A.Narasimha Rao, Member (D) -
(1.) THESE six appeals are filed against the orders of the Appellate Deputy Commissioner (CT), Vijayawada, filed against the orders of the Commercial Tax Officer, Autonagar Circle, Vijayawada. The details are as follows:
The assessments covered by T.A. Nos. 498/96 and 402/96 relating to assessment years 1990 -91 are original assessments. Others are reassessments. The turnovers under dispute related to several items including sales of iron and steel castings. The contention of the appellant is that the items relating to iron and steel castings were declared goods. The assessing authority relied on the decision of the High Court of Andhra Pradesh in the case of Deccan Engineers v. State of Andhra Pradesh (12 APSTJ 138) and stated that their Lordships have held that "Cast Iron" specified in entry 2(1) of Third Schedule of the APGST Act 57 read with Section 14 of the CST Act will include in its form Ingots, Billets, Moulds and Bottom Plates and it will not include any other separate commodity made from Cast Iron like Cast Iron Pipes or Manhole covers. Bends and Pipe fittings as they are finished products though manufactured from Cast Iron which has met tax. The appeals filed against the assessments were dismissed on the ground that sales of cast iron castings like couplings, bearings, bearing housings, Fire bars, reducers etc., are unclassified goods.
(2.) AT the time of hearing the authorised representative cited the decision of the orders of this Tribunal in Mahalaxmi Foundries Engineering, Hyderabad and Others v. State of Andhra Pradesh, (1998) 26 APSTJ 6. He also cited the decision of their Lordships of the A.P. High Court in the case of M/s. Andhra Light Castings Mechanical and Engineering Works v. State of Andhra Pradesh in T.R.C. 18/94 and Batch dated 6.9.1995, wherein their Lordships have observed as follows:
The learned counsel also points out that the Judgment of this Court in Surana Industries v. State of Andhra Pradesh (2), (1985) II STJ 282 is no longer good law in view of the recent judgment of the Supreme Court in Telangana Steel Industries v. State of A.P. (3) : (1994) 93 STC 187. In view of this latest decision of the Supreme Court, the said observation of the Tribunal that rough cast iron castings which are to be treated as declared goods made from tax suffered pig iron would be assessable to tax once again even though they are in the same sub -item, will not any longer hold good. Whether the goods in question have to be categorised as rough cast iron castings and therefore as declared goods or whether they have to be categorised as separate marketable commodities and not declared goods has, however, to be enquired into by the concerned assessing authorities. In this contention, we also notice that the latest judgment of the Supreme Court in Vasantham Foundry v. Union of India (4) : (1995) SCALE 676, further clarified the position after dealing with the earlier Judgment of the Supreme Court, in Bengal Iron Corporation v. Commercial Tax Officer (5) : (1994) Suppl. 1 S.C.C. 310 : 90 STC 47. The concerned assessing authorities have therefore, to notice that they are bound by these two latest Judgments of the Supreme Court and have to decide the issues before them in the light of the two decisions of the Supreme Court.
In Venkatesh Foundries Case (17 APSTJ 41) pronounced on 14.6.1993, Their Lordships read down the G.O. 383, dated 17.4.1985 to the extent it was inconsistent with the provisions of the Act. After referring to the definitions of the said expressions in the Indian Standards (I.S.) Encyclopaedia Britannica and the Metals Hand Book, the Court observed:
"It can therefore be stated in a simplistic way that the objects resulting by casting cast -iron are "cast -iron castings". Castings which are obtained after the process of casting would be in a rough condition and they will have to be further processed before they are used as end goods or marketable commodities. Neither the G.O., of the State Government nor the two letters of Government of India clarified what is meant by "Cast -iron Castings" and what materials and what articles are prohibited by it and whether they include finished commodities having distinct identity and which can be directly put to use. Finished products knows to the market as such like cast iron pipes, man -hole covers etc., are made from cast -iron. Such separate commodities are not attracted by the expression "cast iron". The rationale being that sub -item (i) of Item (iv) of Section 14 of the CST Act takes in only "goods which are in an unfinished form" and not commodities which are "finished products" for use. Unlike in the case of sub -items (ii) to (xvi) in the case of sub -item (i) "Pig -iron and cast -iron" are mentioned without any description suggestive of any particular shapes as such they are declared as "goods" of special importance in inter -State Trade or Commerce. The other goods included in the said sub -item (i) as declared goods are ingot moulds, bottom plates, iron scrap, cast iron scrap, runner scrap and iron scrap. The scraps mentioned in sub -item (i) are crude and in different forms of cast iron. Ingot moulds are usually open ended iron castings used for casting ingots; and bottom plates are also iron castings. These are the only castings, which are specifically included in sub -item (i). It, therefore, follows that the primary and original form in which cast -iron is usually available is in the form of rough casting and thus the term "cast - iron" occurring in Item (iv) of Section 14 of the CST Act denotes "cast iron castings" in that sense. In other words "cast -iron" will include only unfinished forms that is primary or original form in which it is saleable and not any subsequently fabricated forms or finished products and articles made out of cast -iron".
The High Court did not have the advantage of referring to a Supreme Court Judgment pronounced just two months earlier but reported in latter half of 1993.
(3.) IN Bengal Iron Corporation and Another v. Commercial Tax Officer : (1993) (90 STC 47) : (16 APSTJ 266) pronounced on 23.4.1993 the Supreme Court approved Deccan Engineer's, 12 APSTJ 138 (A.P.). The Supreme Court considered G.O.Ms. No. 383, Revenue, Dated 17.4.1985 and the clarifications issued by the Government of India and held them to be not binding on assessing authorities. The products in question before them were cast iron pipes, man -hole covers, bends etc. The counsel for the appellant however did not dispute that the 'cast -iron' was different from the cast -iron pipes, manhole covers, bends etc. Dealing with the effect of G.O.Ms. No. 383 by the Government of Andhra Pradesh it approved the decision of Deccan Engineers cited supra and held:
"So far as clarifications/circulars issued by the Central Government and/or State Governments are concerned, they represent merely their understanding of the statutory provisions. They are not binding upon the Courts. It is true that those 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 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. "Since the goods manufactured by the appellants are different and distinct goods from cast -iron, their sale attracts the levy created by the Act. In such a case, the Government cannot say, in exercise of its power under Section 42(2) that the levy created by the Act shall not be effective or operative. In other words, the said power cannot be utilised for dispensing with the levy created by the Act, over a class of goods or class of persons, as the case may be. For doing that, the power of exemption conferred by Section 9 of the A.P. Act to be exercised".
It did not give benefit of the G.O. 383 and clarifications issued by Government of India to the appellant. In Vasantham Foundry v. Union of India and others : (1995) (99 STC 87), the Supreme Court had an occasion again recently to consider the taxability of 'Cast iron Casting' like pipes, man -hole covers or bends, it held:
"When Section 14 of the CST Act, 1956, declared certain goods as of special importance in inter -State Trade or Commerce, it could not have had molten metal in contemplation. What is bought and sold in the market is cast -iron which is obtained by pouring molten metal in moulds. The moulds may be of various shapes or sizes, but the type or nature of 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 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 goods out of it. 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 approximates in shape to the finished goods that will be ultimately made out of it does not make it any the less a rough mould. What emerges from the mould is cast -iron casting in its primary form, that is to say, rough cast -iron casting. But that will not take it out of the ambit of declared goods. If cast iron or cast iron casting in the primary form is not to be treated as declared goods, then the whole purpose of including cast -iron in the list of declared goods will be defeated. Cast -iron casting in its basic or rough form is "cast -iron" contemplated in Item (iv) (i) of Section 14 of the CST Act, 1956 and the corresponding item (1) of entry 4 of Schedule II to the TNGST Act, 1959. But, if thereafter any machining or polishing or any other process if done to the rough cast iron casting to produce things like pipes, man -hole covers or bends, these cannot be regarded as "cast -iron casting" in its primary form; they are products as "cast -iron" and cannot be treated as declared goods under Section 14(iv) of CST Act.
The Supreme Court, accordingly quashed the circular dated Sept., 14, 1993 issued by the Tamilnadu Government which directed levy of tax on "all cast iron castings whether machined or unmachined" and clarified" rough unmachined cast -iron castings will continue to be treated as declared goods under sub -item (i) of item 4 of the Second Schedule to the TNGST Act, 1959". (Sub -clause 1 of Item 4 of Second Schedule to TNGST Act is identical with sub -clause (i) of item (2) of third Schedule of APGST Act).;