TaxTMI 
TaxTMI 
1991 (4) TMI 415
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....C poles required by the electricity system to carry on their main lines. Originally, when assessments were made under section 12 of the Tamil Nadu General Sales Tax Act, 1959, hereinafter referred to as "the Act", the various assessees claimed that what they supplied to the electricity system were only mild steel rods and rounds purchased in their turn by them and made in the form of grills to suit the purposes of the Electricity Board and, therefore, they were second sales and not liable to tax under the Act in their hands. The said stand was accepted by the assessing officer and exemption claimed was allowed. Subsequently, the inspection of the business place of the assessees and some of their branches disclosed certain vital materials and records relating to the supply of the said goods to the Electricity Board. Among such records were the purchase orders placed by the Electricity Board on the dealers and the bills issued by the dealers themselves which disclosed that the dealers had fabricated and supplied grills as fabricated by them in terms of the specification given by the Electricity Board for their use in the manufacture of RCC poles by the Electricity Board. The assessin....
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....ax in their hands. Overruling the contentions of the assessees, it was held that inasmuch as with the steel M.S. rods and rounds the assessee fabricated grills of a particular size and shape adopting a particular technique, the resultant grills, which were ultimately supplied, were commercially different from the steel M.S. rods and rounds purchased by them and, therefore, the assessing authority was right in subjecting them to tax and that the appellate authority committed an error in treating the sales of the assessees as merely second sales of steel M.S. rounds and rods. Aggrieved, the assessees have filed the above tax appeals. 4.. Mr. C. Venkataraman, learned counsel appearing on behalf of the assessees/applicants, while reiterating the submissions before the authorities below, submitted that what was supplied by the assessees to the Tamil Nadu Electricity Board was in fact and substance steel M.S. rods and rounds with certain modification in their shape, that there was no change in the commercial identity of the steel M.S. rods and rounds purchased by them when they again resold them to the Tamil Nadu Electricity Board in the form of grills and inasmuch as the revising aut....
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....e assessees in that case have been subjected to. 7.. The decision next referred to was one of the Supreme Court reported in (as) State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319. In the said case, the assessees used to purchase iron scrap and thereafter used to convert them into steel rounds, flats, plates, etc., and the scrap was already subject to tax once. That being the position, when the transactions were subjected to tax once again, the assessees contended that the entry "iron and steel" was wide enough to include scrap as well as the steel rounds, flats, plates, etc., made out of the scrap which was subject to tax once and that, therefore, the sale of the steel rounds, flats, plates, etc., cannot be subjected to tax once again. This Court sustained the plea of the assessees and the Revenue took up the matter on appeal before the Supreme Court. While allowing the appeals, the apex Court declared the principles governing the matter of interpretation of the entry "iron and steel" as hereunder. "If the object was to make iron and steel taxable as a substance, the entry could have been: 'Goods of iron and steel'. Perhaps even this would not have been clear enough....
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....aw dealing with the sales tax, the taxable event is the sale and not the manufacture of goods. Nevertheless, if the question is whether a new commercial commodity has come into existence or not, so that its sale is a new taxable event, in the sales tax law, it may also become necessary to consider whether a manufacturing process, which has altered the identity of the commercial commodity, has taken place. The law of sales tax is also concerned with 'goods' of various descriptions. It, therefore, becomes necessary to determine when they ceased to be goods of one taxable description and become those of a commercially different category and description. It appears to us that the position has been simplified by the amendment of the law, as indicated above, so that each of the categories falling under 'iron and steel' constitutes a new species of commercial commodity more clearly now. It follows that when one commercial commodity is transformed into another, it becomes a separate commodity for purposes of sales tax." Relying upon the said ratio, learned counsel for the assessees in the present case contended that so long as the processing by the assessees did not result in ....
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....therefor, as against the supplies of M.S. grills effected by the various assessees. The conditions as well as the special conditions pertaining to the transactions in question give sufficient details regarding the processing required to be undertaken by the various assessees and the description of the goods to be supplied with details of their specification and standard or quality. No special significance can be made to the advantage of the assessees merely because the Commissioner in the order has stated that it is not the stand of the department that there was a manufacturing process. The further conclusion that "the reason for the department to bring to tax the turnover is that the grills fabricated were commercially different from rods and bars" cannot be lost sight of. Having regard to the nature of the processing undertaken, the revising authority appears to have thought that it was more appropriate and proper to categorise the same as "fabrication" rather than "manufacture". That apart, there is nothing in the order which militates against the finding of the revising authority that as a consequence of the fabricating process, a different and distinct commodity has come into ....