# 16 8 STATE OF TAMIL NADU v. PY ARE LAL MALHOTRA ETC. January 19. 1976

- **Citation:** [1976] 3 S.C.R. 168
- **Court:** Supreme Court of India
- **Decided:** 1976
- **Case number:** Civil Appeals Nos. 58-59 and 880-883 of 1971
- **Bench:** iii) sheet bars, tin bars
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/16-8-state-of-tamil-nadu-v-py-are-lal-malhotra-etc-january-19-1976-6747
- **Pages:** 10

## Headnote

(iv) rolled steel sections,
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(v) tool alloy steel,
sold in the same form in which they
are dirtctly produced by the rolling
mill.
The said clause JV \vas amended by the Central Sales Tax Amendment Act,
Act 61 of 1972 by which certain more entries were added.
Section 15 of the Central Sales Tax Act provides that the tax payable under
a St<lre Law on sale or purchase of declared goods shall not be levied at more
lh~n vnc stage.
Respondents used to purchase iron scrap and thereafter used to convert them
into :.teel rounds, flats, plates etc.
The scrap was already subject to tax once.
The respondents contended that the entry Iron & Steel was wide enough
to
ii'1clude scrap as well as the steel rounds, flats, plates, etc. made out of the scrap
which wa~ subject to t;:ix once and that, therefore, the sale of the steel rounds,
flats, plates, etc., c1nnot be subjected to tax again under the Tamil Nadu Sales Tax
AcL The High Court accepted the ,contention of the respondents.
J\llowing an appeal by certificate,
HELD : I. The intention was to consider each sub-item in clause IV as a
separate taxable commcxlity for purposes of sales tax.
The object was not to
lay down that all the categories or sub-items of goods specified separately were
to be viewed as a single saleable commodity called iron and steel for purposes
of determining a starting point for a series of sales. The note against subdivision of Clause IV makes it dear that even each sub-category of a sub-iten1
retains. its identity as a commercially separate item for purposes of sales tax so
long as it retains the sub-division.
f171G, 172B-Cl
2.
The eXpression 'that is to say' is en1ployed to make it clear and fix the
meaning of words to be explained or defined. Such words are not used, as
a rule, to amplify a meaning while removing a possible doubt for which purpose
the word 'includes' is generally employed. The precise meaning of the words
•
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TAMIL NADU V. P. L. MALHOTRA (Beg, J.)
169
~that is to say' must vary with the context. The purpos.e of the expression in a sales
tax law would be to indicate the types of goods each of which would constitute
a separate class for a series of sales.
ll72f-H, 173B]
3.
The chemical composition of iron and steel, cannot afford a clue to the
meaning of iron and steel.
Sales Tax Law taxes sales of goods and is not a
.taxation on sales of substance out of which goods are made.
We prefer to
follow the more natural and normal inter_pretation which follows plainly from
A
the fact of separate specification numbering of each item.
State of
Madhya
B
Prade.~h v. Hira Lal; (1966) 17 STC 313-315 distinguished. The case of Devidas
applied. fl 7JC. E~Fl
4.
It has not been shown to, us that any provision of the Tarnilnadu Sales
Tax Act violates section 15 of the Central Sales Tax Act enacted in accordance
with Article 286(3) of the Constitution.
Section 2(j) of the Tamil Nadu Act
-defines J:?.Oods and section 4 imposes charge in respect of tax on declared goods.
The Tamilnadu Act borrows clause (IV) of sectio11 14 of the Central Sales Tax
Act.
[176 C-HJ
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## Text

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16 8
STATE OF TAMIL NADU
v.
PY ARE LAL MALHOTRA ETC.
January 19. 1976
[A. N. RAY, C.J., M. H. BEG, R. S. SARKARIA AND P. N. SHINGHAL, .TJ.]
Cp1.1:!·11l Sah:s Tr:x Act-Secs. 14-15-Tainil Nadu Sales Tax Act Sec. 2(j)--
Prvlubll101.1 Gf.fll!ltst 1_n1posi11g tax at n1ore than one stage-Whether all categories
aud sub
11cn1.~ of iron and ste·el to be treated as one conunodity-Words &
Fhra.H·s-Mea11i11;.: of "that is lo say."
l he respondents are dealers under the Tamil Nadu Sales Tax 1\ct.
Section
14 <?f t~e Central ~ale~ Tax Act declares certain goods enumerated therein of
spec1a~ importance 1n inter-state trade or commerce. The list of goods given
at scnal No. IV reads as under :-
(iv·) Iron and Steel, that is to s·ay-
(a) pig iron and iron scrap
{ b) iron plares solJ in the :-:ame fonn in which they are directly pro~
duced by the rolling mill;
( c) steel scrap, steel ingots, steel billets, steel bars and rods,
(d) (i) steel plates
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(ii) steel sheets,
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(iii) sheet bars and tin bars, j
(iv) rolled steel sections,
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(v) tool alloy steel,
sold in the same form in which they
are dirtctly produced by the rolling
mill.
The said clause JV \vas amended by the Central Sales Tax Amendment Act,
Act 61 of 1972 by which certain more entries were added.
Section 15 of the Central Sales Tax Act provides that the tax payable under
a St<lre Law on sale or purchase of declared goods shall not be levied at more
lh~n vnc stage.
Respondents used to purchase iron scrap and thereafter used to convert them
into :.teel rounds, flats, plates etc.
The scrap was already subject to tax once.
The respondents contended that the entry Iron & Steel was wide enough
to
ii'1clude scrap as well as the steel rounds, flats, plates, etc. made out of the scrap
which wa~ subject to t;:ix once and that, therefore, the sale of the steel rounds,
flats, plates, etc., c1nnot be subjected to tax again under the Tamil Nadu Sales Tax
AcL The High Court accepted the ,contention of the respondents.
J\llowing an appeal by certificate,
HELD : I. The intention was to consider each sub-item in clause IV as a
separate taxable commcxlity for purposes of sales tax.
The object was not to
lay down that all the categories or sub-items of goods specified separately were
to be viewed as a single saleable commodity called iron and steel for purposes
of determining a starting point for a series of sales. The note against subdivision of Clause IV makes it dear that even each sub-category of a sub-iten1
retains. its identity as a commercially separate item for purposes of sales tax so
long as it retains the sub-division.
f171G, 172B-Cl
2.
The eXpression 'that is to say' is en1ployed to make it clear and fix the
meaning of words to be explained or defined. Such words are not used, as
a rule, to amplify a meaning while removing a possible doubt for which purpose
the word 'includes' is generally employed. The precise meaning of the words
•
•
TAMIL NADU V. P. L. MALHOTRA (Beg, J.)
169
~that is to say' must vary with the context. The purpos.e of the expression in a sales
tax law would be to indicate the types of goods each of which would constitute
a separate class for a series of sales.
ll72f-H, 173B]
3.
The chemical composition of iron and steel, cannot afford a clue to the
meaning of iron and steel.
Sales Tax Law taxes sales of goods and is not a
.taxation on sales of substance out of which goods are made.
We prefer to
follow the more natural and normal inter_pretation which follows plainly from
A
the fact of separate specification numbering of each item.
State of
Madhya
B
Prade.~h v. Hira Lal; (1966) 17 STC 313-315 distinguished. The case of Devidas
applied. fl 7JC. E~Fl
4.
It has not been shown to, us that any provision of the Tarnilnadu Sales
Tax Act violates section 15 of the Central Sales Tax Act enacted in accordance
with Article 286(3) of the Constitution.
Section 2(j) of the Tamil Nadu Act
-defines J:?.Oods and section 4 imposes charge in respect of tax on declared goods.
The Tamilnadu Act borrows clause (IV) of sectio11 14 of the Central Sales Tax
Act.
[176 C-HJ
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CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 58-59 and
880-883 of 1971.
From the Judgment and Order dated 10-4-1970 of the Madras
High Court in Writ Petition Nos. 437 /67 and 520/68 and Tax
Cases Nos. 135-138 of 1970 respectively.
P. Ram Reddy, A. V. Rangam and Miss A. Subhashini, for
the
Appellant in C.As. 58-59 /71.
Sachin Chandra Chaudhury
and
Mrs. S. Gopalakrishnan
for
Respondent.
Gobind Das. P. H. Parekh and Miss Manju Jetley for the InterD
vener (M/s Durga Steel).
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The Judgment of the Court was delivered by
BEG, J.-The two Civil Appeals Nos. 58-59 of 1971 arise out
of a judgment of a Division Bench of the Madras High Court dismissing two Writ Petitions filed against notices issued by a Commercial
Tax Officer showing institution of Sales tax assessment proceedings
in respect of certain iron and steel goods for the assessment year
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1965-66 in Writ Petition No. 437 of 1967 and for the assessment year
1966-67 ill Writ Petition No. 520 of 1968.
The High Court of
Madras. had certified the cases as fit for appeal to this Court under
Article 132 and 133(1)(a) and (c) of the Constitution. Although,
the Writ Petitions had been dismissed on the ground that they involve
an investigation into the question of fact whether the iron and steel
scrap, out of which the manufactured goods, sought to be subjected
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to Sales tax, had been made, were already taxed or not, yet, the State
of Tamil Nadu was aggrieved by the decision of the Madras High
Court holding that the manufactured goods, said to consist of "st;el
rounds, flat,, angles, plates, bars" or similar goods in other forms and
shapes. could not be taxed again if the material out of which thev
were made had already been subjected to sales' tax once an iron and
steel scrap as both were "Iron and steel''.
It was possible to leave
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the assessing authorities free to decide all the questions which they
had jurisdiction to consider.
But, it appears that the Madras High
Court thought it proper to decide the question as the Sales' tax
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SUPREME COURT REPORTS
[1976] 3 S.C.R.
authorities had already adopted the view, in other cases, that such
goods, though co_vered by the broad genus "Iron and Steel", were
separately taxable commodities because each kind of "Iron and Steel"
goods was a commercially different and separately taxable species or
category.
Moreover, this very question was also before the High
Court in regular revision petitions under the Tamil Nadu Sales Tax
Act (hereinafter referred to as 'the Taniil Nadu Act').
Civil Appeals Nos. 880-883 of 1971 arise out of four petitions
for revision under the provisions of the Tamil Nadu Act for the years
l 964-65 aud 1965-66, which were allowed by the Madras High Court
setting aside assessment orders by following its judgment and decision
mentioned above given on 24-6-1970 on Writ Petitions Nos. 437 of
1967 and 520 of 1968. The Madras High Court had also granted
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certificates of fitness for appeal to this Court under Article 132 read
with Article 133(1) (a) (c) in the four cases before it on revision
petitions.
Hence, six cases were connected and heard together by us.
The same question of law, decided by the Madras High Court on 1
grounds contained in one judgment, under appeal in Civil Appeals
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Nos. 58-59 of 1971 before this Court, arise in all of them.
All the six cases before us relate to what are known as "declared
goods"• under Section 14 of the Central Sales Tax Act (hereinafter
·referred to as 'the Central Act'). It was claimed, on behalf of the
dealers, sought to be assessed in each case, that, by reason of the
restrictions imposed by Section 15 of the Central Act, the levy of tax
under the Tamil Nadu Act was not permissible.
Section 14 of the Central Act declares certain goods enumerated
there to be "of special importance in inter-State trade or commerce".
The list of goods given there at No. (iv), as it stood in 1968, was :
"(IV) Iron and Steel, that is to say-
(a) 'pig iron and iron scrap
(b) iron plates sold in the same form in which they are directly :Produced by the
rolling mill;
(c) steel scrap, steel ingots, steel billets, steel bars and rods;
(d) (i) steel plates
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(ii) steel sheets,
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(iii) sheet bars and tin bars,
sc_:i
in
e same 1orm in w. 1c
t. ~¥.are
(iv) rolled steel sections,
J directly produced by the rolhng m1ll,
( v) tool alloy steel,
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By the Central Sales Tax (Amendment) Act 61 of 1972, clause (iv)
was redrafted.
It now reads as follows :
"(iv) iron and steel, that is to say-
(i) pig iron and cast iron includiug ingot, moulds, bottom
plates, iron scrap, cast iron scrap, runuer scrap and
iron skull scrap;
(ii) steel semis (ingots, slabs, blooms and billets of all qualities, shapes and sizes);
(iii) skelp bars, tin bars, sheet bars, bee-bars and sleeper bars;
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TAMIL NADU V. P. L. MALHOTRA (Beg, J.)
171
(iv) steel bars (rounds, rods, squares, flats,
octagone
and
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hexagone, plain and ribbed or twister, in coil from
as
well as straight lengths) :
( \') steel structurals (angles, joints, channels, tees, sheet piling
sections, sect10ns or any other rolled sections);
\vi) sheets, hoops, strips and. skelj), both black and galvanised,
hot and cold rolled, plam and corrugated, in all qualities.
in straight lengths and in coil form,
as
rolled
and
in
rivetted condition;
(vii) plates both plain and chequered in all qualities;
(viii) discs, rings, forgings and st~l cijsting8;
(ix) tool, alloy and special steels of any of the above categories;
(x) steel melting scrap in all forms
including steel
skull,
turnings and borings;
(xi) steel cubes, both welded and seamless, of all diameters and
lengths, including tube fittings;
txii) tin-plates, both hot dipped and electrolytic and tin-free
plates;
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(xiii) fish plate bars, bearing plate bars, crossing sleeper bars,
fish plates, bearing plates, crossing sleepers and pressed
steel sleepers, rails-heavy arid crane rails;
(xiv) wheels, tyres, axles and wheel sets;
(xv) wire rods and wires-rolled, drawn, galvanised, alumanised,
tinned or coated such as by copper;
(xvi) defectives, rejects, cuttings or end pieces of any of the
above categories";
It will be seen that "Iron and Steel" is now divided into 16 categories which clearly embrace widely different commercial commodities,
from mere scrap iron and left overs of processes of manufacturing to
'
1wires" and "wheels, tyres, axles, and wheel sets".
Some
of
the
enumerated items like "melting scrap" or "tool alloys" and "special
steels" could serve as raw material out of which other goods are made
and others are definitely varieties of manufactured goods. If the subsequent amendment only clarifies the original intentions of Parliament,
it would appear that heading 4 in Section 14, as originally worded,
was also meant to enumerate separately taxable goods and not just
to illustrate what is just one taxable substance, "Iron and Steel". The
reason given, in the statement of objects and reasons of the 1972 Act,
for an elucidation of the "definition" of iron and steel, was that the
"definition" had led to varying interpretations by assessing authorities
and the courts so _that a comprehensive list of specified declared iron
and steel goods would remove ambiguity. The Select Committee,
which recommended the amendment, called each specified
category
"a sub-item" falling under "Iron and Steel".
Apparently, the intention was to consider each "sub-item" as a separate taxable commodity
for purposes of Sales' tax. Perhaps some items could overlap, but no
difficulty arises in cases before us due to this feature.
As we have
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172
SUPREME COURT REPORTS
[1976] 3 S.C.R.
pointed out, the statement of reasons for amendment spoke of Section
i'4(iv) as a "definition" of "Iron and. Steel". A definition is expected
to be exhaustive.
Its very terms may, however, show that it is not
meant to be exhaustive. For example, a purported definition may
say that the term sought to be defined "includes" what it specifies, but,
in that case, the definition itself is not complete.
Although, we have looked at the subsequent amendment of 1972
in order to find an indication of the original intention, because subsequent history of legislation is not irrelevant, yet, we think that, even
if we confine our attention to Section 14 as it originally stood at the
relevant time, with which we are concerned in the cases before us, the
object was not to lay down that all the categories or sub-items of goods,
as specified separately even before the amendment of 1972, were to
be viewed as a single saleable commodity called "Iron and Steel" for
purposes of determining a starting point for a series of sales. On the
other hand, the note against the brackets in front of the five smaller
sub divisions of (d) makes it clear that even each sub-category of a
sub-item retains its identity as a commercially separate item for pw;-
pose of sales tax so long as it retains the sub-division. The more
natural and normal meaning of such a mode of listing special or declared kinds of goods seems to us to be that the object of specification was
to enumerate only those categories of items, each of which was to serve
as a new starting point for a series of sales, which were to be classed as
"declared" goods. If one were to state the meaning in different words,
it would seem to us to be : "Iron and Steel goods of various types enumerated below".
What we have inferred above also appears to us to be the significance and effect of the use of words "that is to say" in accordance with
their normal connotation and effect.
Thus, in Stroud's Judicial Dictionary, 4th Edu. Vol. 5, at page 2753, we find:
"THAT. IS TO SAY. (1) 'That is to say' is the com-'
mencement of an ancillary clause which explains the meaning of the principal clause. It has the following properties:
(1) it must not be contrary to the principal clause: (2) it
must neither increase nor diminish it; (3) but where the
principal clause is general in terms it may restrict it : see
this explained with many examples,
Stukeloy
v.
Butler
Hob. 171";
The quotation, given above, from Stroud's Judicial Dictionary shows
that, ordinarily, the expression "that is to say" is employed to make
clear and fix the meaning of what is to be explained or defined. Such
words are not used, as a rule, to amplify a meaning while removing a
possible doubt for which purpose the word "includes" is generally employed. In unusual cases, depending upon the context of the words
"that is to say", this expression may be followed by illustrative instances. In Megh Raj & Anr. v. Allah Rakhia & Ors.(') the words
"that is to say", with reference to a general category "land" were held
to introduce "the most geenral concept" when followed, inter alia, by
the words : "Rights in or over land."
We think that the precise
meaning ot the words "that is to say" must vary with the context, where,
(!)A.LR. !947 P.C. 7?,.
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TAMIL NADU V. P. L. MALHOTRA (Beg, J.)
17 3
as in Megh Raj's case (supra), the amplitude of legislative power to · A
enact provisions with regard to "land and rights over it was meant to·
be indicated, the expression was given a wide scope because it came
after the word "land" and then followed "rights over land" as an explanation on "land".
Both were wide classes.
The object of using
them or subject-matter of legislation was, obviously, to lay down
a
wide power to legislate.
But, in the context of single point sales'
tax, subject to special conditions w11en imposed on seprate categories
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o[ speeitied goods, the expression wc\s apparently employed to specifically e•aumerate separate categories of goods on a given list.
The
purpose of such specification and enumeration in a ~tatule dealing with
sales' tax at a single point in a series of sales would, very naturally,
be to i:iclicaw the types of goods each of which would constitute a
separate class for a series of sales.
Otherwise, the listing itself loses
all meaning, and would be without any purpose behind it.
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Learned Counsel appearing foran intervener argued that the chemical position of iron and steel affords a clue to the meaning of "Iron
and Steel" as used in Section 14 of the Central Act. We are unable
to agree that this could be what Parliament or any legis'1ature would be
thinking of when enumerating items to be taxed as commercial goods.
The ordinary meaning to be assigned to a taxable item i'1 a list of speciD
lied items is that each item so specified is considered as a separately
taxable item for purposes of single point taxation in a series of sales
unless the contrary is shown.
Some ccinfusion bas arisen because the
separate items are all listed under one heading "Iron and Steel".
If the object was to make iron and steel taxable as a substance,
the entry could have been : "Goods of Iron and Steel."
Perhaps even
this would not have been clear enough.
The entry to clearly have
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that meaning would have to be :
"Iron and Steel irrespective of
change of form shape or character of goods made out of them". This is
the very unusual meaning which the respondents would like us
to
adopt. If that was the meaning, sales' tax law itself would undergo
a change from being a law which normally taxes sales of "goods" to
a law which taxes sales of substances out of which goods are made. We,
however, prefer the more natural and normal interpretation
which
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follows plainly from the fact of separate specification and numbering
of each item.
This means that each item so specified forms >a separate
species for each series of sales although they may all belong to the
genus : "Iwa and Steel." Hence, if iron and steel "plates" are melted
and converted into "wire" and then sold in the market, such wire would
only be taxable once so long as it retains its identity as a commercial
goods belonging to the category "wire" made of either iron or steel.
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The mere fact that the substance or raw material out of which it is
made has also been taxed in some other form, when it was sold as a
separate commercial commodity, would make up difference for purposes
of the iaw of sales' ·tax.
The object appears to us to be to tax sales
of goods of each variety and not the sale of the substance out of
which they are made.
As we all know, sales' tax law is intended to tax sales of different
comme~cial commodities and not to tax the production or manufacture
of partlcular substances out of which these commodities
may have
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174
SUPREME COURT REPORTS
(1976] 3 S.C.R.
A . been made. As soon as separate commercial commodities emerge or
come into existence, they become separately taxable goods or entities
tor purposes of sales' tax.
Where commercial goods, without ch.rage
of their identity as such goods, are merely subjected to some processing
or finishing or are merely jointed together, they may remain commercially the same goods which cannot be taxed again, in a series sales,
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so Jong as they retain their identity as goods of a particular type.
In State of Madhya Bharat v. Hirala/( 1) this Court held that a
dealer, who bought some scrap iron loc_ally and imported some iron
plates from outside and then converted the material into bars, flats
and plates, by rolling them in his mills, and then sold them, was still
entitled to exemption given to iron and steel from sales tax.
But, in
that case, the language of the provision giving the exemption justified
this interpretation.
The exemption was given to a sale by either an
importer or a purchaser of "goods prepared from any metal other than
gold or silver."
In other words, the question was whether exemption
was given to the substance out of which goods were made.
In that
context, it had become necessary to exami;ae whether the exemption
from sales' tax was meant for all goods made out of a particular substance, or for goods as separate commercial commodities.
This Court
held that the raw material from which the goods were made was decisive for the purposes of the exemption given.
This Court said
(at
p. 315) :
"A comparison of the said two Notifications brings out
the distinction between raw materials of iron and steel and the
goods prepared from iron and steel; while the former
is
exempted from tax, the latter is taxed.
Therefore, iron and
steel used as raw material focmanufacturing other
goods
are exempted from taxation.
So long as iron and steel continue to be raw materials, they enjoy the exemption. Scrap
iron purchased by the responde1at was merely re-rolled into
bars, fiats and plates.
They were processed for convenience
of sale.
The raw materials were only re-rolled to give them
attractive and accep!'able forms.
They did not in the process lose their character is iron and steel.
The dealer sold
'Iron and steel' in the shape of bars·,· fiats and plates and the
customer purchased 'iron and steel' r.1 that shape.
We,
therefore, hold that the bars, fiats and plates sol\! by the
assessee.are iron and steel exempted under the Notification."
The law to be interpreted in Hirala's case (supra) was entirely
different.
Jn interpreting it, this Court did observe that u mere change
of the form of a substance excepted from sales' tax did not matter. The
language of the notifications involved there made it clear that the exemption was for the metal used.
In the cases before us now the object of
single point taxation is the commerical commodity and not the substance out of which it is made.
Each commercial commodity here
becomes a separate object of taxation in series of sales of that commercial commodity so long •as it retains its identity as that commodity.
.
.
We think that the correct rule to apply in the cases before us is
the one laid down by this Court in Devi Dass Copa/ Krishan & Ors. v.
(!) [1966[ 17 S.T.C. 313, 3J5.
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TAMIL NADU V. P. L. MALHOTRA (Beg, J.)
17 5
The State of Punjab & Ors.( 1) where Subba Rao, C.J., speaking for
a Constitution Bench of this Court, said at (p. 44 7).
"Now coming to Civil Appeals Nos. 39 to 43 of 1965,
the first additioml point raised is that when iron scrap is
converted into rolled steel it does not involve the process
of manufacture.
It is contended that the said conversion
does not involve any process of manufacture, but the scarp is
made into a better marketable commodity.
Before the High
Court this contention was not pressed.
That apart, it is
clear that scrap iron ingots undergo a vital change in the
process of manufacture and are converted into a different
commodity, viz., rolled steel sections.
During the process
the scarp iron loses its identity and becomes a new marketable commodity."
The process is certainly one of manufacture.
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 Ieviable 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 comeTtito 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 sale tax is also concerned with "goods" of various descriptions.
It,
therefore, becomes necessary w determine when they cease to be goods
of one taxable description and become those of a commercially different
category and description.
It appears tQ us that the position has been simplified by the amendment of the law, as indicated above, so that each of the categories falling uader "Iron and Steel" constitutes a new species of commercial
commodity more clearly new.
It follows that when one commercial
. commodity is transformed into another, it becomes a separate commodity for purposes of sales t,ax.
·
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We think that the Madras High Court had committted an error in
appl)ing Hiralal's case (supra) to the decision of cases now before us
which turns really on a correct interpretation of Section 14 of the Central Act.
On the question now before us, we approve of the reasoning adopted by a Division Bench of the Punjab High Court in Devgun
Iron & Steel Rolling Mills v. State of Punjab(2).
Section 15 of the Central Act places certain restrictions and conditions upon State enactments imposing Sales tax. It says :
Every sales tax law of a State shall, in so for as it imposes or authorises the imposition of a tax on the sale or
(1) (1967) 20 S.T.C. 430 at 447.
(2) (1961) 12 S.T.C. p. 590
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176
SUPREME COURT REPORTS
(1976] 3 S.C.R.
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purchase of declared goods, be subject to the following restrictions and conditions, namely :
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(a) the tax payable under that law in respect of any
sale or purchase of such goods inside the State shall not
exceed three per cent of the sale or purchase price thereof,
and such tax shall not be levied at more than one stage;
(b) where a tax has been levied under that law in respect
of the sale or purchase inside the State of any declared
goods and such goods arc sold in the course of inter-State
trade or commerce, and tax has been paid under this Act
in respect of the sale of such goods in the course of interState trade or commerce, the tax levied under such law shall
be reimbursed to the person making such sale in the course
of inter-State trade or commerce in such manner and subject to such condition as may be provided in any law in
force in that State".
It has not been shown to us that any provision of the Tamil Nadu
Sales Tax Act violates Section 15 of the Central Act enacted in
accordance with Article 266 ( 3) of the Constitution.
Section 3 of
the Tamil Nadu Act levies taxes on sales and purchases of "goods"
as defined in Section 2 (j) of the Act :
" ( j) 'goods, means all kinds of
movable
property
(other than newspapers, actionable claims, stocks and shares
and securities) and includes all materials, commodities, and
articles (including these to be used in the fitting out, improvement or repair of movable property), and all growing
crops grass or things attached to, or forming part of, the
land which are agreed to be severed before sale or under
the contract of sale;"
Section 4 of the Tamil Nadu Act lays down :
"4. Tax in respect of declared goods.-Notwithstanding anything contained in Section 3, the tax under this Act
shall be payable by a dealer or the sale or purchase inside
the State of declared goods at the rate and only at the point
specified against each in the Second Schedule on the turnover in such goods in each year, whatever be the quantum
_of turnover in that year".
Item 4 of the second schedule specifies the rates of tax in accordance
with the Central Act.
It reproduces Section 14(iv) of the Central
Act. On an amendment of Section 14(iv) of the Central Act, serial
No. 4 of the second schedule of the Tamil Nadu Act was also correspondingly ainended so as to reproduce the sixteen items found in
Section 14(iv) of the Central Act.
Hence, the decision of these
cases really depends on an interpretation of Section 14 of the Central
Act which we have already given above.
Other provisions only
fortify our conclusion.
t
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TAMIL NADU V. P. L. MALHOTRA (Beg, J.)
177
The result is that we allow these appeals. We set aside the orders
of the High Court and restore the orders of the assessing authorities
in cases giving rise to Civil Appeals Nos. 880-883 of 1971.
In cases
'Out of which Civil Appeals Nos. 58-59 of 1971 arise, we set aside
the judgment of the High Court but maintain its order dismissing
the Wnt Petitions and order that the assessing authorities will now
proceed to determine such question of fact and law as still survive
for determination after the decision given above of the question considered by us.
The parties will bear their own costs.
P.H.P.
Appeals allowed.
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