1994 (5) TMI 241 - HC - VAT and Sales Tax

Court rules petitioner not liable for tax on surplus M.S. rounds not manufactured for sale

Kumar Iron and Steel Pvt. Ltd. Versus Commissioner of Taxes

Kumar Iron and Steel Pvt. Ltd. Versus Commissioner of Taxes - [1994] 95 STC 298 (Gau) Issues Involved:1. Liability of the petitioner to pay tax on the sale proceeds of surplus M.S. rounds.2. Interpretation of 'sale price' and 'turnover' under the Assam Finance (Sales Tax) Act, 1956.3. Applicability of strict construction principles in taxing statutes.Issue-wise Detailed Analysis:1. Liability of the petitioner to pay tax on the sale proceeds of surplus M.S. rounds:The petitioner-company, engaged in the manufacture and sale of M.S. rounds or steel in Assam, also undertakes job works for converting billets into M.S. rounds on behalf of customers. The petitioner submitted returns and paid taxes on its turnover but did not pay tax on the sale proceeds of surplus M.S. rounds retained from the conversion process if the burning loss was less than 10%. The 3rd respondent issued notices to include the value of these surplus rounds in the turnover, which the petitioner contested, asserting that these goods were not manufactured for sale by the petitioner and thus not taxable under sections 2(9) and 2(6) of the Act. The court held that the petitioner did not manufacture the surplus M.S. rounds on its own behalf but on behalf of the owners, and thus the sale proceeds of these rounds could not be included in the turnover for tax purposes.2. Interpretation of 'sale price' and 'turnover' under the Assam Finance (Sales Tax) Act, 1956:The court examined the definitions of 'dealer,' 'sale price,' and 'turnover' under the Act. 'Dealer' refers to any person selling taxable goods in Assam. 'Sale price' means the money consideration for the sale of taxable goods manufactured, made, or processed by the dealer in Assam, or brought into Assam for sale. 'Turnover' refers to the aggregate sale prices receivable by a dealer. The court concluded that unless the taxable goods are manufactured, made, or processed in Assam or brought into Assam for sale by the dealer, the money consideration for their sale cannot be considered 'sale price' under section 2(6), and thus cannot be included in the 'turnover' under section 2(9). Therefore, the petitioner was not liable to pay tax on the surplus M.S. rounds as they were not manufactured by the petitioner for sale.3. Applicability of strict construction principles in taxing statutes:The court emphasized that taxing statutes should be construed strictly, and no tax should be imposed unless the statute clearly and unequivocally requires it. Citing several Supreme Court cases, the court reiterated that the intention of the Legislature must be gathered from the words used in the statute, and no tax can be imposed by inference or analogy. The court held that the language of the definitions in the Act was clear and unambiguous, and thus the petitioner was not liable to pay tax on the surplus M.S. rounds as demanded.Conclusion:The court allowed the petitions, setting aside the orders and notices demanding tax on the surplus M.S. rounds, and held that the petitioner was not liable to pay tax under the Act for the said period. No order as to costs was made. Petitions allowed.