1993 (4) TMI 277 - SC - VAT / Sales Tax

Cast iron castings treated as distinct goods; statutory levy applies; exemption requires Gazette publication under Section 9, not Section 42(2) Publication

SC held that the cast iron castings manufactured by the appellant are distinct from 'cast iron' as defined in the relevant schedules and statutes, and ... Declared goods - cast iron - cast iron castings - single point tax - power to remove difficulties - exemption - administrative clarifications and circulars - no estoppel against the statuteCast iron - cast iron castings - declared goods - single point tax - Whether the cast iron pipes, man-hole covers, bends and other products manufactured and sold by the appellant fall within the expression 'cast iron' in item 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act and section 14(iv)(i) of the Central Sales Tax Act so as to attract single point tax at 4 per cent. - HELD THAT: - The Court examined the meaning of the term 'cast iron' and the nature of the appellant's products and concluded that 'cast iron' denotes the material or alloy (an iron-carbon-silicon alloy) whereas the appellant's products are manufactured commercial commodities made out of that material. The goods manufactured and sold by the appellant are different and distinct commercial commodities from the material 'cast iron'. Consequently, those manufactured cast-iron articles do not fall within the expression 'cast iron' in the relevant entry and are not entitled, by virtue of that entry alone, to the declared-goods single point tax treatment at 4 per cent. The Court therefore affirmed the view taken in Deccan Engineers and rejected the contention that the products are covered as 'cast iron' merely because they are made from cast iron or because of the word 'including' in the entry.The cast iron castings/manufactured articles of the appellant do not fall within the expression 'cast iron' in item 2(i) of the Third Schedule or section 14(iv)(i) of the CST Act; they are not covered as declared goods attracting single point tax at 4 per cent.Power to remove difficulties - exemption - administrative clarifications and circulars - no estoppel against the statute - Validity and effect of G.O. Ms. No. 383 issued under sub section (2) of section 42 of the A.P. Act and of departmental/ministerial clarifications in declaring that 'cast iron castings' are covered within 'cast iron'. - HELD THAT: - The Court observed that orders issued under section 42 are statutory in character but the power under section 42(2) is limited to removing difficulties 'for giving effect to the provisions of the Act' and cannot be used to alter or dispense with the levy created by the Act. An exemption from levy requires exercise of the distinct power under section 9 and publication in the Andhra Pradesh Gazette. Administrative clarifications and circulars (including Central Government letters and State communications) represent the executive's understanding and are not binding on courts or authoritative to override or negate the statutory levy; there can be no estoppel against the statute. Consequently G.O. Ms. No. 383 could not be invoked to exclude the statutory levy on goods that are, in law, distinct from 'cast iron' unless the Government validly exercised the statutory exemption power in accordance with law.G.O. Ms. No. 383 and departmental/ministerial clarifications cannot be used under section 42(2) to dispense with or alter the levy created by the Act; administrative clarifications do not bind the courts and cannot create an estoppel against the statute.Final Conclusion: The appeal and the writ petition were dismissed: the manufactured cast iron articles of the appellant are not 'cast iron' within the relevant declared goods entry and thus are not entitled to single point tax treatment at 4 per cent; State executive orders and clarifications could not lawfully be used under section 42(2) to negate the statutory levy. Issues Involved:1. Whether the products manufactured by the appellant (cast iron pipes, man-hole covers, bends, etc.) are classified as 'declared goods' under the Andhra Pradesh General Sales Tax Act, 1957, and thus liable to tax at the rate of 4%.2. The validity and effect of the Government Order (G.O. Ms. No. 383) and various clarifications issued by the Central and State Governments regarding the classification of 'cast iron castings' as 'cast iron.'3. The applicability of the principle established in Deccan Engineers v. State of Andhra Pradesh [1992] 84 STC 92 to the appellant's case.4. The statutory interpretation of 'cast iron' under the Andhra Pradesh General Sales Tax Act, 1957, and the Central Sales Tax Act, 1956.Issue-wise Detailed Analysis:1. Classification of Products as 'Declared Goods':The appellant contended that their products (cast iron pipes, man-hole covers, bends, etc.) should be classified as 'declared goods' under the Andhra Pradesh General Sales Tax Act, 1957, and thus liable to tax at the rate of 4%. The Commercial Tax Officer, however, treated these products as general goods and taxed them accordingly. The appellant's appeal before the Appellate Deputy Commissioner was pending, and a writ petition was filed in the High Court of Andhra Pradesh, which was dismissed based on the earlier decision in Deccan Engineers v. State of Andhra Pradesh [1992] 84 STC 92. The Supreme Court upheld the High Court's decision, stating that 'cast iron' is different from 'cast iron castings' manufactured by the appellant. The products manufactured by the appellant are distinct commercial commodities from 'cast iron' and thus do not fall under the category of 'declared goods' liable to tax at 4%.2. Validity and Effect of G.O. Ms. No. 383 and Clarifications:The appellant relied on various clarifications and circulars issued by the Central and State Governments, particularly G.O. Ms. No. 383, which stated that 'cast iron castings' are covered within the term 'cast iron.' The Supreme Court held that while these clarifications represent the understanding of the statutory provisions by the Government, they are not binding on the courts. The power under section 42 of the Andhra Pradesh General Sales Tax Act cannot be used to alter the provisions of the Act but only to give effect to them. The Government cannot use this power to exempt a class of goods from the levy created by the Act. The Court emphasized that there can be no estoppel against the statute, and the understanding of the Government does not bind the quasi-judicial functioning of the authorities under the Act.3. Applicability of Deccan Engineers Principle:The principle established in Deccan Engineers v. State of Andhra Pradesh [1992] 84 STC 92 was applied to the appellant's case. In Deccan Engineers, it was held that 'cast iron' does not include 'cast iron castings' such as pipes, man-hole covers, and bends. The Supreme Court affirmed this view, stating that the products manufactured by the appellant are different and distinct from 'cast iron' and thus do not qualify as 'declared goods.' The Court dismissed the appellant's argument based on the application of G.O. Ms. 383 in another case (Pratap Steel), noting that the matter was not argued in the same manner as in Deccan Engineers.4. Statutory Interpretation of 'Cast Iron':The Court examined the statutory interpretation of 'cast iron' under the Andhra Pradesh General Sales Tax Act, 1957, and the Central Sales Tax Act, 1956. It referred to various dictionary definitions and technical opinions to conclude that 'cast iron' is a material used to manufacture other products and is distinct from 'cast iron castings.' The Court held that the products manufactured by the appellant do not fall within the expression 'cast iron' in entry 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act or section 14(iv)(i) of the Central Sales Tax Act.Conclusion:The Supreme Court dismissed the appeal and the writ petition, holding that the cast iron castings manufactured by the appellant do not fall within the expression 'cast iron' as defined under the relevant statutory provisions. The products are distinct commercial commodities and are not entitled to the tax rate applicable to 'declared goods.' The clarifications and Government Orders relied upon by the appellant do not have the force to alter the statutory provisions. The appeal and petition were dismissed with no order as to costs.