Commercial identity test in sales tax: processed cold rolled strips can be taxed separately from hot rolled strips.

Cold rolled strips produced from hot rolled strips are treated as a separate commercial commodity when processing results in a new marketable product, so sales tax can be levied on the sale of the finished strips under the West Bengal Sales Tax Act, 1994. The deduction or exemption claim under section 17(3)(a)(vi) also fails because that provision applies to resale of the same commodity, not to a different product manufactured from the inputs. The fact that both items fall within an iron and steel entry does not prevent separate tax treatment where commercial identity changes.

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Issues: (i) Whether cold rolled strips manufactured from hot rolled strips constitute a distinct taxable commodity so that tax could be levied on their sale under the West Bengal Sales Tax Act, 1994. (ii) Whether the petitioner was entitled to deduction or exemption under section 17(3)(a)(vi) of the West Bengal Sales Tax Act, 1994 on the footing that the input and output goods fell within the iron and steel entry under the Central Sales Tax Act, 1956.

Issue (i): Whether cold rolled strips manufactured from hot rolled strips constitute a distinct taxable commodity so that tax could be levied on their sale under the West Bengal Sales Tax Act, 1994.

Analysis: The decisive principle applied was that sales tax is attracted when a separate commercial commodity emerges, even if the new commodity is produced from another item included in the same statutory entry. The Court relied on the larger Bench view that inclusion of multiple articles under one heading does not make them a single commodity, and held that the earlier authorities on iron and steel did not displace that principle. On the facts, cold rolled strips were treated as a commercially distinct product from hot rolled strips.

Conclusion: The levy on sale of cold rolled strips was upheld and the challenge to taxability failed.

Issue (ii): Whether the petitioner was entitled to deduction or exemption under section 17(3)(a)(vi) of the West Bengal Sales Tax Act, 1994 on the footing that the input and output goods fell within the iron and steel entry under the Central Sales Tax Act, 1956.

Analysis: The Court held that the deduction provision required resale of the same commodity, and that requirement was not satisfied where hot rolled strips were used to manufacture cold rolled strips, which were found to be a different commodity. The omission of the words "in the same form" from the State Act did not alter the settled rule that a processed product can be separately taxed if it is commercially distinct. Administrative correspondence and the Tribunal's earlier view did not control the statutory interpretation.

Conclusion: The deduction or exemption claim was rejected.

Final Conclusion: The writ petition failed because the manufactured product was treated as a separate taxable commodity and the statutory deduction was not available on the facts found.

Ratio Decidendi: Where processing or manufacture brings into existence a separate commercial commodity, tax may be levied on the new commodity even if the input goods fall within the same statutory entry, and a deduction limited to goods purchased for resale does not apply to a different commodity produced from those goods.

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