2017 (10) TMI 68 - SC - VAT and Sales Tax

Iron wire from iron rods not a separate commodity for tax purposes. Supreme Court affirms High Court decision.

Commissioner of Trade Tax, U.P. Versus S/s International Electrodes, Commnr. of Sales Tax, U.P. Vs. S/s Iron Rod Drawing Factory, Commissioner, Trade Tax, U.P., Lucknow Vs. Decent Industries Sarai Mian, Aligarh, M/s Iron Rod Vs. Commissioner, Trade Tax, U.P.

The Supreme Court affirmed the High Court's decision that iron wire obtained from iron rods is not a separate commodity for taxation purposes. Citing ... Whether iron wire obtained from iron rods is a separate and distinct commodity from iron rods so as to make the same taxable separately over and above the sales tax already paid on iron rods? Held that: - reliance placed in the case of COLLECTOR OF CENTRAL EXCISE Versus TECHNOWELD INDUSTRIES [2003 (3) TMI 123 - SUPREME COURT OF INDIA], where it was held that Merely because there are two separate entries does not mean that the product becomes excisable. The product becomes excisable only if there is manufacture - iron rods and iron wires are one and the same commodity - appeal dismissed - decided against Revenue. Issues:1. Whether iron wire obtained from iron rods is a separate and distinct commodity from iron rods for separate taxation.Analysis:The Supreme Court considered the issue of whether iron wire extracted from iron rods should be taxed separately from iron rods. The High Court had ruled in favor of the Assessee, relying on a previous decision. The Court noted that the previous decision did not explicitly address the distinctness of iron rods and iron wires but suggested that when both are clubbed together under a tax provision, they should be treated as one taxable item.The Revenue's counsel cited a different case to argue that determining whether items clubbed together are distinct is essential before taxing them separately. Another decision was referenced to support this argument. The Court acknowledged these submissions and reviewed the relevant precedents mentioned.The Court then discussed a case related to central excise duty, where it was held that iron rods and iron wires are considered the same commodity, and extracting wires from rods does not constitute manufacturing. This decision was examined in light of the definition of 'manufacture' in the U.P. Trade Tax Act, which supported the conclusion that iron rods and wires are not distinct commodities. Therefore, the Court upheld the High Court's decision, finding no error in it.As a result of the above analysis, the Court dismissed the appeals filed by the Revenue and allowed the appeal filed by the Assessee, affirming the High Court's order in favor of the Assessee.