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Commissioner of Sales Tax Vs. Agrawal Commercial Corporation - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberS.T.R. No. 23 of 1971
Judge
Reported in[1973]31STC32(All)
AppellantCommissioner of Sales Tax
RespondentAgrawal Commercial Corporation
Appellant AdvocateStanding Counsel
Respondent AdvocateR.C. Sharma, Adv.
Excerpt:
- - by 'hardware' is meant small articles like nuts, bolts, etc......u. p. sales tax act. the following two questions of law have been referred :(1) whether galvanised iron wire in coils sold by the assessee comes under the category of 'iron goods' liable to tax as 'hardware' under notification no. st-1367/x-1045(19)-1960 dated 5th april, 1961, or as 'wares made of any metal or alloy' under notification no. st-2104/ x-902(16)-62 dated 21st may, 1963, or as unclassified items under section 3 of the u.p. sales tax act or as 'iron and steel' liable to tax at single point under sub-section (1)(d)(iv) of section 3-aa of the u.p. sales tax act?(2) if the answer to question (1) above is that galvanised iron wire in coils comes under the category of 'iron goods', whether the learned additional revising authority has erred in law in holding it as coming under the.....
Judgment:

R.L. Gulati, J.

1. At the instance of the Commissioner of Sales Tax, U.P., Lucknow, the Judge (Revisions) Sales Tax, Lucknow, has submitted this statement of the case, under Section 11(3) of the U. P. Sales Tax Act. The following two questions of law have been referred :

(1) Whether galvanised iron wire in coils sold by the assessee comes under the category of 'iron goods' liable to tax as 'hardware' under Notification No. ST-1367/X-1045(19)-1960 dated 5th April, 1961, or as 'wares made of any metal or alloy' under Notification No. ST-2104/ X-902(16)-62 dated 21st May, 1963, or as unclassified items under Section 3 of the U.P. Sales Tax Act or as 'iron and steel' liable to tax at single point under Sub-section (1)(d)(iv) of Section 3-AA of the U.P. Sales Tax Act?

(2) If the answer to question (1) above is that galvanised iron wire in coils comes under the category of 'iron goods', whether the learned additional revising authority has erred in law in holding it as coming under the category of 'iron and steel' assessable at single point when sold to consumers under Section 3-AA of the U.P. Sales Tax Act ?

2. The questions have been framed in a very involved language. We, therefore, reframe the two questions as under:

(i) Whether galvanised iron wire in which the assessee deals can be said to be 'hardware' and

(ii) if it is not 'hardware', whether it is iron and steel covered by Section 3-AA of the U.P. Sales Tax Act.

3. The assessee carries on business in iron and steel. During the assessment year 1964-65, the assessee sold certain quantity of galvanised iron wire rolled into coils. These coils were purchased by the assessee from M/s. Indian Steel and Iron Products Limited, Jamshedpur. The assessee claimed exemption from tax in respect of the turnover of G.I. wires on the ground that these wires were iron and steel and were exempt under Section 3-AA of the U.P. Sales Tax Act. The assessee also furnished certificates in form III-A. The Sales Tax Officer regarded G.I. wires as 'hardware' and taxed the turnover under the entry relating to 'hardware'. On appeal, the appellate authority did not agree with the Sales Tax Officer and upheld the contention of the assessee that G.I. wires were 'iron and steel' and were exempt under Section 3-AA. The department went up in revision but did not succeed. Hence this reference.

4. Now a wire cannot by any stretch of imagination be said to be a 'ware'. A 'ware' when used as a noun means 'manufactured articles, products of arts or craft or produce'. The finding in this case is that the assessee sells galvanised wire in the same condition in which he purchases from the manufacturer mills, the coils, so that there is no question of their being hardware. By 'hardware' is meant small articles like nuts, bolts, etc., as held by this court in Commissioner of Sales Tax v. Aftab Husain Imdad Husain [1970] 25 S.T.C. 471. Accordingly, we answer the first question in the negative by saying that 'galvanised wires' in question are not 'hardware'.

5. Now, coming to the second question, it cannot be disputed that the rolling mill from which the petitioner purchases the wire is engaged in the production of iron and steel. Iron and steel, as is evident from Section 3-AA itself, may be in various shapes such as plates, ingots, bars, rods, etc. It can be in the shape of wires and merely because iron wires are galvanised does not change their nature. Wires are rolled into coils to facilitate their transportation. It is clear that the commodity does not change its nature from what it was at the time of production. Section 3-AA authorises the levy of tax on iron and steel only if it is sold to the consumer. The assessee having filed certificates in form III-A was not a consumer and as such was not liable to pay tax on the turnover of galvanised wire.

6. We, accordingly, answer question No. (1) in the negative and question No. (2) in the affirmative. As both the questions have been answered in favour of the assessee, he is entitled to the costs of this reference which we assess at Rs. 100.


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