State Taxation Tribunal - Tamil Nadu
Tube Investments Of India Ltd. vs Deputy Commercial Tax Officer, Group ... on 22 March, 2000
Equivalent citations: [2000]120STC59(TRIBUNAL)
JUDGMENT
The judgment of the Tribunal was delivered by J. Kanakaraj, J.(Chairman).
1. These five tax revision cases filed by the assessee, are against the common order of the Sales Tax Appellate Tribunal in T.A. Nos. 431, 433, 434 of 1989 and T.A. Nos. 157 and 199 of 1990 dated October 24, 1990. The assessment orders for the years 1982-83, 1983-84 and 1984-85 were revised under Section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 by the Deputy Commercial Tax Officer, Enforcement, on the ground that the assessees were manufacturing and supplying automobile spare parts, but had earlier treated the same as steel tubes and scraps taxable at 4 per cent. Similarly for the year 1985-86, the Assistant Commissioner (CT), made a similar revision under Section 16(1). Therefore, the assessments were revised and the goods were treated as automobile parts taxable at 15 per cent. For the assessment year 1986-87, original orders of the assessment were made by the Assistant Commissioner treating the said goods as automobile parts at 15 per cent.
2. The three first appeals, A.P. Nos. 395, 396 and 397 of 1988 for the years 1982-83, 1983-84 and 1984-85 were heard in common by the Appellate Assistant Commissioner and decided on March 2, 1989 against the assessee. For the years 1985-86 and 1986-87, the first appeals were decided against the assessee by the Deputy Commissioner on January 9, 1990. All the orders were taken in second appeal and by a common order dated October 26, 1990, the Sales Tax Appellate Tribunal granted relief in part, remanded a portion of turnover and dismissed the appeals, in respect of the balance. The assessee has filed the revision petitions.
3. Mr. C. Natarajan, learned Senior Counsel for the petitioner, reiterates the arguments advanced before the Appellate Tribunal. According to him, the exhaust pipes and tail pipes supplied to Ashok Leyland were also nothing but steel pipes sold in specified lengths and bent in some cases. Therefore, it is contended that they are only taxable as declared goods at 4 per cent under item 4(xi) of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959. The argument is that SI. No. 3 of the First Schedule is not attracted, because Section 4 clearly overrides the charge under the First Schedule. Reference is made to dictionaries and definitions of steel tube and it is argued that cut tubes do not lose the character of steel tubes. The Concise Oxford Dictionary says that a tube is a "long hollow cylinder especially for conveying or holding liquids". The Chambers Twentieth Century Dictionary says that "a pipe ; any long hollow body". Further, the following additional explanation is relied upon :
"Products of cross section other than circular, with rounded corners along their whole length and tubes with upset ends, are also to be considered as tubes. They may be polished, coated, bent (including coiled tubing), threaded and coupled or not, drilled, wasted, expanded, cone shaped or fitted with flanges, collars or rings."
The Central Excise Tariff of India also affirms the above description. Learned Government Advocate, Mr. R. Mahadevan, refers to the purchase orders describing the goods as exhaust pipes and tail pipes, which are admittedly automobile parts. He argues that the Appellate Tribunal has good reasons for treating the goods as automobile parts. Both parties have also relied on certain decisions.
4. We have carefully considered the rival submissions. Let us first refer to the entries. Serial No. 3 of the First Schedule, at the relevant times, read as follows :
Entry from July 8, 1981 (vide notes 18, 19 and 20) :
Motor vehicles including motor cars, motor taxi-cabs, motor cycles and cycle combinations, cycles (including bicycles, tri-cycles, cycle rickshaws, tandem cycles, cycle combinations and perambulators) fitted with motor engines, motor scooters, motorettes, motor omni buses, motor vans and motor lorries, chassis of motor vehicles, bodies built on chassis of motor vehicles belonging to others (on the turnover relating to bodies), component parts of motor vehicles, all varieties of trailers, by whatever name known, tyres (including pneumatic tyres) and tubes ordinarily used for motor vehicles and trailers (whether or not such tyres and tubes are also used for other vehicles), and articles (excluding batteries) adapted for use generally as parts and accessories of motor vehicles and trailers and motor engines used for being fitted to cycles (including bicycles, tri-cycles, cycle rickshaws, tandem cycles, cycle combinations and perambulators).
Entry from January 1, 1987 (vide note 35) :
Motor vehicles including motor cars, motor taxi-cabs, motor cycles and cycle combinations, cycles (including bicycles, tri-cycles, cycle rickshaws, tandem cycles, cycle combinations and perambulators) fitted with motor engines, motor scooters, motorettes, motor omni buses, motor vans and motor lorries, chassis of motor vehicles, bodies built on chassis of motor vehicles belonging to others (on the turnover relating to bodies), component parts of motor vehicles, all varieties of trailers, by whatever name known, tyres (including pneumatic tyres) and tubes ordinarily used for motor vehicles and trailers (whether or not such tyres and tubes are also used for other vehicles), and articles (excluding batteries) adapted for use generally as parts and accessories of motor vehicles and trailers (whether or not such articles are used for other purposes) and motor engines used for being fitted to cycles (including bicycles, tri-cycles, cycle rickshaws, tandem cycles, cycle combinations and perambulators).
Item 4(xi) of the Second Schedule is as follows :
"steel tubes, both welded and seamless, of all diameters and lengths, including tube fittings."
5. Our task in these cases is simplified because of the reliefs given by the second appellate authority (Sales Tax Appellate Tribunal). It is, therefore, necessary to notice the reliefs given by the Appellate Tribunal and examine only those issues decided against the assessee. Dealing with ERW tubes supplied to customers other than Ashok Leyland Ltd., the Appellate Tribunal first records the automobile manufacturers, who purchased from the assessee. They are :
Tvl. Sundaram Clayton Ltd., Madras Tvl. Ind-Suzuki Motor Cycle Ltd., Madras Tvl. Standard Motor Ltd., Madras Tvl. Enfield India Ltd., Madras Tvl. Ashok Leyland Ltd., Madras.
Ultimately, with reference to supplies made to other customers except Tvl. Ashok Leyland, the Appellate Tribunal concludes as follows :
"Therefore, we hold that the steel tubes supplied by the appellants can only be classified as steel tubes occurring in entry 4(xi) of the Second Schedule and would consequently suffer tax at the rate of 4 per cent only."
6. With regard to supplies made to Tvl. Ashok Leyland Ltd., the Appellate Tribunal holds as follows :
"Hence, the lower authorities were correct in terming the supplies made to Ashok Leyland Limited as automobile or motor spare under entry 3 of the First Schedule."
Such supplies for the five years account for the following turnovers :
Assmt. year Turnover
1982-83 Rs. 15,30,138.00
1983-84 Rs. 19,96,564.00
1984-85 Rs. 23,76,178.00
1985-86 Rs. 35,31,001.00
1986-87 Rs. 79,87,595.00
7. So far as a turnover of Rs. 4,20,30,657, the delay in filing form XVII was condoned and the matter remanded back to the assessing officer. For the assessment year 1985-86, the levy of penalty at 50 per cent of tax on the actual sustained turnover was upheld. For the year 1986-87, penalty was restricted to 50 per cent of the tax on sales of assets and credit notes.
8. Therefore, the only issue before us relates to the sale of exhaust pipes and tail pipes to Ashok Leyland Ltd.
9. While we should avoid the user theory in relation to the goods to be taxed, we cannot ignore the nature or description of the goods in the purchase orders. The assessing officer says :
1. Tvl. Ashok Leyland Ltd., Madras Detailed verification of purchase orders revealed that the purchasers have given the specification of parts with number and diagram. In the diagram, the title of the goods noted as "Exhaust pipe" part No. F. 19515-15 and pipe manifold end with the following conditions :
"This design is strictly private and confidential. It is the exclusive property of Ashok Leyland Ltd., and must not be used, copied of reproduced in part or whole without the company's written permission."
"In the invoice raised by the dealers was also quoting as 'Auto'."
In some cases, the goods were supplied on the basis of drawings and specifications meant for auto parts. The assessee had also admitted before Enforcement Wing Officers that the goods are taxable at 15 per cent.
10. The goods which are the subject-matter of levy are certainly auto parts. This is clear from the purchase orders placed by the purchasing dealers, namely, Tvl. Ashok Leyland Ltd. Further, the entries of the First Schedule which we have already extracted, places the issue beyond all reasonable doubt. The words used in the First Schedule entries relate to goods "adapted for use generally as parts and accessories of motor vehicles". The Appellate Tribunal also observes that the drawing make it clear that at least 80 per cent to 90 per cent of the finishing work of the goods had been completed at the assessee's factory. Therefore, whatever further work that is done by the purchaser is only to adapt the goods as parts and accessories of motor vehicles. The argument that the goods still continue to be steel tubes, is unacceptable. Consequently, entry 4(xi) of the Second Schedule is excluded. There is, therefore, no question of entry 4(xi) of the Second Schedule, overriding the First Schedule charge.
11. The decisions cited on behalf of the assessee are not at all helpful. In fact, [1996] 102 STC 67 (SO (Dewan Enterprises v. Commissioner of Sales Tax, U.P.) can be ruled out, because entry 4(xiv) itself talks of "wheels, tyres, axles and wheel sets". In [1995] 99 STC 87 (SC) (Vasantham Foundry v. Union of India) makes it clear that only rough unmachined cast iron can be brought under 4(i) of the Second Schedule. In [19823 51 STC 257 (Mad.) (State of Tamil Nadu v. Gopal Nair and Sons) supports the Revenue. The following observation at page 258 is apposite.
"The question as to whether a particular article or commodity falls within the scope of a particular expression used in the Sales Tax Act has to be determined with its nomenclature in commercial parlance."
12. We confirm the findings of the Sales Tax Appellate Tribunal in all respects. The tax revision cases are, accordingly, dismissed.
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 22nd day of March, 2000.