LexVASANTHAN FOUNDRY versus UNION OF INDIA AND ORS.
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VASANTHAN FOUNDRY A V. UNION OF INDIA AND ORS. AUGUST 9, 1995 (B.P. JEEVAN REDDY, N.P. SINGH AND SUHAS C. SEN, JJ.] B Tamil Nadu General Sales Tax Act, 1959 : Schedule II-Clause (i) of Entry 4-'Cast Iron Castings'-Sales Tax-Levy of-Government circular stating that rough cast iron castings C . should be treated as different from cast iron-Quashing of-Held 'Cast Iron Casting' in its basic f onn is 'cast iron '-But products made by machining or polishing the rough cast iron castings cannot be regarded as 'cast iron casting'. The appellant-Foundry, manufacturer or rough Cast Iron Castings,. unsuccessfully challenged the validity of a circular dated 14th September, D 1993 issued by the Special Commissioner and Commissioner of Commer- cial Taxes Madras-Vas well as notices issued pursuant to the said circular proposing to assess to tax sale of Cast Iron Castings @8%. The case of the appellant is that before the judgment of this Court in Bengal Iron Corporation v. Commercial Tax Officer, (1994] Supl. 1 SCC 310 'Cast Iron Castings' were treated as declared goods and tax was levied at 4% at the first point of sale in the State of Tamil Nadu. Subsequent to the judgment E the impugned circular was issued stating that rough 'cast iron castings' whether machined or unmachined have to be treated as distinct and different from cast iron and the earlier stand that rough cast iron castings were 'declared goods' has to be reversed and tax shall be levied on cast F iron castings accordingly. Thus, the question in these appeals is whether the 'cast iron' in the list of declared goods in the Tamil Nadu Sales Tax Act, 1959 should include 'Cast Iron Castings'. It was contended for the appellant that (i) the circular dated 14.9.1993 is based on misconception of the law laid down by this Court in G the case of Bengal Iron Corporation; and (ii) if in a given case it is found that agricultural implements or parts of a motor vehicle or manhole covers, bends, or cast iron pipes are being produced in a foundry, these cannot be treated as 'cast iron', but will have to be treated as finished goods made of cast iron. But, 'cast iron casting' at its primary stage must H 575 576 SUPREME COURT REPORTS (1995) SUPP. 2 S.C.R. A be treated as declared goods. When pig iron or scrap iron is melted in the foundry and mixed with carbon and silicon, it cannot be said that the molten metal was cast· iron and when the molten metal is poured into a mould, it ceased to be cast iron. B c Allowing the appeals, this Court HELD : 1. The circular dated 14.9.93 is quashed and the impugned show cause notices issued pursuant to the aforesaid circular are also quashed, with the clarification that 'rough unmachined cast iron castings' will continue to be treated as declared goods under sub-item (i) or Item (iv) of the Second Schedule to the Tamil Na du General Sales Tax Act, 1959. (588-G] 2. 'Cast Iron Casting' in its basic or rough form must be held to be 'cast iron'. But, if thereafter any machining or polishing or any other process is done to the rough cast iron casting to produce things like pipes, D manhole covers or bends, these cannot be regarded as 'cast iron casting in its primary or rough form, but products made out of cast iron castings. Such products cannot be regarded as 'cast iron' and cannot be treated as 'declared goods' under Section 14(iv) of the Centrai Sales Tax Act. This view is not in conflict with the view taken in the case of Bengal Iron Corporation, b'llt it is in con~ofiance with the decision in that case. (586-C-E] E .. Bengal Iron Corporation v. Commercial Tax Officer, (1994) Suppl. 1 S.C.C. 310, explained. 3. By including 'cast iron' among the goods of special importance in inter-State trade or commerce, the Legislature could not have given the F phrase 'cast iron' a narrow and limited meaning so as to exclude everything made out of cast iron in molten form. It is not conceivable that molten . metal can be sold or purchased in course of inter-State trade or for that matter even in course of intra-State sale or purchase. It can only be delivered by a foundry in a container. The molten metal will solidify on G cooling and acquire the shape and size of the container. In other words, the molten metal will become rough cast iron casting. Similarly, if the molten metal is delivered in moulds, it will acquire the size and shape of the moulds as soon as it cools down and will acq
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