Commercial identity and intra-department transfers: stainless steel goods fell under the First Schedule, while internal supplies were stock transfers.

In a taxing schedule using the words "that is to say", the listed iron and steel items were treated as exhaustive and classified by distinct commercial identity. Stainless steel tubes, seamless stainless steel tubes and stainless steel ball bearing tubes were held not to fall under the Third Schedule entry for steel tubes, but under the wider First Schedule entry for articles; stainless steel scrap was not brought within the Third Schedule on the reasoning adopted. Separately, supply between units of the same Department of Atomic Energy was held to be an internal stock transfer, not an inter-State sale, because a sale requires distinct contracting parties and consideration between separate persons.

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Issues: (i) Whether stainless steel tubes, seamless stainless steel tubes, stainless steel ball bearing tubes and stainless steel scrap fell under item 2 of the Third Schedule to the Andhra Pradesh General Sales Tax Act or item 54 of the First Schedule; (ii) Whether the supply of goods by one unit of the Department of Atomic Energy to other units of the same Department amounted to stock transfer or inter-State sale.

Issue (i): Whether stainless steel tubes, seamless stainless steel tubes, stainless steel ball bearing tubes and stainless steel scrap fell under item 2 of the Third Schedule to the Andhra Pradesh General Sales Tax Act or item 54 of the First Schedule.

Analysis: Entry 2 of the Third Schedule was treated as an exhaustive enumeration of declared iron and steel goods. The expression "that is to say" was read as limiting the scope of the entry, and each specified sub-item was treated as a separate commercial commodity. Stainless steel was held to be a distinct commercial commodity from steel, and the specific words in item 2(xi) covered steel tubes, both welded and seamless, but not stainless steel tubes. By contrast, the word "articles" in item 54 of the First Schedule was given its wider ordinary meaning, extending to a commodity as well as a component or distinct part.

Conclusion: Stainless steel tubes, seamless stainless steel tubes and stainless steel ball bearing tubes did not fall under item 2 of the Third Schedule and were held to fall under item 54 of the First Schedule. Stainless steel scrap was not accepted as falling under item 2 on the reasoning adopted.

Issue (ii): Whether the supply of goods by one unit of the Department of Atomic Energy to other units of the same Department amounted to stock transfer or inter-State sale.

Analysis: A sale requires two distinct persons and a transfer of property for consideration from one to another. Units of the same Department were treated as part of the same legal entity, so there could be no sale by the Department to itself. The transactions were supported by the manner in which invoices and book adjustments were made, but that did not alter their character as internal transfers.

Conclusion: The transactions were stock transfers and did not amount to inter-State sales liable to tax under the Central Sales Tax Act, 1956.

Final Conclusion: The assessee succeeded only on the stock-transfer question, while the Revenue succeeded on the classification of the stainless steel goods under the First Schedule rather than the Third Schedule.

Ratio Decidendi: In a taxing schedule using the words "that is to say", the listed sub-items are exhaustive and each specified commodity is separately classifiable according to its commercial identity; a sale also requires distinct contracting parties and cannot arise from transfer within the same legal entity.

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