Character of metal scrap for entry tax must be tested by original seller's treatment, not invoice descriptions.

Entry tax under the U.P. entry tax law applies only to goods covered by the Schedule, and iron scrap stood excluded after amendment. The dispute turned on whether the rail line material was genuine iron scrap or defective or rejected goods under the Central Sales Tax framework. The court held that this character could not be determined merely from invoice or transport descriptions; the proper test is how the originating seller treated and sold the goods. Because the record showed no adequate inquiry into the railway's characterisation of the material, the Tribunal's finding was unsustainable. The matter was remanded for fresh factual determination and consideration of additional evidence.

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Issues: Whether rail line scrap purchased by the dealer was iron scrap excluded from entry tax under the amended Schedule, or whether it fell within defective or rejected goods under section 14(iv)(xvi) of the Central Sales Tax Act, 1956, requiring fresh examination.

Analysis: Entry tax under section 4 of the U.P. Tax on Entry of Goods Into Local Areas Act, 2007 applies only to goods specified in the Schedule. The amended entry excluded iron scrap, but the authorities treated the goods as defective or rejected material merely from the descriptions in the invoice and form 38, without examining how the railway authorities had treated the goods at the time of sale. Scrap is distinct from defective or rejected material, and the proper test is the nature in which the goods were held and sold by the originating seller. Since the record did not show any proper inquiry into the railway's characterization of the material, the finding of the Tribunal was not sustainable.

Conclusion: The matter required reconsideration on the factual question whether the goods were iron scrap or defective or rejected rail material, and the earlier orders were set aside with remand to the assessing authority for fresh decision after permitting additional evidence.

Ratio Decidendi: The character of disputed metal goods for entry tax purposes must be determined by the nature in which the original seller treated and sold them, and not merely by descriptions in invoices or transport documents.

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