature of
4400 to 3800 centigrade. This bar is then fed through a 13 strand `properzi'
mill where the thickness of cross section is progressively reduced and finally
a 9.5 mm diameter redraw rod comes out, which is then wound on the drum of a
mechanical coil. The stand of the Dealer is that `properzi' rods of the size of
9.5 mm have no use in the market inasmuch as except for being used as raw
material in the manufacture of wires of different sizes, it cannot be used as
such for any other purpose.
3 For the
assessment years 1983-84, 1984-85, 1985-86 and 1987-88, the `properzi' rods
manufactured by the Dealer were classified by the Assessing Authorities to be a
metal/primary metal and were assessed at the rate of 2% plus surcharge at 10%
of the said rate in terms of Entry 24 of the Schedule to the U.P. Trade Tax
Act, 1948 (for short "the U.P. Act"), as inserted by Notification
No.ST-II-6075/X-6(9)/83 dated 30th September, 1983. The said Entry reads as
All kinds of ore, metals, scraps and alloys including sheets and circles used
in the manufacture of brass wares, except those included in any other entry or
any other notification issued under the Act."
for the assessment year 1988-89, with which we are concerned in this appeal,
the Assessing Authority taxed the `properzi' rods at the rate of 2.2% vide
order dated 19th August, 1992. However, subsequently proceedings under Section
21 of the U.P. Act were initiated against the Dealer on the ground that
assessment in respect of the said assessment year had escaped assessment or had
been under-assessed. The main reason for re-opening the assessment was that
while assessing another dealer in the State, namely, M/s Hindustan Aluminium
Corporation (hereinafter referred to as "HINDALCO"), who were also engaged
in the manufacture of `properzi' rods and other products, the Assessing Officer
had held that `properzi' rods were not `Metal' falling under Entry 24.
in the re-assessment, the Assessing Officer held that `properzi' redraw rods
manufactured by the Dealer being a "rolled product" were not primary
metal and being commercially different from metal, were liable to be taxed as
an unclassified item at the rate of 10% in terms of Section 3A(1)(c) of the
U.P. Act. The re-assessment resulted in creation of an additional demand of
Rs.35,19,632/- against the Dealer.
aggrieved, the Dealer preferred separate appeals against the assessments under
the Regional Sales Tax Act and the Central Sales Tax Act. Relying on the
decision of this Court in Hindustan Aluminium Commissioner (Appeals), Sales
Tax, Varanasi vide his order dated 11th February, 1993, allowed both the
appeals. The Deputy Commissioner (Appeals) found that `properzi' rods
manufactured by the Dealer were not in the final shape of finished goods and were
the basic raw material for the manufacture of aluminium wires and, therefore,
being a primary metal, would attract tax at the rate of 2%. Aggrieved by the
said order, the Revenue took the matter in second appeal to the Tribunal which,
vide order dated 27th March, 1998, dismissed both the appeals.
dissatisfied, the Revenue filed Revision Petitions before the High Court. As
stated above, by the impugned order, the High Court has allowed both the
Revision Petitions. Placing reliance on the decision of 1 (1981) 3 SCC 578 5
this Court in Hindustan Aluminium Corporation Ltd. (supra) wherein, according
to the High Court, it had been held that aluminium rolled products and
extrusions did not fall in the category of metal and were liable to be taxed as
unclassified item, the High Court has come to the conclusion that `properzi'
rods manufactured by the Dealer are, in fact, wire bars and not wire rods, and
have, therefore, to be taxed as unclassified items.
the Dealer is before us in this appeal.
counsel appearing on behalf of the Dealer has strenuously urged before us that
the High Court has mis-directed itself in law in not only treating extrusions
as similar to `properzi' redraw rods, its decision drawing a distinction
between the `properzi' redraw rods manufactured by the Dealer and the same
product manufactured by HINDALCO is clearly perverse. Learned counsel submits
that, in fact, observations in para 7 of the judgment in Hindustan Aluminium
Corporation Ltd. (supra) show that in so far as `properzi' redraw rods are
concerned, this Court has treated these rods as different from rolled products
and extrusions and, therefore, affirmed the direction of the High Court to the
Sales Tax Officers to re- examine the matter after making further enquiry. It
is asserted that the said decision does not conclude the issue against the
Dealer as pleaded on behalf of the Revenue. Learned counsel also points out
that pursuant to the remand by the High Court in the case of HINDALCO, the
Assessing Officer examined the entire issue afresh; by summoning the
representatives 6 of other manufacturers to understand the manufacturing
process as also the commercial value, and then came to the conclusion that
`properzi' redraw rod is like an ingot - a form of primary metal and,
therefore, falls in the category of metal and alloy, covered under Entry 24.
According to the learned counsel, the assessment made in the case of HINDALCO
on remand has attained finality. It is, thus, pleaded that since the item, viz.
redraw rod manufactured by the Dealer and HINDALCO are similar, the Revenue
cannot treat two dealers differently for the purpose of levying sales tax under
the Regional Act as well as the Central Act.
counsel appearing on behalf of the Revenue, on the other hand, supported the
decision of the High Court and submitted that `properzi' redraw rods are
manufactured from aluminium ingots and billets;
commercially different commodities, the same cannot be considered as primary
metal and, therefore, these have been correctly taxed in the category of
unclassified item. Learned counsel urged that after this Court had passed order
on 2nd December, 2009, directing the Revenue to disclose its stand with regard
to the assessment in the case of HINDALCO, assessments in the case of the said
company in respect of assessment years 2003-04 to 2006-07 have been re-opened
under Section 21(2) of the U.P.
therefore, the plea of discrimination is not available to the Dealer.
however, conceded that in so far as assessment in the case of 7 HINDALCO for
the assessment year 1988-89 is concerned, it has attained finality and cannot
questions falling for consideration are: (i) whether the aluminium `properzi'
redraw rods can be classified as metal under Entry 24 of the aforementioned
Notification dated 30th September, 1983 and (ii) when admittedly, the
foundation for re-opening Dealer's assessment in respect of assessment year
1988-89 was the assessment in the case of HINDALCO, in which case, after the
remand by the High Court, assessment for that year has attained finality, can
the Revenue be permitted to take a different view in the case of the Dealer
from that taken in the case of HINDALCO in respect of the same assessment year?
In so far as the first question is concerned, we are of the opinion that in the
light of the decision of this Court in Hindustan Aluminium Company Ltd .
(supra) wherein, while examining the question whether aluminium rolled products
and extrusions could be described as `Metal' under Item No.6 (as it then
existed) in the Schedule attached with the U.P.
is materially similar to Entry 24, this Court has observed that expression
`Metal' has been generally employed to refer to the metal in its primary sense,
i.e. the metal in the form in which it is marketable as a primary commodity, it
is unnecessary for us to delve deep into the issue.
question for our consideration is whether the said decision 8 conclusively
holds that `properzi' redraw rods are not `metal' in the primary form as such
constituting new commercial commodity as held by the High Court. Having
carefully gone through the judgment, particularly the observations in para 7
thereof, we are convinced that in so far as `properzi' redraw rods are
concerned, a distinction has been drawn by this Court between `properzi' redraw
rods and other aluminium rolled products and extrusions and precisely for this
reason, the issue was kept open to be re-examined by the Sales Tax Officer
after further enquiry. As noted above, learned counsel for the Revenue candidly
conceded before us that in so far as assessment year 1988-89 is concerned,
after fresh enquiry, the Assessing Officer treated `properzi' redraw rods as
primary metal, classifiable under Entry 24. Admittedly, this decision of the
Assessing Officer was not questioned by the higher authorities and thus,
attained finality. Moreover, bearing in mind the fact that the same issue has
now been re-opened in the case of HINDALCO, in respect of assessment years
2003-04 to 2006-07, we feel that expression of any opinion on the issue, at
this juncture, would be prejudicial to the interest of either of the parties,
particularly when HINDALCO is not before us.
coming to the second issue, it is trite that in view of the inherent complexity
of fiscal adjustment of diverse elements, a wider discretion is given to the
Revenue for the purpose of taxation and ordinarily different interpretations of
a particular tariff entry by different authorities 9 as such cannot be assailed
as violative of Article 14 of the Constitution.
in our opinion, two different interpretations of a particular entry by the same
authority on same set of facts, cannot be immunised from the equality clause
under Article 14 of the Constitution. It would be a case of operating law
unequally, attracting Article 14 of the Constitution.
present case, as stated above, the basis for re-opening the assessment of the
Dealer in respect of assessment year 1988-89, was the view taken by the
Assessing Officer in the case of HINDALCO that `properzi' redraw rods were not
primary metal in terms of Entry 24.
subsequently when on remand by the High Court as affirmed by this Court, in
HINDALCO's fresh assessment in respect of the said assessment year, the said
product was held to be a `metal' falling under Entry 24, the entire foundation
for re-opening of the assessment vanished.
accepted the view of the Assessing Officer in the case of HINDALCO, the Sales
Tax Authorities in the State cannot be permitted to take a different stand in
the case of the Dealer in respect of a similar item for the same assessment
these reasons, we are of the opinion that the view taken by the High Court,
distinguishing the case of HINDALCO from that of the Dealer, cannot be
1 As a
result, the appeal is allowed; the impugned order is set aside and that of the
Tribunal is restored leaving the parties to bear their own costs.
............................................J. [ D.K. JAIN ]
............................................J. [ T.S. THAKUR ]
APRIL 16, 2010.