TaxTMI 
TaxTMI 
1994 (2) TMI 287
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....lled strips into cold rolled strips involved only reduction of the thickness of strips without any changes in the chemical composition thereof was accepted by the authority concerned. While doing so the assessing authority relied upon his personal observation of the process of conversion in the petitioner's factory of which a reference is made in the order of assessment passed by him. The exemption claimed by the petitioner on the sale of cold rolled strips was accordingly upheld and the petitioner's turnover held exempt from tax. Nearly two years later the Deputy Commissioner of Commercial Taxes, Administration Sub-Division, Bangalore/first respondent in this petition, issued a show cause notice under section 21(4) of the Karnataka Sale....
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....he Fourth Schedule to the Act was suggestive of the fact that the cold rolled and hot rolled strips were treated to be one commodity no matter one was produced out of the other. The clubbing of goods though commercially different in the same sub-item of item 2, contended the learned counsel, was a statutory recognition of the fact that the goods so grouped together for purpose of taxation were to be treated as one category of goods with the result that tax paid on one would suffice for the other also. Reference was also made by the learned counsel to sections 14 and 15 of the Central Sales Tax Act, to show that the goods covered by item 2 of the Fourth Schedule were declared goods, tax burden on which was meant to be minimised. In Bah....
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....y of taxable commodity for the purpose of section 14 of the Central Act. The opinion expressed by the Government of India near about the time section 14 of the Central Act was amended, and the earliest clarification issued by the Commissioner, in the year 1975, reflect the proper meaning." A similar issue came up for consideration of the apex Court in Telangana Steel Industries v. State of Andhra Pradesh [1994] 93 STC 187. Relying upon its judgment in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319 (SC) their Lordships came to a similar conclusion in the following words: "Despite the aforesaid being the position, Shri Chari contends that wires being known as a different commercial commodity from rods, as were flour,....
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.... interdiction of section 15 of the Act, we would not be justified in conceding the present demand of the Revenue unless a strong and cogent case were to be made out, which we do not find. ........................... We, therefore, conclude by stating that iron wires cannot be taken as a separate taxable commodity and, if wire rods which were purchased by the appellants had suffered sales tax, the same could not be realised from the sale of wires." Reliance is also placed by Indra Kumar upon two judgments of the High Court of Andhra Pradesh in State of A.P. v. Nagarjuna Steels Limited [1995] 96 STC 451 and State of Andhra Pradesh v. Southern Steel Ltd. [1995] 96 STC 452 wherein the question as to whether cold rolled steel strips man....
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....in the context of the language used in this sub-item, it is possible to interpret the sub-item plainly to include all types of strips whether hot rolled or cold rolled.' " *The portion within quotations is from State of Andhra Pradesh v. Southern Steel Ltd. [1995] 96 STC 452 (AP).-Ed. The principles that can therefore be deduced may be stated thus: (a) The grouping together of goods in a sub-item of item 2 of the Fourth Schedule, is a prima facie strong circumstance to show that the goods so grouped together form one category of goods for purposes of sales tax. (b) Even if commercially different goods are produced out of some other goods found in the same sub-item the goods so produced may not be liable to tax if the good....