TaxTMI 
TaxTMI 
1995 (8) TMI 190
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....ciation, Coimbatore (petitioner in W.P. Nos. 21167 and 21168 of 1993) and the Coimbatore District Tiny and Small Scale Industries Association, Coimbatore (petitioner in W.P. Nos. 21169 and 21170 of 1993) it is said are engaged in the manufacture and sale of cast iron castings. 2.. Government of India (first respondent), it is said, issued clarification that the expression "cast iron" in the list of declared goods would cover cast iron castings. It is upon such a clarification, the Special Commissioner of Commercial Taxes, Chepauk, Madras 5 (third respondent), was stated to have issued proceedings Ref. R. Dis. A2/3492/81 dated June 24, 1981 that rough (unmachined) cast iron castings are liable to be taxed as declared goods under sub-item (i) of item 4 of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959-for short "the TNGST Act"). 3.. Government of Andhra Pradesh, it is said, also treated cast iron castings as declared goods falling within sub-item (i) of item 2 of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957 (Act 6 of 1957-for short "the APGST Act"), based on the clarification issued by the Government of India. Th....
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....ose clarifications and circulars were communicated to the concerned dealers but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law. There can be no estoppel against the statute. The understanding of the Government, whether in favour or against the assessee, is nothing more than its understanding and opinion. It is doubtful whether such clarifications and circulars bind the quasi-judicial functioning of the authorities under the Act. While acting in quasi-judicial capacity, they are bound by law and not by any administrative instructions, opinions, clarifications or circulars. Law is what is declared by this Court and the High Court-to wit, it is for this Court and the High Court to declare what does a particular provision of statute say, and not for the executive. Of course, the Parliament/Legislature never speaks or explains what does a provision enacted by it mean-(See Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal Ltd. AIR 1983 SC 239)" (Page 56b-e). 6.. Based upon such a decision of the Supreme Court, the third respondent by a Circular No. Drafting Cell/85146/93 dated September 14, 1993, to be effective from A....
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....thereof, which had been enacted by the Legislature of the Tamil Nadu in accord with the salient provisions adumbrated under sections 14 and 15 of the CST Act. Sub-item (i) of item 2 to the Third Schedule of the APGST Act reads as follows: S.No. Description of goods Point of levy Rate of tax 2 Iron and steel, that is to say- Pig iron and cast iron including ignot moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron skull scrap. do. 4do. Sub-item (i) of item 4 of the Second Schedule to the TNGST Act reads as follows: S.No. Description of goods Point of levy Rate of tax (per cent) 4 Iron and steel, that is to say- (i) Iron and steel, that is to say,- (i) ping iron and cast iron including ingot, moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron skull scrap. Do. 4 10. From what has been extracted above, it is rather crystal clear that the description of entry relatable to "iron and steel" as "declared goods" is the same, excepting the variance as respects the number and Schedule under the respective enactments. In the light of such a provision in both the enactments, the aforesaid dec....
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....ith him), for the respondents. [Judgment per : Suhas C. Sen, J.]. - The question that falls for determination in this case is whether the `cast iron' in the list of declared goods in the Tamil Nadu General Sales Tax Act would include `Cast Iron Castings.' 2. The case of the appellant is that the basic raw materials for producing cast iron are pig iron, steel scrap, iron scrap, cast iron scrap etc. After melting these raw materials and adding requisite quantity of carbon, silica etc., the molten metal in the cupola furnace is poured into the moulds of different specifications to get the cast iron castings as required by the end user. The foundry owners like the appellant, manufacture rough cast iron castings according to the specifications of their customers, who in their turn manufacture manhole covers, pipes, components for automobile industry, agricultural implements, etc. For this the rough castings have to undergo machining, grinding, polishing and various other process. 3. Section 14 of the Central Sales Tax Act declared certain goods to be of special importance in inter-State trade or commerce. In the list of goods, set out in Section 14, `Iron and ....
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....is Act shall be payable by a dealer on the sale or the purchase inside the State of declared goods at the rate and only at the point specified against each in the second schedule on the turnover in such goods in each year." 6. Entry 4 of the Second Schedule to the Tamil Nadu General Sales Tax Act has reproduced clause (iv) of Section 14 of the Central Sales Tax Act word for word. Clause (i) of Entry 4 of the Second Schedule to the Tamil Nadu General Sales Tax Act with effect from 1-4-1974 reads as follows :- "(i) Pig iron and cast iron including ingot moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron skull scrap; ..........       ............                 ............." 7. There is no dispute that sub-item (i) of Item II to the Third Schedule of Andhra Pradesh General Sales Tax is also identically worded and provides for levy of 4% tax on such goods. 8. The case of the appellant is that before the judgment of this Court in the case of Bengal Iron Corporation v. Commercial Tax Officer - 1993 (66) E.L.T. 13 (S.C.) = (19....
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....Small Scale Industries Association, Coimbatore, challenging the aforesaid clarification as well as notices. All these writ petitions were dismissed by a common order in which it was held that there was absolutely no merit in all these cases. The law as to the treatment of the cast iron castings and as to in what manner the goods by the description cast iron castings had to be treated for assessment purposes, has been declared by the Supreme Court and is binding not only on all quasi-judicial functionaries, but also upon all courts and all persons in this country under Article 141 of the Constitution. It was held that the relevant provisions of Andhra Pradesh General Sales Tax Act were identical with those of corresponding provisions of the Tamil Nadu Act and in that view of the matter, the circular issued by the State of Tamil Nadu to give effect to the judgment of the Supreme Court, cannot be quashed by the issuance of a writ of certiorari as prayed. 12. The appellant has now come up before this Court and has contended that the decision of this Court in the case of Bengal Iron Corporation (supra) is being misconstrued and misunderstood by all the States' revenue authorities.....
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.... with carbon and silicon, it cannot be said that the molten metal was cast iron and when the molten metal is poured into a mould, it ceased to be cast iron. 14. In our judgment, this contention must be upheld. When Section 14 declared certain goods as of special importance in inter-State trade or commerce, it could not have the molten metal in contemplation. It is nobody's case that the molten metal is bought and sold in the market. What is bought and sold is cast iron, which is obtained by pouring molten metal in the moulds. The moulds may be of various shapes or sizes, but the type or nature or the size of the mould will not decide the question whether the end product will be `cast iron' or not. Cast iron has to be in some shape, whether as a bar, as a billet or in some other form. The molten metal has to be poured into some mould to obtain `cast iron' so that it can be traded, transported and used in obtaining finished goods out of it. It is not the shape of this rough mould that is determinative of the issue. What is determinative is whether it is finished product or only a rough mould to be used in manufacturing finished products. The fact that the rough mould approximat....
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....ce, it must have in contemplation some commodity which is actually traded in inter-State trade or commerce. If rough cast iron castings are treated as something distinct and separate from cast iron, the purpose behind Sections 14 and 15 will be defeated. 17. It has been asserted on behalf of the appellant that `cast iron' would have to be given its natural meaning and understood in the light in which the expression has been understood by the trade for several decades. The Central Government through the Department of Revenue has issued several clarificatory letters confirming that `cast iron' and `cast iron castings' would mean the same item for the purpose of declaration under the Act. This contention is sought to be supported by the following statement in McGraw-Hill's Encyclopaedia of Science & Technology, 7th Edition, Volume 3 :- "Cast Iron A generic term describing a family of iron alloys containing 1.8-4.5% carbon. Cast iron usually is made into specified shapes, called castings, for direct use or for processing by machining, heat treating, or assembly." It will be seen from this that `cast iron' and `cast iron castings' are not being described as two different commod....
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....r centuries. With the growth of industrial societies. the need for metal castings has become very great. In the United States alone the industry produces more than 16 million tons of castings annually, using iron, steel, copper, aluminium, zinc, alloys, and magnesium alloys." Therefore, it appears from this that the molten form is not regarded as `cast iron' at all according to the Encyclopaedia Americana. It is produced by pouring the molten alloy into moulds. `Casting' is also used generally to describe the process of producing a metal object of a desired shape. 20. In our judgment, the molten metal produced in a foundry cannot be described as `cast iron'. In particular having the purpose behind Sections 14 and 15 of the Central Sales Tax Act in mind, cast iron cannot be construed to mean anything but the solidified material which is bought and sold in inter-State trade or commerce. The shape and size of the solidified material is quite unimportant for the purpose of Section 14. If molten metal is poured into a mould, what comes out may be regarded as a casting. Even then such iron casting in its solid form must be treated as `cast iron' in Section 14(iv) of the Central Sa....
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....ernment from time to time in a consistent view. This meaning should not be discarded without very strong reasons. In the instant case, if the well-understood meaning is discarded and the new meaning is adopted, 6,000 foundries in the State of Tamil Nadu and thousands of other foundries all over the country will suffer irreparable loss or damage. 24. Lastly, it has been contended that the circular dated 14-9-1993 issued by the Tamil Nadu Government is based on misconception of the law laid down by this Court in the case of Bengal Iron Corporation (supra). The aforesaid circular reads as follows:- "CIRCULAR Sub :  TNGST Act, 1959 - Cast iron rough castings - clarification regarding rate of tax - judgment of Supreme Court in the case of Bengal Iron Corporation - Revised Clarification - Issued. Ref : 1. This Office Lr. R. Dis. A2/3492/81, dated 24-6-1981.    2. Judgment of Supreme Court in 90 STC 47. In this office Lr. No. R. Dis. A2/3492/81, dated 23-6-1981, it was clarified (in modification of all previous instructions) that rough (unmachined) cast iron castings were liable to be taxed as declared goods under sub-item 1 of item 4 of the Second....