Declared goods in the same entry cannot face fresh taxation where processing leaves their essential identity unchanged.

Declared goods grouped in the same statutory entry are ordinarily treated as one taxable category for sales tax purposes, and processing that does not alter their essential identity does not justify a fresh levy. Applying sections 14 and 15 of the Central Sales Tax Act, the Karnataka HC noted that hot rolled steel strips and cold rolled steel strips differ only in thickness, while their chemical composition and essential properties remain unchanged. Because tax had already been paid on the original hot rolled strips, the attempted reassessment and clarification seeking fresh taxation on the cold rolled strips were unsustainable and were quashed.

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Issues: Whether hot rolled steel strips and cold rolled steel strips, being grouped in the same entry of the Fourth Schedule and the former having already suffered tax, could be treated as distinct taxable commodities so as to justify fresh taxation on the sale of cold rolled strips manufactured from them.

Analysis: The grouping of goods in the same sub-item of the Fourth Schedule was treated as a strong indication that they constitute one category of declared goods for sales tax purposes. The judgment applied the scheme of sections 14 and 15 of the Central Sales Tax Act and the prohibition against multi-point taxation on declared goods, holding that goods placed in the same sub-item should not ordinarily be split into separate taxable commodities merely because one is processed from the other. It was noted that cold rolled strips differ from hot rolled strips only in thickness, while their chemical composition and essential properties remain unchanged. On that basis, and in the absence of any compelling reason to depart from the view already taken in earlier decisions, the clarification and proposed reassessment were found unsustainable.

Conclusion: Hot rolled and cold rolled steel strips were held to be the same category of goods for tax purposes, so tax could not again be levied on cold rolled strips manufactured from tax-paid hot rolled strips.

Final Conclusion: The impugned clarification and show cause notice were quashed because the attempted fresh levy on the processed strips was inconsistent with the statutory scheme governing declared goods and single-point taxation.

Ratio Decidendi: Where declared goods are grouped in the same statutory entry and the processing does not alter their essential identity, the goods cannot be subjected to fresh multi-point taxation once tax has already been paid on the original goods.

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