State Taxation Tribunal - Tamil Nadu
Steel Authority Of India And Anr. vs State Of Tamil Nadu And Ors. on 23 September, 1998
Equivalent citations: [2000]118STC260(TRIBUNAL)
JUDGMENT
The judgment of the Tribunal was delivered by J. Kanakaraj,J.(Chairman)
1. Iron and steel falling under entry 4 of the Second Schedule of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the TNGST Act") is the subject-matter of this batch of cases. To begin from the beginning, Section 14 of the Central Sales Tax Act, 1956 (hereinafter called "the Central Act") declares certain goods are of special importance in inter-State trade or commerce. Sub-section (iv) of Section 14 specifies that iron and steel is one of the goods declared, as having special importance. The said entry proceeds to describe the various forms of iron and steel and it is not necessary for us to notice all the types of iron and steel which are eligible for the special status given to declared goods. Section 15 of the Central Act enumerates the restrictions and conditions in regard to tax on sale or purchase of declared goods within the State. We will refer to such restrictions and conditions at a later stage. In compliance with the Central Act, the Tamil Nadu General Sales Tax Act defines declared goods under Section 2(h) of the TNGST Act. Section 4 is the charging section in respect of such declared goods and the same faithfully incorporates the restrictions imposed by Section 15 of the Central Act. The Second Schedule to the Tamil Nadu General Sales Tax Act prescribes the rate of tax and the point of levy. Entry 4 of the Second Schedule talks of iron and steel and the various forms and by-products of iron and steel. There are as many as 16 types of iron and steel and all of them are chargeable at the point of first sale in the State at 4 per cent. There is no dispute about the above statutory provisions.
2. In Pyarelal Malhotra v. Joint Commercial Tax Officer, Madras [1970] 26 STC 416 (Mad.), the validity of the levy of sales tax on iron plates, iron sheets and iron bars made out of iron scrap came up for consideration. The short question before the division Bench was whether iron scrap having already suffered tax, the authorities could again levy tax on the iron plates, sheets and bars made out of tax-suffered iron scrap.
3. The conclusion of the division Bench of the Madras High Court was as follows :
"Even assuming that the process adopted is a manufacturing process and the product sold by the petitioner is a manufactured product, we are of the view that even in their manufactured state the goods did not cease to be 'iron and steel' as defined in entry (iv) in Section 14 of the Central Act. A reading of the said entry as a whole shows that the statute wanted to treat all forms of iron and steel either as raw material or as a finished product from the rolling mill as 'iron and steel' and the product as emerging from the various stages of manufacture cannot be treated different from 'iron and steel'."
This judgment was rendered on April 10, 1970, and the manufacturers and traders had the benefit of the above decision. But, on January 19, 1976, the Supreme Court of India, reversed the said judgment in State of Tamil Nadu v. Pyare Lal Malhotra reported in [1976] 37 STC 319 and held that the sales tax law is intended to tax sales of different commercial commodities and as soon as a separate commercial commodity emerges or comes into existence, they become separately chargeable to tax. Observed the Supreme Court :
"It is true that the question whether goods to be taxed have been subjected to a manufacturing process so as to produce a new marketable commodity, is the decisive test in determining whether an excise duty is leviable or not on certain goods. No doubt, in the law 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".
4. Consequent on the judgment of the Supreme Court, the authorities started issuing notices for re-opening the assessment and bring to tax the sale of such other commodities which attracted the judgment of the Supreme Court. There was a spate of representations from the traders seeking waiver of tax for the period between April 10, 1970, the date of the Madras High Court judgment and January 19, 1976, the date of the Supreme Court judgment. The Government, after taking note of all the circumstances, directed that the tax from the steel re-rolling mills for the period from April 10, 1970 to January 19, 1976 be waived subject to the condition that the waiver will not apply to dealers who had collected the tax as such or in some other form. Regarding future liability, the Government invited the views of the then Board of Revenue. This waiver was granted in G.O. Ms. No. 4 dated January 3, 1977. In G.O. Ms. No. 484/ CTRE/dated May 29, 1980, the Government further directed that the tax due under the Central Act from the re-rolling mills for the same period in respect of end-products such as M.S. rounds, rods, etc., manufactured out of raw materials which had already suffered tax under the TNGST Act also be waived. There were again representations from the Tamil Nadu Steel Re-rollers Association in respect of the subsequent levy of sales tax on raw materials as well as end-products at 4 per cent respectively. They complained that they were not able to compete with the manufacturers from other States. In June, 1979, a Task Force was appointed by the Government to examine the difficulties expressed by the re-rollers. Ultimately, in G.O. Ms. D. No. 103 dated January 24, 1982, the Government accepted the recommendations of the task force and directed that the end-products in item No. 4 of the Second Schedule, such as M.S. rounds, rods, etc., manufactured by the steel rolling mills in Tamil Nadu out of raw materials which also find a place in item No. 4 of the Second Schedule, be exempted from tax payable under the TNGST Act and CST Act. This exemption was available from January 19, 1976, the date of the Supreme Court judgment. In G.O. P. No. 311/CTRE/dated March 13, 1982 Government issued two notifications under Section 17 of the TNGST Act. The first notification under Sub-section (1) of Section 17 exempted the payment of tax in respect of end- products mentioned in item 4 of the Second Schedule of the TNGST Act manufactured by steel rolling mills in Tamil Nadu subject to the condition that the raw materials had suffered tax under the said Act and subject to the conditions that the dealers did not collect tax directly or indirectly, or got income-tax relief. The second notification under Sub-section (5) of Section 8 of the Central Act gave exemption in respect of the very same goods from payment of tax under the said Central Act, subject to the very same conditions. These notifications came into effect from April 1, 1982.
5. While matters stood thus, the Government effected a drastic change in the policy by issuing G.O. P. No. 253 dated March 17, 1986. Under the said Government order a Notification II (l)/CTRE/47(n)/86 was issued under Sub-section (1) of Section 17 of the TNGST Act exempting the tax payable by any dealer on the sales of raw materials falling under item 4 of the Second Schedule to the Act to steel re-rolling mills in Tamil Nadu, subject to the production of a declaration of purchase from the steel re-rolling mills. An amendment was introduced to the above notification on April 3, 1987 in G.O. P. No. 334, which stated that the exemption on raw materials will apply when the sale is to re-rolling mills for the manufacture of end-products falling under item 4 of the Second Schedule for sale inside the State or in the course of inter-State trade or commerce subject to the production of a declaration of purchase from the steel re-rolling mills. There was a second amendment on February 22, 1988 issued in G.O. P. No. 150, dated February 22, 1988. Under the second amendment the sale of raw materials was exempted subject to the production of a declaration of purchase from the steel re-rolling mills and subject to the condition that the re-rolling mills remit to the assessing authority the tax in the raw materials so purchased and used in the manufacture of end-products sent on consignment sales/branch transfers to other States. It is this amendment on February 22, 1988 which cast a sting on the re-rolling mills.
6. In G.O.P. No. 390 dated September 4, 1991, a notification II(1)/CTRE/ 147 (a-15)/91, was issued, in and by which the notification dated March 17, 1986 was superseded, with all the amendments. The fresh notification says that there will be a reduction of 2 per cent in respect of the tax payable by any dealer under the TNGST Act on the sales of raw materials falling under item 4 of Second Schedule to steel re-rolling mills in Tamil Nadu for manufacture of end-products. The condition for the grant of the concessional rate is that the end-products should be sold inside the State or in the course of inter-State trade or commerce subject to the production of a declaration of purchase from the steel re-rolling mills. The second important condition is that at the steel re-rolling mills remitted to the assessing authority the difference of tax of 2 per cent on the raw materials so purchased and used in the manufacture of end-products sent on consignment sales (branch transfers to other States). Since the last notification issued in G.O. P. No. 390, dated September 4, 1991 is the main target of attack in all the writ petitions, we extract below the said notification :
"G.O. P. No. 390, dated the 4th September, 1991 [II(1)/CTRE/147(a-15)/ 91].--In exercise of the powers conferred by sub-sections (1) and (3) of Section 17 of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959), and in supersession of the Commercial Taxes and Religious Endowments Department Notification No. II(l)/CTRE/47(n)86 dated 17th March, 1986, published in Part II-Section 1 of the Tamil Nadu Government Gazette, Extraordinary, dated the 17th March, 1986, as subsequently amended, the Governor of Tamil Nadu hereby makes a reduction from four per cent to two per cent in respect of the tax payable by any dealer under the said Act, on the sales of raw materials falling under item 4 of the Second Schedule to the said Act, to steel re-rolling mills in Tamil Nadu for manufacture of end-products falling under item 4 of the said Schedule for sale inside the State, or in the course of inter-State trade or commerce subject to the production of a declaration of purchase from the steel re-rolling mills and subject to the condition that the steel re-rolling mills remit to the assessing authority, the difference of tax of two per cent on the raw materials so purchased, and used in the manufacture of end-products, sent on consignment sales (branch transfer or to other State).
2. The notification hereby made shall come into force on the 5th September, 1991."
7. The challenge in all the cases before us is by a variety of manufacturers, traders and other dealers on diverse grounds, some of which are genuine, some imaginary and mostly apprehensive and premature in nature. It will be useful to analyse the different categories of attack by the different traders and manufacturers, all for the purpose of gaining an advantage for themselves. Broadly speaking, there are four categories of petitioners :
(1) Scrap dealers :
For illustrating the case of such scrap dealers we will take one case, namely, T.P. No, 3111 of 1997. We can also notice the grounds of attack of such scrap dealers in general. It is stated that such dealers purchase iron and steel scrap either from inside Tamil Nadu or from outside Tamil Nadu and the scrap is melted in furnace to produce ingots, billets, etc. They sell the ingots and billets to re-rolling mills inside Tamil Nadu or out of Tamil Nadu who undertake the task of hot rolling or cold rolling for the purpose of drawing rolled steel sections. These petitioners representing the scrap dealers are only apprehensive of the imposition of a further levy under the Additional Sales Tax Act, 1970. They therefore, contend that though the tax is reduced from 4 per cent to 2 per cent, they are likely to be affected because of the imposition of additional sales tax. They also complain of non-application of mind by the Government and contend that the impugned G.O. P. No. 390, dated September 4, 1991 is also vitiated by the principles of promissory estoppel. There is also a plea that the impugned notification is not in public interest. Their prayer in the writ petition is to declare G.O. P. No. 390, dated September 4, 1991 as ultra vires of Section 17 of the TNGST Act and sections 14 and 15 of the Central Sales Tax Act. They also refer to articles 14, 19(1)(g), 301 and 304 of the Constitution of India apart from entry 92-A, List I of the Seventh Schedule to the Constitution. From a perusal of all the objections by such scrap dealers the following points can be culled out as points for determination :
(1) Whether G.O.P. No. 390 dated September 4, 1991, is vitiated by the principles of promissory estoppel?
(2) Whether the said Government order is not in public interest?
(3) Whether the petitioners will be liable to pay additional sales tax, in addition to the 2 per cent mentioned in the notification?
(2) The steel re-rolling mills :
By way of example, we can take T.P. No. 1077 of 1997 which will represent all the re-rolling mills regarding the factual points and the grounds of attack. The petitioner in T.P. No. 1077 of 1997 says that they were assessed for the year 1987-88 on March 23, 1989 and granted exemption in respect of branch transfers and transfers on consignment sale. They are aggrieved by a notice issued on December 14, 1990 which says that if the end-products are sent on consignment sales or branch transfers to other States they have to pay tax on the corresponding purchase at 2 per cent. This is because the dealer had purchased scraps by issuing a declaration form, but despatched goods on consignment sales and had not included the turnover in the monthly return for the year 1987-88. The assessing authority proposed to revise the assessment and include the said turnover. The contention of the re-rolling mills is that the State Legislature or its representative has no jurisdiction under entry 54, List II of the Seventh Schedule to the Constitution to impose tax on such despatches to places outside the Tamil Nadu State. If at all it is only under entry 92-B of the Union List that legislation can be made.
Secondly, it is pointed out that it is not open to the State Government to levy sales tax on the purchase of raw materials falling under item 4 of the Second Schedule in view of sections 14 and 15 of the Central Sales Tax Act. The point of levy in respect of raw materials is on the first sale in the Tamil Nadu State. Therefore, the indirect attempt to impose the tax on the re-rolling mills on the purchase of raw materials by a mere notification under Section 17 of the TNGST Act is absolutely illegal. It is also contended that Section 7-A of the TNGST Act will not get attracted in respect of such purchases of scraps. Therefore, the attempt of the respondent to estimate the purchase value of the consignment sales and impose a tax at 2 per cent can only be regarded as a tax on consignment sales which is beyond the jurisdiction of the State Government. Therefore, the steel re-rolling mills attack the impugned G.O. P. No. 390 dated September 4, 1991 on the following grounds :
(1) The State Government has no jurisdiction to legislate on the subject because of the constitutional entries.
(2) The impugned notification is in violation of sections 14 and 15 of the Central Sales Tax Act.
(3) The impugned notification is vague and unworkable.
(4) Section 7-A of the TNGST Act is not at all attracted.
(3) Tube manufacturers :
The case of the tube manufacturers can be illustrated with the facts of T.P. No. 661 of 1997. The petitioner is carrying on business as manufacturers", dealers, importers, etc., in pipes, tubes and tubular goods made of steel. They are also dealing in tubes made of other raw materials like rubber, plastic, P.V.C., etc. The steel tube and pipes are manufactured out of hot rolled steel coils and skelps. Their factory is at Pondicherry, but their office is at Madras. The petitioner purchases raw materials from the Steel Authority of India (SAIL) from its branch at Madras and the goods are despatched to their factory at Pondicherry. Normally, the tax on the purchase of raw materials in Tamil Nadu is chargeable at 4 per cent. Under Notification II(1)/CTRE/47(n)-86, dated March 17, 1986, the Tamil Nadu Government granted exemption in respect of the tax payable on the sales of raw materials falling under item 4 of the Second Schedule to steel re-rolling mills in Tamil Nadu, for manufacture of end-products. According to the petitioner, they are re-rolling mills and they are manufacturing end-products from out of the raw materials supplied by SAIL. It is further claimed that there is no definition of a re-rolling mill and having regard to the manufacture of steel tubes with the raw materials supplied by SAIL, they must be deemed to be re-rolling mills. Therefore, they sought for exemption in respect of the purchase of raw materials from SAIL. Neither, the third respondent (SAIL) nor the assessing authority was satisfied about the said claim of the petitioner and proceeded to levy sales tax on the sale of raw materials by SAIL, at 4 per cent. Similar factories had filed W.Ps. to injunct the third respondent and the assessing authority from levying and collecting sales tax on the sale of raw materials. By virtue of interim orders the petitioners were purchasing raw materials on furnishing bank guarantee. Therefore, the petitioners have filed these writ petitions seeking a writ of mandamus to direct the respondent to extend the benefit of the said notification dated March 17, 1986 in the matter of purchase of raw materials. The points urged by the petitioners are as follows :
(1) The respondents are not justified in thinking that the petitioners are not re-rolling mills.
(2) The benefit of the notification dated March 17, 1986 is available to the petitioners, (3) The object of re-rolling can be undertaken by the petitioners through other factories, on job-work basis, whether such factories are in Tamil Nadu or outside Tamil Nadu. This restriction offends articles 301 and 304 of the Constitution of India.
(4) Steel Authority of India (SAIL) :
A number of writ petitions/transferred petitions have been filed by the Steel Authority of India and their case is to some extent conflicting with some of the other petitioners. Their prayer itself is for the issue of a writ of mandamus to restrain the sales tax authorities from denying the benefits of the notification dated March 17, 1986 as amended by G.O.P. No. 150 dated February 22, 1988. The petitioners are a Government of India undertaking. They have steel plants in Bhilai, Rourkela, Durgapur and Bokaro for the production of mild steel products and hot rolled coils, skelps, angles, channels, plates, etc., as well as billets, blooms, ingots, slabs, etc. They have also alloy steel plants and stainless steel plants. After referring to the various notifications of the Government of Tamil Nadu, it is pointed out that the sales of raw materials like the products of SAIL are exempt from sales tax, so long as the purchaser is a steel re-rolling mill, engaged in the manufacture of end-products. The purchaser has to prove their status by furnishing a declaration to the seller of raw materials (SAIL). According to the petitioner, the tube manufacturers are not entitled to the benefit of the said notification. However, most of the tube manufacturers have approached the High Court and obtained orders restraining the petitioner from collecting sales tax. In view of the stand taken by the tube manufacturers, the sales tax authority is issuing notice proposing to recover sales tax on the sale of raw materials to tube manufacturers. Similarly, for the year 1989-90 a notice has been issued proposing to levy sales tax on the petitioner holding that the exemption under the notification dated March 17, 1986 is not applicable. It is also proposed to levy penalty on the petitioners. Since the petitioners are disabled from collecting sales tax from the purchasers in view of the orders of injunction granted by the Madras High Court, the petitioners are in an unenviable position. Their one and only contention is that both the notifications dated March 17, 1986 and February 22, 1988 are legal and should be given effect to in respect of the sales made by the petitioners to purchasers who are entitled to claim exemption under the said notification.
8. It is also pointed out in O.P. No. 1548 of 1997 that for the year 1991-92 the petitioners were not given sufficient time to file objections to their notice dated March 17, 1997 and an order of assessment has been foisted on the petitioners. The order of assessment is dated March 31, 1997. According to the petitioners the order of assessment is illegal in so far as it denies the benefit of the notifications dated March 17, 1986 and February 22, 1988. Therefore, the only point to be considered in this batch of cases filed by SAIL is :
Whether the tube manufacturers are re-rolling mills and whether the notifications dated March 17, 1986 and February 22, 1988 are applicable to them ?
9. We will now advert to the counter-affidavit filed by the respondents which will clearly indicate the stand of the Government. A set of counter-affidavits have been filed in the writ petitions filed by the re-rolling mills. In W.P.No. 16149 of 1991 which is converted as T.P. No. 3111 of 1997, the stand of the Government is clearly set out. In this batch of cases filed by the re-rolling mills, the attack is on G.O. P. No. 390/CTRE department dated September 4, 1991. So far as the levy of additional sales tax is concerned, it is explained that the Act itself contains a safety valve and the prohibition contained in the Central Sales Tax Act will not be violated and the tax shall never exceed 4 per cent. After pointing out that the re-rolling mills have to file a declaration to the first seller of raw materials it is pointed out that the grant of exemption was subject to the condition that if the re-rolling mills send the end-products on consignment basis to their branches or agents in other States, then the steel re-rolling mills have to remit the tax due on their purchase turnover of raw materials to assessing authority. In the words of the Revenue it is stated as below :
"Therefore, if the re-rolling mills do not abide by the conditions of selling the end-products either within the State or in the course of inter-State trade or commerce, they have to remit the tax due on their purchase turnover of steel raw materials used in the manufacture of end-products by way of penalty. It does not mean that the point of taxation was shifted from the sellers of steel raw materials to the re-rollers on their purchase turnover."
Again the counter-affidavit says as follows :
"The effect of the amendment issued was therefore, when the end-products were sent on consignment sales or branch transfer to other States, the raw materials utilised in the manufacture of such end-products and suffer 2 per cent tax at the hands of the seller and another 2 per cent in the hands of the re-rolling mills. Originally, the entire 4 per cent tax was paid by the re-rolling mills prior to the amendment issued in G.O. P. No. 390/CTRE dated September 4, 1991, However, the counter-affidavit maintains that there is no double taxation both at the point of purchase and at the point of sale. The levy according to the Government, is only punitive when the re-rollers violated the conditions stipulated in the exemption notification, by transferring the goods on consignment basis. They also maintained that entry 92-B of List I of the Seventh Schedule to the Constitution is riot offended. They also contend that Section 7-A(1-C) is attracted when the goods are despatched to places outside Tamil Nadu by way of consignment or branch transfer. The impost according to the revenue, is on the raw materials purchased for the manufacture of end-products to be despatched on consignment/branch transfer. To the same effect is the counter-affidavit filed in W.P. No. 16534 of 1991 which is re-numbered as T.P. No. 3112 of 1997. The facts in W.P. No. 16205 of 1989 (T.P. No. 1041 of 1997) are slightly different and a separate counter-affidavit has been filed. In this case, the dealer has its main office at Visakhapatnam (Andhra State) and a branch office in Madras. They have 2 mini re-roller plants at Bangalore and Visakhapatnam. They purchased iron and steel scraps from registered dealers in the State of Tamil Nadu, which are tax suffered raw materials and stock transferred to their re-rolling mills outside Tamil Nadu. The raw materials are converted into end products by re-rolling method and again transferred to Tamil Nadu. They claimed exemption as per the Notification G.O. Ms. No. 103 dated January 24, 1982 for the period from January 19, 1976 to March 31, 1982 and under G.O. P. No. 311 dated March 13, 1982, for the period from April 1, 1982 to March 31, 1986. According to the petitioners the denial of exemption on the sole ground that the goods were manufactured outside Tamil Nadu is in violation of Article 404(a) of the Constitution of India. In the counter-affidavit filed by the respondents it is categorically stated that the petitioners are not entitled to exemption on sales of end-products manufactured outside the State of Tamil Nadu and imported into Tamil Nadu and sold locally. They are first sales in Tamil Nadu of the end-products and therefore, taxable under the TNGST Act. Reliance is placed on [1990] 77 STC 82 (SC) ; 4 SISTC 95 (SC) (Video Electronics Pvt. Ltd. v. State of Punjab).
10. Counter-affidavits have been filed in respect of the W.Ps. filed by the tube manufacturers. A perusal of the same suggests that the Government denies exemption both on the ground that some of the manufacturers have factories outside Tamil Nadu and also on the ground that they are not steel re-rolling mills. So far as the second ground of defence it is stated that they purchased coils and skelps from the 3rd and 4th respondents. Even the third and fourth respondents did not accept the claim of the petitioners that they are re-rolling mills and therefore exemption was not available to them. It is pointed out that in the manufacture of end-products they produce steel tubes with continuous section by a process which is not equated to re-rolling. The counter-affidavit says that re-rolling is a process by which sections of various shapes, sheets, rods, strips, plates, etc., are made by forming the raw materials and they being passed through formed rollers. A tube whose sections ought to be continuous cannot be formed by the rolling process without joining the edges by some other process like tube welding, etc. Lastly, a counter-affidavit has been filed in one of the writ petitions filed by the SAIL. The SAIL sells raw materials falling under item 4 of the Second Schedule. Their sales do not qualify for exemption for reason that the sales are not made to steel re-rolling mills. Therefore, it is contended that whenever the SAIL sold raw materials to factories other than re-rolling mills, they were brought to tax, denying exemption. The difficulties expressed by the SAIL on account of writ petitions filed by the tube manufacturers have to be sorted out by the SAIL by having the orders of injunction vacated.
11. We have been trying to get the declaration (the format) referred to in the impugned notifications. We have been told that there is no notification amended to the respective notifications. The executive has drafted a declaration form for the purpose of giving effect to the notification. We have called for the files and we find that a circular has been issued on March 26, 1986 from the Office of the Commissioner of Commercial Taxes enclosing a format of the declaration. It is interesting to notice the contents of the said declaration form which is as follows :
"Declaration form [Notification No. 47(n)86]
1. Sl. No.
2. Name and complete address of the steel re-rolling mills.
3. Regn. No. (a) under TNGST Act.
(b) under C.S.T. Act.
To (Name and complete address of the seller of raw materials falling under item 4 of Second Schedule) Regn. No. under TNGST Act/CST Act.
'Certified that the raw materials (the particu-
lars whereof have been furnished below) supplied in pursuance of our purchase order No.................
dated :
Purchased from you as per cash bill No. dated................
Invoice No.....................
for Rs..................
are intended for use by me/us in the manufacture of end-products falling under item 4 of the Second Schedule to the TNGST Act, 1959.' PARTICULARS OF GOODS
(a) Description of goods.
(b) Quantity of goods.
The above statements are true to the best of my knowledge and belief and nothing has been concealed therefrom.
Signature with date.
Name of the person signing the declaration.
Status of the person signing the declaration in relation to the steel re-rolling mills."
12. On the above pleadings and records, Mr. C. Natarajan, has projected the arguments on behalf of most of the petitioners. The first argument is that the intention of the Government had always been to maintain a single stage levy of iron and steel products and that is clear from G.O. P. No. 103/CTRE Department dated January 24, 1982. All the notifications up to G.O. P. No. 253 dated March 17, 1986 were issued having regard to public interest involved in granting exemption. Therefore, the withdrawal of the said notification by the impugned G.O. P. No. 390 dated September 4, 1991 should also be proved and demonstrated to be in public interest. Reference is made to Indian Express Newspapers (Bombay) Private Ltd. v. Union of India [1986] 159 ITR 856 (SC) ; AIR 1986 SC 515. Secondly, it is pointed out that having regard to the tax structure in neighbouring States there was no reason for withdrawing the earlier notifications. It is complained that there is lack of application of mind because the Government ought to have known the implications of the Additional Sales Tax Act, 1970. It is further contended that the impugned notification is in excess of power of Section 17 of the TNGST Act because the said section only authorises the grant of exemption on the levy of tax. The purported levy on products linked with the transfer of stocks outside Tamil Nadu is clearly violative of entry 92-B, List I of the Seventh Schedule to the Constitution of India. Mr. C. Natarajan, Senior Counsel also argues for SAIL and says that the tube manufacturers are not entitled to claim the exemption under G.O. P. No. 253, dated March 17, 1986.
13. Mr. C. Venkataraman, has argued for the tube manufacturers and contends that it is open to the factories to have the re-rolling done on job-work basis. He also argues that the notification is unworkable ; because one cannot find out whether the purchaser (re-roller) has sold the goods or stock transferred to other States. He also objects to the words "in Tamil Nadu" in the various notifications especially G.O. P. No. 253, dated March 17, 1986, According to him G.O. P. No. 311, dated March 13, 1982 is still in operation.
14. Mr. Promodkumar Chopda, appearing for the re-rollers, argues that Section 7-A of the TNGST Act is not at all attracted because of the exemption granted under Section 17 of the TNGST Act. He has taken us through the notice dated December 14, 1990 which is challenged in T.P. No. 1077 of 1997. A portion of the notice can be cited and the same is in consonance with the stand taken by the Government in their counter-affidavit. The said portion of the notice is as follows :
"According to the G.Os. and notifications cited above, if the end-products are not sold within the State or in the course of inter-State trade and commerce steel rolling mills should pay the tax on the purchase of raw materials purchased by issuing declaration form and used in the manufacturing of the end-products. In other words, the steel rolling mills should remit the tax on the raw materials purchased by issuing declaration form and used in the manufacturing of the end-products which were sent on consignment sales and branch transfer to other States. In this case the dealers have purchased scraps by issuing declaration form and used in the manufacturing of end-products sent to outside the State on consignment sales and branch transfer during the years 1987-88. They have not paid the tax due on the above corresponding purchases and not included in the monthly return. This turnover was also not assessed by the assessing officer for the year 1987-88."
For working out the corresponding purchase value of scrap the assessing authority had adopted a particular method. The method is to divide the value of scrap purchased by issuing declaration forms and used in the manufacture of finished products sent on consignment basis by total quantity of scrap purchased by issuing declaration forms and then multiplied by the total quantity of stock transferred on consignment basis. After arriving at the purchase value of scrap the officer proposed to tax the same at 4 per cent. According to Mr. Chopda, the above notice is totally without jurisdiction and there is absolutely no logic in proposing the tax at 4 per cent.
15. Mr. S. Sivanandam, the learned counsel, has only added that Section 7-A of the TNGST Act is not at all attracted, because there was no earlier taxable event.
16. Mr. K. Mani, the learned counsel appearing for some of the tube manufacturers, insisted that the Notification G.O. P. No. 253, dated March 17, 1986 did apply to their factories. If they are excluded, it will amount to discrimination under Article 14 of the Constitution of India.
17. The learned Government Advocate, in trying to meet the arguments advanced on behalf of the petitioners, has taken us through some of the counter-affidavits and argues that none of the points raised by the petitioners can be substantiated. There was no promise extended to any of the petitioners and there is no public interest involved in granting exemption or withdrawing exemption under Section 17 of the TNGST Act. He refers to a number of decisions in support of the theory that exemption is a matter of policy adopted by the Government from time to time. He has placed on record volume IV of the History of sales tax in Tamil Nadu. So far as the imposition of additional sales tax is concerned he contends that the question will arise as and when it is imposed and there is sufficient safeguard in the Act itself to prevent any abuse of the levy of the Central sales tax. In reply, Mr. C. Natarajan, says that so far as SAIL is concerned the action taken against them must be postponed until the purchasers from SAIL are finally subjected to tax.
18. Before rendering our findings on the issue raised by us, we have to look into the decisions cited on behalf of the parties.
19. We will first refer to the Indian Express case [1986] 159 ITR 856 (SC) ; AIR 1986 SC 515, to understand the scope of interference in a notification extending concessions and exemptions. They were considering a notification under Section 25 of the Customs Act. That section specifically refers to the involvement of public interest. The apex Court held that a notification being a piece of subordinate legislation may be questioned on any ground on which the plenary legislation is questioned. It may be challenged on the ground that it does not conform to the statute. It may be challenged on the ground of unreasonableness, in the sense that it is manifestly arbitrary. The Government should take note of all relevant materials before withdrawing the exemption already granted.
20. In Bhawani Cotton Mills Ltd. v. State of Punjab [1967] 20 STC 290 (SC), it was held that the notification enabling the State Government to collect purchase tax in respect of cotton were opposed to the material provisions of the Central Sales Tax Act, The classification of purchases used in the manufacture of goods for sale was held to be an unreasonable classification.
21. Sun Paper Mills Ltd. v. Union of India [1991] 80 STC 1 (Mad.) was relied upon for the purpose of suggesting that the withdrawal of the notification should be shown to be in public interest. This decision is no longer good law in view of the fact that the said judgment was set aside by the Supreme Court in Civil Appeal Nos. 3243-49 of 1991 dated October 23, 1997--State of Tamil Nadu v. Sun Paper Mills [1999] 113 STC 311. Therefore, we do not propose to apply the ratio in the division Bench judgment.
22. In [1973] 31 STC 585 (Sales Tax Officer, Navgoan v. Timber & Fuel Corporation), the Supreme Court held that when the taxable event took place, the assessee was not liable to be taxed on sales effected by it and its liability had to be determined only on the basis of the law at that time. The fact that the Forest Department was retrospectively exempted from paying tax could not make the assessee to pay tax which it was otherwise not liable to pay.
23. State of Tamil Nadu v. M.K. Kandasamy is an oft-quoted judgment on the issue of purchase tax. It is reported in [1975] 36 STC 191 (SC). The TNGST Act was considered with reference to Section 7-A and the ingredients were set out by the apex Court. The apex Court held that the scheme of the Act involves 3 (three) inter-related and distinct concepts which may be described as "taxable person", "taxable goods" and "taxable event". According to the Supreme Court all the three must be satisfied before a person can be saddled with liability. It necessarily excludes goods the sale or purchase of which is totally exempted from tax at all points under Section 8 or Section 17 of the Act. The goods so exempted not being "taxable goods" cannot be brought to charge under Section 7-A of the TNGST Act. They also pointed out that the words "under the Act" would include a charge created by Section 7-A also. In other words, Section 7-A is a charging as well as a remedial provision. The main object of Section 7-A was to plug leakage and prevent evasion of tax. They laid down that a construction which preserves the workability and efficacy of the section should be adopted and not one which would render it otiose or sterile. In the said particular case it was held that purchases from agriculturists of various goods and converted into other marketable items and transported to other States on consignment basis would attract tax under Section 7-A of the TNGST Act. In Indian Aluminium Cables Ltd. v. State of Haryana [1976] 38 STC 108 (SC) the words "exempt from tax generally" was considered with reference to Section 8(2-A) of the Central Sales Tax Act. The State Act excluded levy of sales tax under certain specified circumstances or specified conditions, If the circumstances do not exist or if the conditions are not performed then the exemption was inapplicable. The apex Court held such an exemption would not come within the purview of the words "exempt from tax generally" and consequently was not exempt under Section 8(2-A) of the Central Sales Tax Act. Jankiram Jain v. State of Orissa [1991] 83 STC 169 (Orissa) is an authority for the proposition that the withdrawal of a notification must be in public interest and not on account of any court's decision. That again is a decision under Section 8(5) of the Central Sales Tax Act where public interest is specifically mentioned.
24. Moopil Nair's case AIR 1961 SC 552 was cited only for the proposition that a taxing statute is not wholly immune from the attack on the ground of violation of Article 14 of the Constitution of India.
25. In Govind Saran Ganga Saran v. Commissioner of Sales Tax [1985] 60 STC 1 (SC), it was held that even if a State levy is uncertain or vague and was likely to exceed the restrictions under Section 14 of the Central Sales Tax Act, the court will not uphold the validity of the State law. In that case it was held that in order that tax should not be levied at more than one stage, it is imperative that the State sales tax law should specify either expressly or by necessary implication the single point at which the tax may be levied. This, in our opinion, is an important decision which considerably supports the attack on the impugned G.O. P. No. 390, dated September 4, 1991 because there is considerable uncertainty and vagueness in ascertaining the point of levy. Firm A.T.B. Mehtab Majid & Co. v. State of Madras [1963] 14 STC 355 (SC) is authority for the proposition that any discrimination between goods imported from outside the State and those manufactured or produced inside the State would contravene Article 404(a) of the Constitution of India.
26. We will now refer to some of the decisions cited on behalf of the Revenue. Reference is first made to the judgment of Raju, J., as he then was, in Mittal Steel Limited v. State of Tamil Nadu [1993] 91 STC 542 (Mad.). The question for consideration was whether the benefit of exemption under G.O.P. No. 253, dated March 17, 1986 was available, irrespective of the fact that the end-products were manufactured by steel re-rolling mills in Tamil Nadu or outside Tamil Nadu. The learned Judge after referring to Bhoruka Steel Limited (1989) 10 SISTC 19 (Mad.), holding that such a discrimination was illegal and unconstitutional, observed as follows:
"It is to be noticed that the declaration by the division Bench was subject to this very vital and essential condition, namely, that before an assessee could be held entitled to exemption under the two Government orders referred to supra it should be shown or substantiated that the end-products concerned were manufactured out of the raw materials which had already suffered tax under the Tamil Nadu General Sales Tax Act, 1959. The Government order dated March 17, 1986 merely stipulated the condition or mode of such proof to prevent abuse and evasion by manipulation."
The learned Judge proceeded to say that :
"A careful reading of the notification in question would disclose that it does not suffer same vice or infirmity which the other notifications dated January 24, 1982 and March 13, 1982 were held to suffer as noticed by the division Bench of this Court in the judgment dealt with above. The stipulation in the new notification dated March 17, 1986 ensures the remittance of tax at least at one stage and if the plea of the petitioner is to be accepted it would be difficult to properly ascertain as to whether the end-products in respect of which exemption claimed has been really or actually manufactured out of raw materials which actually suffered the tax at the raw material stage under the Tamil Nadu General Sales Tax Act."
27. The learned Judge therefore directed the assessee to face the assessment proceedings and substantiate his claim for exemption. Reliance is then placed on Mahaveer Metal Industries v. State of Tamil Nadu [1995] 98 STC 326 (Mad). In that case the very plea of promissory estoppel was rejected by the Madras High Court. The learned Judge held that there was no promise at any stage that the end-products will not be taxed, merely because exemption was granted for a certain period. The learned counsel for the Revenue also cites S. Kandaswamy Chettiar v. State of Tamil Nadu AIR 1985 SC 257. In that case under Section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act exemption was granted to buildings owned by Hindu, Christian and Muslim religious public trusts and public charitable trusts. The Supreme Court held that it was not violative of Article 14 of the Constitution of India.
28. On the question of promissory estoppel and withdrawal being in public interest reliance is placed on Kasinka Trading v. Union of India (1995) 1 SCC 274. That case arose out of the withdrawal of exemption in public interest under Section 25 of the Customs Act. The Supreme Court, after taking note of the earlier judgments, observed that the grant of exemption and the fact that it was in existence of quite a long time does not hold out any promise to the beneficiaries. Observed the Supreme Court at page 290 :
"It would bear a notice that though Notification No. 66 of 1979 was initially valid only up to March 31, 1979 but that date was extended in 'public interest', we see no reason why it could not be curtailed in public interest. Individual interest must yield in favour of societal interest."
29. In Jayaprakash Match Works v. Union of India [1983] ELT 58 the following important ratio has been laid down by the Madras High Court at page 63 :
"As may be seen from all these judgments, though wide discretionary powers are conferred on the Government, in the matter of granting exemptions, any particular order could be questioned if it was contrary to the provisions of the Act or that the conditions imposed thereunder for getting the concessions are either germane or foreign to the particular item in respect of which the condition is imposed or that it is not consistent with the operative provisions of the Act itself."
and again at pages 64-65 ;
"We cannot say that the conditions imposed by the notification were either arbitrary or irrational. The policy of the Government varies and depends on a number of economic factors taken into account. The courts neither have the wherewithal nor the equipment to decide the wisdom of that policy. Nor can we question a policy of the Government. So long as the conditions imposed have a relevance to the exemption as such".
30. There is yet another line of cases to be noticed on the question of levy of additional sales tax. In Sree Ayyanar Spinning and Weaving Mills Limited v. State of Tamil Nadu [1998] 109 STC 205 a division Bench of the Madras High Court upheld the contention that additional sales tax at 2 per cent is not at all sustainable because of a notification issued under Sub-section (5) of Section 8 of the Central Sales Tax Act, restraining the tax payable under the Central Sales Tax Act. But a reference to the judgment of the Supreme Court in Deputy Commissioner of Sales Tax v. Aysha Hosiery Factory (P.) Ltd. [1992] 85 STC 106 suggests that the said view, taken on the basis of a concession, extended by the revenue, could need some explanation. In the judgment of the Supreme Court it is categorically laid down at page 114 as follows :
"So construed we have no doubt that in all cases where the rate of tax under the local law is less than four per cent that will be the rate applicable to the inter-State sale of the same commodity if the provisions of Section 8(2-A) of the Central Sales Tax Act are applicable. The dealer undoubtedly would be paying at the rate as enhanced by the Additional Sales Tax Act and therefore that will be the rate, that is including the additional tax, that is to be taken into consideration for finding out the applicability of Section 8(2-A) of the Central Sales Tax Act and the rate of tax in respect of his inter-State sales turnover. There could be, therefore, no doubt that the assessees-respondents in all these cases are liable to pay sales tax at the rate including the additional sales tax in respect of their inter-State sale under the Central sales tax assessment orders."
31. The Supreme Court upheld the levy of additional sales tax under the Kerala Additional Sales Tax Act in respect of the inter-State sales of assessee after April 1, 1978. The apex Court made it clear that any levy under the Kerala Additional Sales Tax Act is also a levy "under the sales tax law of the appropriate State".
32. The last of the case to be noticed is Eagle Flask Industries Limited v. Commercial Tax Officer [1997] 105 STC 202 (TNTST). This is a judgment by the Special Tribunal. Though this case seems to be similar to the facts of the present case, there is a vital difference. In that case a manufacturer of vacuum flask bought component parts/raw materials against the issue of form XVII declarations from registered dealers in Tamil Nadu. The assessing officer found that the petitioner had violated the declarations and determined the value of raw materials/component parts purchased against form XVII declarations and proposed to levy an additional 2 per cent tax under Section 3(4} of the TNGST Act. The Special Tribunal rightly observes that when there was a violation, the balance of 2 per cent tax was payable and that was collected from the purchaser who violated the declaration. This is specifically provided for by the statute in respect of First Schedule goods and there can be no complaint. The learned Judge however added that by no stretch of imagination the value of the said goods which went into the manufacture of end-products but were stock transferred in violation of the declaration could be included in the taxable turnover of the said dealer for attracting the provisions of the Tamil Nadu Additional Sales Tax Act, 1970.
33. Having noticed the facts and the legal position as adumbrated by various decisions cited above, we proceed to render our findings on the issues raised before us.
1. The writ petitions filed by scrap dealers :
The first position under G.O. P. No. 253, dated March 17, 1986 was that the end-products of the steel re-rolling mills would attract tax, but the sale of raw materials to steel re-rolling mills in Tamil Nadu for manufacture of end-products subject to production of a declaration of purchase from the steel re-rolling mills would be exempted. The next amendment on April 3, 1987 required that the manufacture of end-products should be for sale inside the State or in the course of inter-State trade or commerce subject to the declaration form prescribed earlier. The second amendment dated February 22, 1988 further stipulated that if the end-products manufactured from raw materials by furnishing declaration forms are sent on consignment sales/branch transfer to other States, the steel re-rolling mills shall remit the tax on the value of raw materials involved in such consignment sales or branch transfer.
But the impugned Notification G.O. P. No. 390, dated September 4, 1991 made a sea-change by subjecting the raw materials to 2 per cent tax and additional payment of 2 per cent tax in the event of the re-rolling mills stock transferring the finished products to places outside. Tamil Nadu. According to the petitioners such a shift in the stand of the Government would attract the principles of promissory estoppel. We do not think that the contention is well taken. A perusal of the history of sales tax produced by the Revenue shows that representations were made when the Government sought to enforce the judgment of the Supreme Court in [1976] 37 STC 319, (Pyare Lal Malhotra). To alleviate the grievances the collection of tax for the period from April 10, 1970 till January 19, 1976 was waived. Again on similar considerations tax for the period from January 19, 1976 to March 31, 1982 was waived. But the reports of State team disclosed that each one of the articles mentioned in item No. 4 of the Second Schedule is a separate commercial product and can be subjected to single point tax as per the decision of the Supreme Court. Therefore, in March, 1986, the Government considered it unnecessary to continue the exemption granted till March, 1982. The result was G.O. P. No. 253, dated March 17, 1986. Therefore, there was absolutely no promise held out to the assessees in the matter of exemption. The judgment of the Supreme Court in (1995) 1 SCC 274 (Kasinka Trading Corporation) dispels any theory of promissory estoppel. Even the plea of public interest does not hold water because Section 17 nowhere refers to public interest in the matter of granting exemption or concession in the rate of tax. This power is totally different from the power under Section 25 of the Customs Act or the power under Section 8(5) of the Central Sales Tax Act, where the words "public interest" are specifically used. The argument that by implications Section 17 should also be exercised only in "public interest" does not merit consideration. This is because Section 17 is intended to give relief to a section of traders who have some specific difficulties in complying with the sales tax law, either on account of certain decisions, or on account of certain retrospective levies. It is concerned only with the particular group of assessee who need relief and does not have any general public interest. So far as the question of additional sales tax is concerned there is ample protection under the Additional Sales Tax Act, 1970, in the shape of the proviso to the Explanation under sub-Clause 1(aa) of Section 2 of the Act. We have also referred to the judgment of the Supreme Court in Aysha Hosiery Factory (P) Ltd.'s case [1992] 85 STC 106. We are clearly of the opinion that as and when the assessee is faced with a levy of additional sales tax, it is open to him to put forth his objections, if any, as to statute law being violated. It is not possible to give any specific direction, on the imposition of additional sales tax and we will leave it entirely to the taxing authority to act on the basis of the provisions of law and on the basis of the objections that may be raised by the assessee. Consequently, all the three points raised on behalf of the scrap dealers are rejected.
2. Steel re-rolling dealers :
They account for the bulk of cases. Their grievance is mainly against G.O. P. No. 390, dated September 4, 1991. It is worthwhile to notice the conditions imposed under G.O. P. No. 253 dated March 17, 1986. The notification No. II(1)/CTRE/47(n)/86 only imposed a condition that the sales of raw materials should be to steel re-rolling mills in Tamil Nadu for manufacture of end-products falling under item No. 4 of the Second Schedule and the production of a declaration to that effect. We have already seen the form of declaration. On April 3, 1987 the condition was improved by an amendment which said the sale should be for the manufacture of end-products falling under item No. 4 of the Second Schedule for sale inside the State or in the course of inter-State trade or commerce plus a declaration of purchase by the steel re-rolling mills. The emphasis* supplied by us indicates the addition. There was no change in the declaration. On February 22, 1988 a second notification was brought in, which said that the exemption was subject to a declaration of purchase from steel re-rolling mills and subject to the condition that the steel re-rolling mills remit to its assessing authority the tax in the raw materials so purchased and used in the manufacture of end-products sent on consignment sales/branch transfer to other States. The entire emphasised* portion is a new addition. This additional condition was maintained and insisted upon in the impugned G.O. P. No. 390, dated September 4, 1991, which for the first time reduced rate of tax on the seller of raw materials from 4 per cent to 2 per cent and provided for the collection of the difference of 2 per cent from re-rolling mills in case they sent the end-products on consignment or branch transfer to other States. The idea was to prevent the re-rolling mills from escaping tax on end-products, by resorting to consignment/branch transfers. Further, this supersedes the G.O. P. No. 253, dated March 17, 1986 with all its amendments only from September 4, 1991. Till September 4, 1991 the said G.O. P. No. 253, dated March 17, 1986 and the amendments will operate during the respective periods.
The amendment introduced by G.O. P. No. 150, dated February 22, 1988 and the new G.O. P. No. 390, dated September 4, 1991 in so far as they make the purchasers, namely, the re-rolling mills to pay the tax on the raw materials either in full or the difference is the result of a confusion in the minds of the sales tax authorities, the Government which is the executive and the Law Department which, advises them. In the confusion they forgot to amend the declaration form appropriately. The Supreme Court in [1976] 37 STC 319 (Pyre Lal's case) has enabled the State Government to levy single point tax on each of the sub-items mentioned in entry 4 of the Second Schedule. But the Government wanted to show some concession to scrap dealers for obvious reasons. But at the same time they wanted to tap the revenue from the re-rolling industry. The Law Department naturally put spokes on the policy of giving relaxation or exemption having regard to the special status given to declared goods vide sections 14 and 15 of the Central Sales Tax Act. The result was a confused, unworkable half-baked amendment in G.O. P. No. 150, dated February 22, 1988 which is maintained in G.O. P. No. 390, dated September 4, 1991. Nobody can quarrel with the exemption or the concessional rate extended to scrap dealers. The end-products are naturally taxable in the hands of the re-rollers, because of the Supreme Court judgment in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319. But somebody in the Government or the tax department had a brain wave of tapping the consignment/branch transfer to other States. They wanted to do indirectly what they cannot do directly and also in the hands of the wrong person, namely, the re-roller, purchaser of raw materials. The plain interpretation of a condition in an exemption or concessional notification is that if the condition is violated the beneficiary automatically loses the benefit. Therefore, he is either taxed or the concession is cancelled and the full rate of tax is collected, In other words, the beneficiary suffers or the seller of raw materials has to be denied the exemption. It is always open to him to contract with the buyer, the re-roller, to pay the difference. Even without a contract, may be, it is open to him to claim the difference from the purchaser. But the impugned notification fastens liability on the purchaser, who violates the condition. The counter-affidavit says so. The impugned notices in some of the cases also reflect the same position. This is illegal for more than one reason. They are as follows :
(i) The power under Section 17 of the TNGST Act is only to "make an exemption or reduction in rate". There is no power to create a liability on any dealer. It is not a charging section. Therefore, while granting exemption on the sale of raw materials, the Government has no power to shift the liability on the purchaser merely because he violated the declaration. As things stand a person who violates a declaration can be proceeded against under Sub-section (8) of Section 45.
(ii) In effect the respondents are taxing the purchaser on the turnover of end-products despatched on consignment/branch transfers, by estimating the corresponding purchase turnover which is clearly without jurisdiction because of entries 92-A and 92-B of List I of the 7th Schedule to the Constitution of India,
(iii) If it is to be taken as tax on raw materials it means that the respondents are violating sections 14 and 15 of the Central Sales Tax Act because the point of levy is vague. It appears to be both on the sale point so far as seller is concerned and also on the purchase point so far as purchaser (re-roller) is concerned. The decision in Govind Saran Ganga Saran v. Commissioner of Sales Tax [1985] 60 STC 1 (SC) can be seen with advantage. There is also a recent judgment of the Supreme Court directly on the point [1999] 114 STC 1 ; (1998) 5 SCC 349 (Shanmuga Traders v. State of Tamil Nadu).
(iv) The stage and the circumstances under which the liability will get fastened on the purchaser is also uncertain and vague.
Consequently the first three points raised before us in respect of the steel re-rolling mills batch are answered in their favour. So far as the last point relating to the application of Section 7-A is concerned we are not going to render any finding one way or the other. Suffice it, to say that in State of Tamil Nadu v. M.K. Kandasami [1975] 36 STC 191 (SC), throws some light on the issue. We may however indicate that there may be a difference when G.O. P. No. 150 dated February 22, 1988 applies and for the period when G.O. P. No. 390 dated September 4, 1991 applies. This is because of the words "in circumstances in which no tax is payable under Section 3 or 4" in Section 7-A. We leave this question open to be decided by the assessing authorities. It will be open to the assessees to raise their objections before the authorities.
3. Tube manufacturers :
Mr. C. Venkataraman, mainly argued for the tube manufacturers. According to him, the factories which are making tubes out of raw materials purchased from SAIL or other companies would also be eligible to give a declaration and avail of the exemption or concession. Alternatively, it was pointed out that such factories can undertake re-rolling by giving job-work to others and still avail themselves of all the exemption or concession. Further, Mr. C. Venkataraman, argued that in the notifications commencing from G.O. P. No. 253, dated March 17, 1986, the reference to re-rolling mills "in Tamil Nadu" is opposed to articles 301 and 304(a) of the Constitution of India. This point relating to articles 301 and 304(a) arises in certain other cases also where re-rolling mills are concerned. Therefore, our decision on this point will govern all the cases where the question is involved.
So far as the contention that the tube manufacturers are also re-rolling mills the counter-affidavit of the State gives the correct picture and provides an answer to the contention. In W.P. No. 12720 of 1986 which is equal to T.P. No. 2932 of 1997, the respondents explained the process of re-rolling as understood in the various notifications. It is correctly pointed out that re-rolling is a process by which various shapes, sheets, rods, strips, plates, etc., are made by forming the raw materials by passing the same between rollers. This process is well-known in the iron and steel industries. It cannot therefore, be contended that any process, other than re-rolling process is entitled to the concession or exemption granted under the notifications. A careful reading of notifications shows that the exemptions or concessions was extended to steel re-rolling mills in Tamil Nadu for end-products falling under item No. 4 of the Second Schedule which are specifically manufactured in re-rolling mills (emphasis* supplied). An indication is given in G.O. Ms. D-103, dated January 24, 1992 which granted exemption to end-products manufactured out of tax suffered raw materials. The G.O. clearly says that the end-products, coming under item 4 of the Second Schedule such as M.S. rounds, rods, etc. are manufactured by steel re-rolling mills in Tamil Nadu. In all the subsequent notifications, the reference to end-products manufactured by steel re-rolling mills can only refer to such end-products like M.S. rounds, rods, etc. The word "etc"., would normally mean products of the same kind by applying the principles of "ejusdum generis", The manufacturers of tubes were never under consideration for the grant of exemption or concession. The contention of the tube manufacturers is therefore rejected. Equally, the contention that they can have the re-rolling done through other factories on job-work basis cannot be accepted. The exemption is in respect of those who are directly involved in the re-rolling process for the purpose of manufacturing end-products mentioned above. Therefore, the first two points raised by the tube manufacturers are rejected. There is no discrimination under Article 14 because re-rolling mills are a class by themselves.
The third point raised by the tube manufacturers which we have already indicated will apply to other re-rolling mills also. It will be carrying coals to new castle, if we are to examine the issue where the exemption is restricted to re-rolling mills in Tamil Nadu and thus discriminating against re-rolling mills in places outside Tamil Nadu. It is against the constitutional guarantees and safeguards contained in articles 301 and 304(a) of the Constitution of India. It is enough to notice the judgment in (Bhoruka Steel) [1989] 10 SISTC 19 (Mad.) Raju, J., as he then was, has followed the said judgment in Mittal Steel Limited v. State of Tamil Nadu [1993] 91 STC 542 (Mad.), but has expressed a caution* that the law having been declared, its application must be left to the assessing authorities to verify whether the very same goods had suffered tax. But the legal proposition is unexceptional and we have therefore no hesitation in holding that the words "in Tamil Nadu" in all the notifications have to be deleted. In other words, while the assessing authorities examine each case on the basis of judgment of Raju, J., they have to ignore the words "in Tamil Nadu" and even if the steel re-rolling mills are outside Tamil Nadu the benefit of exemption or concession should be extended.
4. The Steel Authority of India :
We now come to the last set of cases filed by the Steel Authority of India. They seek to enforce the Notifications No. 253 dated March 17, 1986 and G.O. P. No. 150 dated February 22, 1988, Since we are upholding these notifications except for a few portions which have nothing to do with the sale of raw materials by SAIL. We are of the opinion that the SAIL and similarly placed companies can have no difficulty or complaint. But, Mr. C. Natarajan, pleads that in many cases the SAIL have been proceeded against notwithstanding injunction orders issued by the Madras High Court while entertaining the writ petitions filed by the tube manufacturers. Now as the position has been made clear by the present judgment, there can be no difficulty in completing the assessments because the tube manufacturers are ineligible for getting the benefit of exemption or concession. The SAIL are effecting sales both to re-rolling mills as well as to tube manufacturers. They are certainly entitled to have the benefit of the notifications issued under Section 17 of the TNGST Act taking into account the portions which are deleted by this judgment. The point raised by SAIL in all the cases is answered as above.
34. We now come to the operative portion of the judgment by way of giving effect to the findings given by us on the various points raised in the various writ petitions filed by various traders. We have already set out the issues in each batch of cases and we have answered the same. Based on such findings we give below the following directions :
(1) The words "in Tamil Nadu" after the words the steel re-rolling mills in G.O. Ms. No. D. 103 dated January 24, 1982 in notifications I and II annexed to G.O. P. No. 311 dated March 13, 1982 in G.O.P. No. 253, dated March 17, 1986 and G.O. P. No. 390/CTRE, dated September 4, 1991 shall stand deleted.
(2) The words "and subject to the condition that the steel re-rolling mills remit to its assessing authority, the tax in the raw materials so purchased and used in the manufacture of end-products, sent on consignment sales/branch transfer to other State shall be substituted" in G.O. P. No. 150 dated February 22, 1988 shall stand deleted.
(3) The words "and subject to the condition that the steel re-rolling mills remit to the assessing authority, the difference of tax of two per cent (2 per cent) on the raw materials so purchased, and used in the manufacture of end-products, sent on consignment sales (branch transfer to other State)" in G.O.P. No. 390, dated September 4, 1991 shall stand deleted.
(4) All the notifications in all other respects are upheld as valid and shall be given effect to the respective periods of operations.
(5) The tube manufacturers shall not have the benefit of any of the exemptions relating to re-rolling mills.
(6) Consequent on the reduction in rate of tax on sales of iron and steel to 2 per cent with reference to G.O. P. No. 390, dated September 4, 1991, additional sales tax provisions will be attracted subject to an overall ceiling of 4 per cent of total tax as contemplated in the Act.
(7) All the parties are directed to file objections or file statutory appeals on the basis of the judgment rendered by us and the assessing authorities shall consider the same in accordance with law. The assessees are given time till October 30, 1998 for filing objections in all cases where no final orders have been passed. In the case of the assessee filing statutory appeals, the time taken during the pendency of the W.Ps., T.Ps., and O.Ps., in their respective cases shall stand excluded in calculating the period of limitation for filing statutory appeals. The original orders if any, shall stand returned to the assessees.
(8) All interim orders granted in all cases in favour of the petitioners shall stand vacated and the authorities are directed to proceed in accordance with the judgment.
The T.Ps./O.Ps. are disposed of in the above manner.
And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
Issued under my hand and the seal of this Tribunal on the 23rd day of September, 1998.