2011 (4) TMI 77 - SC - VAT and Sales Tax

Supreme Court rules 'stainless steel wire' not a declared commodity under tax law

Bansal Wire Industries Ltd. Versus State of UP.

The Supreme Court held that 'stainless steel wire' does not qualify as a declared commodity under the Central Sales Tax Act, exceeding the 4% tax limit. ... Declared commodity u/s 14 of the Central Act - The language used in entry no (ix) is plain and unambiguous and that the items which are mentioned there are 'tools, alloy and special steel' - By using the words 'of any of the above categories' in entry Nos. (ix) would refer to entries (i) to (viii) and it cannot and does not refer to entry no (xv) - However, entry (xvi) of Clause (iv) would be included in entry (xvi) particularly within the expression now therein any of the aforesaid categories - Therefore, the specific entry 'tool, alloy and special steel' being not applicable to entry (xv), the contention of the counsel for the appellant has to be rejected - It is, therefore, held that the stainless steel wire is not covered within entry (ix) of clause (iv) of section 14 of Central Sales Tax Act Expression 'Wire rods and wires' which is mentioned in item no (xv) would not and cannot cover the expression 'tools, alloy and special steels' of entry no (ix) nor it would refer to the expression 'Iron and Steel' as each item used in entry nos (ix) and (xv) are independent items not depending on each other at all as has been held in the case of Pyare Lal Mehrotra. The decision of this Court in Union of India v. Hansoli Devi wherein this Court held that it is a cardinal principle of construction of a statute that when the language of the statute is plain and unambiguous, the court must give effect to the words used in the statute Held that : the decision arrived at by the High Court that stainless steel wire is not covered under the entry of 'tools, alloys and special steels' in entry no (ix) and, therefore, does not fall under 'Iron and Steel' as defined under section 14(iv) of the Central Act have to be upheld - Hence, the said commodity cannot be treated as a declared commodity under section 14 of the Central Act and provision of section 15 of the Central Act does not apply to the facts of the present appeals - The findings arrived at by the High Court does not suffer from any infirmity - Consequently appeals dismissed without any order as to costs. Issues Involved:1. Classification of 'stainless steel wire' under the Central Sales Tax Act, 1956.2. Applicability of tax rates on 'stainless steel wire' as a declared commodity.3. Interpretation of specific entries under Section 14(iv) of the Central Sales Tax Act, 1956.4. Validity of reassessment and re-opening of tax cases by the respondent authorities.Detailed Analysis:1. Classification of 'stainless steel wire' under the Central Sales Tax Act, 1956:The central issue in these appeals is whether 'stainless steel wire' falls under the category 'tools, alloys and special steels of any of the above categories' enumerated in entry no (ix) of clause (iv) of section 14 of the Central Sales Tax Act, 1956 (Central Act). The appellant contends that 'stainless steel wire' should be classified under entry no (xv) as 'wire rods and wires-rolled, drawn, galvanized, aluminized, tinned or coated such as by copper.'2. Applicability of tax rates on 'stainless steel wire' as a declared commodity:The appellant argued that 'stainless steel wire' is a declared commodity under clause (iv) of section 14 of the Central Act, and thus, as per section 15, no tax exceeding 4% can be imposed. The respondent, however, held that 'stainless steel wire' is not a declared commodity and falls outside the ambit of 'Iron and Steel,' subjecting it to a higher tax rate.3. Interpretation of specific entries under Section 14(iv) of the Central Sales Tax Act, 1956:The court examined the relevant provisions, including various notifications and the specific language of section 14(iv) of the Central Act. The interpretation of the phrase 'that is to say' and 'of any of the above categories' was crucial. The court referred to the decision in *State of Tamil Nadu v. Pyare Lal Mehrotra* [1976] 1 SCC 834, which clarified that the phrase 'that is to say' is used to exhaustively enumerate the kinds of goods listed, making each category a separate species for tax purposes.4. Validity of reassessment and re-opening of tax cases by the respondent authorities:The respondent issued notices for re-opening the appellant's tax cases for various assessment years, arguing that 'stainless steel wire' was incorrectly taxed at 4%. The appellant challenged these notices, leading to a writ petition in the Allahabad High Court, which was dismissed. The Supreme Court upheld this decision, agreeing with the High Court that 'stainless steel wire' is not covered under the entry 'tools, alloys and special steels' and thus does not qualify as 'Iron and Steel' under section 14(iv) of the Central Act.Conclusion:The Supreme Court concluded that 'stainless steel wire' does not fall under entry no (ix) of clause (iv) of section 14 of the Central Act and therefore cannot be considered a declared commodity. Consequently, the tax rate applicable to 'stainless steel wire' exceeds 4%, and the reassessment and re-opening of tax cases by the respondent authorities were valid. The appeals were dismissed, and the High Court's judgment was upheld.