Manufacturing scrap as a distinct taxable commodity: special single-point schedule rate prevails over general multi-point levy.

Iron and steel scrap arising during manufacture is treated as a distinct commercial commodity for sales tax purposes and not as a second or subsequent sale of the original declared goods, so it is not exempt on that basis. However, where the scrap answers the description of iron or steel scrap in the Second Schedule, the special single-point levy applies and the general multi-point charge does not. The turnover was therefore required to be assessed as the first sale of scrap at the scheduled rate under item 4(a) or 4(c), rather than under the general charging provision.

---

---

Issues: (i) Whether iron and steel scrap arising from manufacture could be treated as a second or subsequent sale of the original declared goods and be exempt from tax. (ii) If not exempt, whether the turnover of such scrap was liable to be taxed at the multi-point rate under section 3(1) or at the single point rate applicable to iron or steel scrap under item 4 of the Second Schedule.

Issue (i): Whether iron and steel scrap arising from manufacture could be treated as a second or subsequent sale of the original declared goods and be exempt from tax.

Analysis: Declared goods are taxed on the basis of the commercial commodity sold, not merely on the intrinsic substance from which it is derived. Goods that emerge from a manufacturing process may become a different marketable commodity even though they retain the same basic material. Factory scrap produced during manufacture is not the same commercial commodity as the original raw material purchased for manufacture. The fact that the scrap can be traced to the original iron and steel goods does not make its sale a second or subsequent sale of those goods.

Conclusion: The scrap sale was not exempt as a second or subsequent sale of the original declared goods.

Issue (ii): If not exempt, whether the turnover of such scrap was liable to be taxed at the multi-point rate under section 3(1) or at the single point rate applicable to iron or steel scrap under item 4 of the Second Schedule.

Analysis: Where the manufactured scrap itself answers the description of iron scrap or steel scrap in item 4 of the Second Schedule, the relevant levy is the single point tax at the rate specified for that item. The first sale of such scrap in the State is the taxable event under the special schedule entry, and the general multi-point charging provision does not govern a turnover that is specifically covered by the schedule. The Court also held that it could entertain the alternative legal plea because it concerned correct classification and rate of tax, not new facts.

Conclusion: The turnover had to be assessed as the first sale of scrap at 3 per cent under item 4(a) or 4(c) of the Second Schedule, and not at the multi-point rate under section 3(1).

Final Conclusion: The assessment was directed to be revised by treating the scrap turnover as taxable under the special single-point entry for iron or steel scrap, which resulted in the appeal being allowed in substance.

Ratio Decidendi: Scrap produced in the course of manufacture may constitute a distinct commercial commodity for sales tax purposes, and when it falls within a specific single-point entry, the special rate and point of levy prevail over the general multi-point charge.

---