C. S. P. Singh, J. - The petitioner manufactures aluminium in its factory situated at Renukoot, from bauxite by subjecting it to electrolytic processes. The aluminium produced by the petitioner, according to petitioners case falls in three categories, i.e. Cast Products, Rolled Products and Extrusions (See Annexure 'C' to the amendment application). The process adopted for manufacturing these products as set out by the petitioner is this. Alumina is extracted from bauxite and is then subjected to electrolytic processes in the potrooms. The Alumina in the potrooms is in the shape of molten metal. This molten metal is fed into cast iron moulds and aluminium ingots and aluminium alloy ingots are produced By the same process of casting, Wire Bars and Properzi Redraw Rods are also producted. The process for making Wire Bars, as stated is pouring the molten metal in casts and then chilling it directly. So far Properzi Redraw Rods are concerned, the process is as follows. Molten metal is poured directly from potroom crucible in the melting furnace and then transferred to holding furnace. It is then degassed, fed through a cast-iron spout into the groove of a water cooled circular steel casting wheel, which rotates at a slow speed. The top portion of the grooved steel mould is covered by a steel belt and during one-half rotation of the casting wheel, the metal gats solidified and comes in the form of a continuous bar of about 12 Sq. centri-meter cross-section at a temperature of 440 degrees to 480 degrees centigrade. This bar is fed through strand Properzi Mill where the area of cross section is progressively reduced and finally 9.5.mm diaredraw rods come out which are wound in the drum of a mechanical coiler. So far as Rolled Products are concerned, they consist of Hot Rolled Plates, Hot Rolled Coil Cold Rolled Sheet/Coil, and corrugated sheets etc. The Hot Rolled plates /coils are produced by using rolling ingots, which are cast by direct chill (D.C.) casting process. The ingots are scaled to smooth the surface, heated in soaking pits and them rolled in a reversing hot mill to the required thickness. The method of making cold rolled sheet/coils is by rolling the hot mills products on a reversing cold mill to fine thickness according to requirements of the ultimate manufacturer. Slug stock is producted by rolling of hot mill product on sheet mill to the required thickness, and sharing it to desired widths in shearing machine. Circles are produced by using cold mill sheets which are out to desired diameters on circle cutting machine and purchased by utensil manufacturers. Corrugated sheets are producted by using cold mill sheets and passing them through the roll corrugating machine. Extrusions are produced in the form of rods, bars, flat, squares, hexagonals, channels, tees, I-Beems, tubes round, oval, square, rectangular, triangular and other solid and hollow shapes. The Process of manufacturing extrusions is by using a preheated billet in an extrusions press, and forcing it through a die orifice of the desire shape and size by a hydraulically operated ram, when the desired extruded shape comes out on the run table.
2. The State Government issued Notification No. ST-II 6628/X. 10-12 1972 dated 1st December, 1973 in exercise of its powers under sub-section (2) of S. 3-A of the U.P. Sales Tax Act ordering that with effect from 1st December 1973, the turnover in respect of particular goods 'including all kinds of minerals and ores, metals and alloys except copper, zinc, nickel or alloy of these metals only' would be taxable at the point of sales at 3 1/2%. This was followed by another Notification No. ST-II 4949/X-10(2)-74 dated 30th May 1975, whereby the State Government imposed tax at the rate of 2% at the point of sale by the manufacturer of importer on 'all kinds of minerals, ores, metals and alloys, except those included in any other notification issued under the Act.' Sometime in October 1974, a notice was issued by the Sales Tax Officer, Mirzapur to the petitioner intimating that save ingots, other items of aluminium manufactured by the petitioner would be treated as unclassified items and would fall under the heading of metal and alloys as set out in the notification of 1st December 1973. The petitioner filed a writ petition challenging this notice but that was dismissed on 10-9-1975 by a Bench of this Court on the view that the petitioner should contest the matter before the Sales Tax Officer before approaching this Court. Thereafter, there was some correspondence between the Sales Tax Officer and the petitioner company, and finally the Sales Tax Officer by his letter dated 30-10-1975 informed the petitioner that under the Notification of 30-5-1975, only Aluminium ingots would be treated in the category of metals while the rest of the items of aluminium manufactureed by the petitioner would be treated as unclassified items. It appears that shortly before this communication, the Commissioner of Sales Tax by a circular dated 15-10-1975 had intimated all Sales tax authorities including the Sales Tax Officer that the Department had sought the opinion of the Government on the question as to whether all categories of aluminium would fall within the description of the words metal and alloys as occurring in the Notification dated 30-5-1975 and the Government had after consulting the Law Department, intimated that apart from aluminium ingots, nothing else should be treated as coming within the description of the word metals The circular directed the various authorities including the Sales Tax Officer concerned to faithfully follow this interpretation. This circular is Annexure 5 to the writ petition filed in this Court. After this, the petitioner filed his quarterly returns for the period ending 30th June 1975 and 30th September showing the turnover of the sales various items of aluminium which have already been detailed above and deposited the tax at the reduced rate, on the footing that the items of aluminium manufactured and sold would be covered by the notification dated 1st December, 1973 and 30th May, 1974. On 12-11-1975, a show cause notice was issued by the Sales Tax Officer asking for an explanation as to why tax at lower rate had been deposited and also to show cause why the return filed should not be rejected. A reply was given to this by the Company on 24-11-1975 stating the various why the entire products manufactured and sold by the company should be treated as metals and alloy. The Sales Tax Officer, however, passed assessment order on 30-12-75 treating all other items as unclassified items except aluminium ingots. As a result of this order, an additional liability of Rs. 4,75,335.91 was created for the first quarter ending 30th June, 1975 and Rs. 6,42,906/- for the quarter ending 30th September, 1975. The petitioner filed two petitions challenging this order and the notice of demand issued by the Sales Tax Officer. When the petition came up for hearing, we thought it advisable to hear the petition after the final assessment order in the matter was passed. Subsequently, the Sales Tax Officer has now passed a final assessment order for the assessment year 1975-76. An application for amendment was made for amending the petition so as to enable the petitioner to challenge the final assessment order, This was allowed with the validity of the final assessment order passed on 3-8-1976.
3. Before we enter into the merits of the case, we think it advisable dispose of preliminary objection raised on behalf of the State. It was contended by Sri V. K. Mehrotra appearing on behalf of the respondents, that since the petitioner has an alternative remedy, we should not exercise our discretionary powers under Article 226 of the Constitution. It was also contended that the assessee has already filed an appeal against the assessment order and that matter should also be taken into consideration while considering the feasibility of entertaining the petition. This contention would have force, if an effective alternative remedy is open to a petitioner. Then it would not be proper exercise of judicial discretion to entertain a petition so as to enable the petitioner to byepass the statutory remedy provided under the taxing statute. However, this is not an invariable rule of law, and the question as to whether the extraordinary jurisdiction conferred on a court under Article 226 should be exercise in a particular case depends upon the facts and circumstances of each case. In the present case, we think that it would be appropriate to decide the question raised for the reasons now being set out
4. In the first place, it is not disputed that the Commissioner of Sales Tax has already issued a circular to all Sales Tax Officers and the Assistant Appellate Commissioner on the interpretation to be put on the notification dated 30th May 1975 and informing them that only aluminium ingots should be treated as falling in the category of metals, and all the order items should be treated as unclassified items. The matter does not rest here. The circular further directs that the instructions contained therein should be faithfully obeyed. The Sales Tax Officers and the Assistant Appellate Commissioner while deciding the appeal may be exercising quasi judicial functions, but the fact cannot be lost sight of that they are also administrative officers under the direct control of the State Government and the Commissioner of Sales Tax. No statutory provision has been pointed out to us authorising the Commissioner of Sales Tax to issue directions of such a nature. The State counsel contended that the assessment order does not indicate that the Sales Tax Officer relied on that notification while making the assessment, an, as such even if such a circular is there that should not be sufficient ground for entertaining the petition. We are not impressed by this argument. In a case where the State Government or the immediate officer, who has supervisory control over its subordinate officers, issues directions which are not warranted by law and wants them to comply with it faithfully, we do not feel that the officer concerned would not be able to decide the matter dispassionately. The other reason why we think it would be appropriate to decide the question in this petition is that the question about the correct interpretation of the notification is a question which will affect aluminium manufactures by and large, and the question is of a repetitive character which is likely to occur so long as the notification mentioned above holds the field. Further, we have already entertained the petition and have also heard the matter at some length and the point involved is manifestly one of law. This being so, we do not think it advisable to relegate the petitioner to seek his remedy before the appellate authority, who may feel himself bound by the circular even though he may not explicit express it. For all these reasons, we think it advisable to decide the controversy.
5. The only question involved in this case is whether the aluminium items manufactured by the assessee, which we set out, fall within the description of the words 'metal and alloy' used in the notification of 1973 or of the notification of 30th May, 1975. Counsel for the State has contended that the word 'metal'as occurring in, the notification embraces metal in the primary from ingots. The Sales Tax Officer has taken the same view in the assessment order. On the other hand, Counsel for the petitioner contended that the words metals and alloys as used in the notification, are wide enough to embrace metals and alloys in all shapes and sizes so long as they did not assume the form of a new commodity. The argument raised by the parties had to be resolved on the principles laid down by the Supreme Court in three cases; (1) State of Madhya Bharat vs. Hiralal (2) Devgam Iron & Steel Rolling Mills vs. State of Punjab and the State of Tamil Nadu vs. M/s. Pyare Lal Malhotra. In Hira Lals case the parliament had enacted the Essential Goods (Declaration & Regulation of Tax on Sales or purchases) Act, 1952 (Act No. 52 of 1952). In Schedule I of the Act, iron and steel were declared essential for the life of the community. The Government of Madhya Bharat in exercise of power conferred on it by S.5 of the Act, issued a notification, the material part of which ran :-
'No tax shall be payable on the sale of following goods :-
S.No. Description of the Good
39 Iron & Steel.
This very notification also set out the goods, the sales of which were taxable at a particular rate. Schedule IV enlisted the various articles, the sale proceeds of which were assessable at Rs. 3-2-0 percent and item No. 9 thereof described from any metal other than gold and silver. The assessee had purchased scrap iron locally, and imported iron plates from outside, and after converting them into bars, flats and plates in the mills sold them in the market. The State of Madhya Bharat sought to impose tax on the sales of bars, flats and plates made by the Mills at the rate of Rs. 3-2-0 present. They took up the stand that iron and steel mentioned at serial number 39 in Schedule I of the notification meant iron and steel in their original condition and not iron and steel in the shape of bars flats and plates. It would be better to quote the reasoning of the Supreme Court for rejecting the stand taken by the State of Madhya Pradesh in its own words :-
Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation. So long as iron &steel; continue to be raw materials, they enjoy the exemption. Scrap iron purchases by the respondents was merely re-rolled into bars, flats and plates. They were processed for convenience of sale. Raw materials were only re-rolled to given them attractive and acceptable forms. They did not in the process lose their character as iron and steel. The dealer sold iron and steel in the shape of bars, falts and plates and the customers purchased iron and steel.'
In view of this conclusion, it was held that the bars, flats and plates sold by the assessee were iron and steel exempted under the notification.
6. In the case of Devgam iron & Steel Rolling Mills vs. State of Punjab, the appellant carried on the business of rolling steel at Govindgarh. They purchased some scrap and steel ingots and converted them into rolled steel sections. The assessing authority imposed purchase tax at the rate of 2% on the purchase of steel scrap and steel ingots for making rolling steel sections and selling them. The question arose as to whether the levy was justified. The contention raised was that the provision under the Punjab Act was void in as much as it contravened S. 14 and 15 of the Central Sales Tax Act, which prohibited imposition of sales tax on declared goods at more than Punjab Act, tax was being imposed both on the purchased the controversy whether the Act contravened the provisions of the Central Act, the point as to whether rolled steel was a new commodity distinct altogether from iron scrap was considered. This contention was dealt with by their Lordships at page 1905 of the Report and rejected in the following words :
'Now coming to Civil Appeals Nos. 39 to 43 of 1965, the first additional 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 scrap 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 scrap iron loses its identity and becomes a new marketable commodity. The process is certainly one of manufacture.'
Counsel for the State has strongly relied on this case and contended that inasmuch as all the other products of aluminium, save ingots are made out of ingots they became a different commodity altogether and would not come in the category of metals and alloys as understood under the Notification. Hiralals case & Devgam Iron & Steel Rolling Mills case were both considered in a recent decision of the Supreme Court in the State of Tamil Naidu vs. M/s. Pyare Lal Malhotra. In Pyare Lal Malhotras case, the question that arise for decision was whether steel rounds, flats, angles, plates, bears and similar goods in other forms and shapes made out of iron and steel could be taxed under the State law, when iron and steel was by S. 14 of the Central Sales Tax Act a declared commodity. S. 14(iv) of the Central Sales Tax Act declared certain goods enumerated therein to be of special importance in inter-State trade or commerce. S. 14(iv) declared iron and steel to be goods of special importance, and described various items of iron and steel. As many as sixteen items of iron and steel were set out as comprised in the term iron and steel. One of the contentions raised was that the chemical composition of iron and steel afforded a clue to the meaning of iron and steel used in S. 14 of the Central Sales Tax Act. This was repelled on the ground that when specified items were set out as taxable items in a List, they were to be treated separately, and each item so specified formed a separate species for each series of sale, although they may all belong to the same genus. As regards Hira Lals case, it was observed that although that case laid down that a mere change in the form of the substance exempted from sales tax, did not matter, the case really turned on the language of the notifications involved therein. It was held that the principles of the case were not applicable to Malhotra case, for the object of single point taxation under S. 14 was that each commercial, commodities and not the substances out of which it was made, enjoyed exception. Each commercial commodity, in view of the phraseology of S. 14 of the Central Sales Tax Act, was a separate item for taxation. It was observed that the principle laid down in Devgam Iron & Steel Rolling Mills vs. State of Punjab was more appropriate to the facts of Malhotras case. After discussing these two cases, their Lordships laid down the following test which we think is vital to this case, and, as such, we propose to quote it in extenso :-
'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 foods. 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 cease to be goods of one taxable description and become those of commercially different category and description.'
The principle that emerges from this case is that in case the question arises as to whether a new commercial commodity has come into existence or not, it is necessary to consider as to whether by a manufacturing process the identity of the commodity has been altered. In the present case, the two Notifications of 1973 and 1975 imposed a concessional rate of tax on metals and alloys. Now, metals and alloys do not occur in the raw state. It is only after the mineral ore which contains the metal has been subjected to some manufacturing process that a particular metal is obtained. In the present case, it is not disputed that aluminium as a pure metal, does not occur. It occurs in the from of bauxite. From bauxite, alumina is extracted, and, therefore alumina is by a manufacturing process converted into aluminium which is in a molten form. It hardly admits of any doubt that molten aluminium is not a salable commodity. It becomes salable only after it is given a particular shape. At this stage, we may also notice the contention raised on behalf of the State that the words 'metals and alloys 'as used in the Notification only embraces alumina which is the basic metal. It might be that alumina is also a metal or a metal alloy. In this case, we are not concerned with the tax on the sale of alumina. We are concerned with the sale of aluminium ingots in various forms. There is a basic difference between alumina and aluminium. Alumina is an oxide of aluminium while aluminium is a pure metal. This is borne out by the standard books of chemistry. This being so, it cannot be said that aluminium is not also a metal. The basic question in the case is as to whether only aluminium ingots, as has been held by the Sales Tax Officer, come within the description of the words 'metals or alloys' as used in the Notification, or other products also qualify. It appears from Annexure 'C' to the amendment application that the petitioner manufactures three types of aluminium products, (1) Cast Products; (2) Rolled Products and (3) Extrusions. Cast Products consist of (i) aluminium ingots, (ii) aluminium alloy ingots and (iii) wire Bars (iv) Properzi Redraw Rods and (v) Billets. Rolled Products are obtained by rolling ingots and Extrusion are manufactured from billets. It can hardly be doubted that ingots and billets are salable commodities as such. By subjecting them to further process of manufacture i.e. either by rolling them or by processing them by the Extrusion process, a new commercial commodity comes into existence i.e. Rolled Products and Extrusions. Thus, so far as Rolled Products and Extrusions are concerned, since they are manufactured either from ingots or billets, they cannot come in the category of metals and alloys. They are new commercial commodities distinct from ingots and billets giving out the Cast Products. As regards Cast products we have already seen, as appears from Annexure 'C', they consist of aluminium ingots, aluminium alloy ingots, wire bars, Properzi Redraw Roads and billets. During the course of argument, it appeared that so far as aluminium alloy ingots, wire bears and billets are concerned, the process for manufacture of these items is similar to those of aluminium ingots. There is no justification for treating aluminium alloy ingots, wire bars and billets as not coming within the description of 'metals and alloys'. The dispute so far as Cast Products are concerned, centres round Properzi Redraw Rods. We have already set out the process of manufacture of properzi Redraw Rods. Counsel for the State contended that as soon as molten metal is solidified into 12 sq. centimeter cross-section, they assume the nature of a commercial commodity, and subsequently, when they are further processed by being fed into the Properzi Mill, another new commoditys Properzi Redraw Rods, comes into existence. Parties do not appear to have ld evidence on the point as to whether the solidified 12 sq. centimeter cross-section are a commercial commodity at that stage. As such, it would not be proper to decide in these proceedings as to whether Properzi Redraw Rods fall within the description of 'metals and alloys' without giving the parties further opportunity to lead evidence in the matter. We, therefore, think it, appropriate to direct the Sales Tax Officer to look into this aspect of the matter, and decide whether Properzi Redraw Rods come within the description of metals and alloys, after considering the evidence, if any, which the petitioner may choose to lead, and in the light of the principles laid down in the case of State of Tamil Nadu vs. M/s. Pyare Lal Malhotra.
7. It was contended on behalf of the State by reference to some decisions of the Supreme Court that normally, an interpretation put by taxing authorities as regards the nature of goods for purposes of classification, should be accepted. There is no getting away from that principle, but in case the taxing authorities come to a decision which is not in consonance with the law declared by the Supreme Court or by the High Court, this principle can be hardly applied.
8. Counsel for the State also drew our attention to certain other notifications where concessional rate of tax was granted in respect of copper, tin, zinc, sheets and circles used in the manufacture of brass ware. It was contended that wherever the notification granting concessional tax intended to grant concessional rate to articles manufactured out of metals or alloys, it did so by specifically mentioning the specified shapes of the metals which were to enjoy the exemption. This argument is not decisive of the matter for sheets, circles etc. are products which are made out of ingots or billets after processing them. They are not Cast Products.
9. We may, at this stage, dispose of the last contention made on behalf of the State. It was contended that the petitioner has been realizing tax from its purchasers on the basis that all the products save ingots were unclassified items, and, therefore, no relief should be granted. Counsel for the petitioner contended that it realized tax at a higher rate in order to safeguard its interest in case the matter was decided against it, and has given an undertaking to refund the excess tax to its purchasers. Now, it is not disputed that the State can charge only such tax as is permissible under the law. Liability to tax does not depend on the fact as to whether a dealer has or has not charged any sales tax from its customers or has charged higher amounts. Thus, if a safe is liable to be charged at a lower rate, the State cannot insist on realizing a higher amount solely on the ground of a larger amount being charged. Relief can be given when an illegal impost not authorized by the law is made. This a part, as the petitioner has all along been challenging the rate of tax, and has under taken to refund the excess amount to its purchasers, we see no ground for not interfering with an illegal order imposing a tax not authorized under the law.
10. We, accordingly, allow this petition in part, and direct the Sales Tax Officer to reframe the assessment as indicated above and after deciding the question as to whether Properzi Redraw Roads come within the description of metals and alloys in the light of the observation made above and in accordance with the law. Parties to bear their own costs.