2010 (11) TMI 896

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....t Pleader appearing for the respondent. The facts leading to the controversy are the following: The petitioner is a dealer in scrap materials having shop at Palakkad. In the course of business the petitioner purchased old vehicles from various persons, dismantled the same and sold the items as scrap taxable at four per cent. During the inspection the intelligence officer noticed that scrap portion of the dismantled vehicle is sold in the breaking yard itself and usable automobile spare parts are recovered by the petitioner from the dismantled vehicles and the same are brought to shop and sold as automobile spares. The petitioner's case is that old spares also are sold as scrap inasmuch as sale is by weight and so much so tax collected ....

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....mon knowledge that the spares and components recovered on dismantling an old automobile would not have suffered uniform erosion because items would have been replaced in the course of use of the automobile periodically and there may not be uniform erosion in the quality on all such items leaving sizable number of spare parts obtained on dismantling the vehicles as fit for re-use as such. Scrap is purchased only for melting and for re-rolling the primary metal. However, when old spare parts are sold as such, those are for use as spare parts in automobiles and so much so tax is leviable at the rate applicable for the commodity. However, the only difference is that the dealer of second hand spare parts will be liable to pay tax on those items ....