IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.95 OF 2009

M/s. Jai Vijai Metal Udyog Pvt. Ltd. ... Appellant Industrial Estate, Varanasi

VERSUS

The Commissioner, Trade Tax, ... Respondent U.P. Lucknow

O R D E R

Challenge in this appeal, by special leave, is to the final judgment  

and order dated 12th August, 2005 rendered by the High Court of Judicature  

at Allahabad in Trade Tax Revision No.945 of 1998.  By the impugned  

judgment, the High Court has allowed the Revision Petitions filed by the  

Commissioner, Trade Tax, U.P., Lucknow (for short “the Commissioner”)  

against a common order passed by the Trade Tax Tribunal, Varanasi (for  

short “the Tribunal”) in appeals preferred by the Commissioner against the  

order  passed  by  the  Deputy  Commissioner  (Appeals)  in  favour  of  the  

appellant  (hereinafter  referred  to  as  “the  Dealer”)  in  respect  of  the  

assessment year 1988-89.  

Briefly stated, the material facts giving rise to the present appeal are  

as follows:

The Dealer, incorporated as a private limited company, is engaged in  

the  manufacture  of  aluminium  ‘properzi’  redraw  rods  from  aluminium  

ingots.  The word ‘properzi’ is the name of the person who had invented  

the process of manufacturing redraw rods.  According to the Dealer, the  

process involves pouring of molten metal from pot room crucible directly  

in the melting furnace, which is then transferred to holding furnace.  The  

material 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 steel belt and  

during one half rotation of the casting wheel, the metal gets solidified and  

comes  out  in  the  form of  a  continuous  bar  of  about  12  sq.  cms.  cross  

section at a temperature of 440° to 380° centigrade.  This bar is then fed  

through a 13 strand ‘properzi’ mill where the thickness of cross section is  

progressively reduced and finally a 9.5 mm diameter redraw rod comes out,  

which is then wound on the drum of a mechanical coil.  The stand of the  

Dealer is  that ‘properzi’ rods of the size of 9.5 mm have no use in the  

market  inasmuch  as  except  for  being  used  as  raw  material  in  the  

manufacture of wires of different sizes, it cannot be used as such for any  

other purpose.

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For the assessment years 1983-84, 1984-85, 1985-86 and 1987-88,  

the  ‘properzi’  rods  manufactured  by  the  Dealer  were  classified  by  the  

Assessing Authorities to be a metal/primary metal and were assessed at the  

rate of  2% plus surcharge at 10% of the said rate in terms of Entry 24 of  

the Schedule to the U.P. Trade Tax Act, 1948 (for short “the U.P. Act”), as  

inserted  by  Notification  No.ST-II-6075/X-6(9)/83  dated  30th September,  

1983.  The said Entry reads as follows:

“(24)  All  kinds  of  ore,  metals,  scraps  and  alloys  including  sheets  and  circles  used  in  the  manufacture  of  brass  wares,  except  those  included  in  any  other  entry  or  any  other  notification issued under the Act.”

Similarly,  for  the  assessment  year  1988-89,  with  which  we  are  

concerned in this appeal, the Assessing Authority taxed the ‘properzi’ rods  

at  the  rate  of  2.2%  vide  order  dated  19th August,  1992.   However,  

subsequently proceedings under Section 21 of the U.P. Act were initiated  

against  the  Dealer  on the  ground that  assessment  in  respect  of  the said  

assessment year had escaped assessment or had been under-assessed.  The  

main reason for re-opening the assessment was that while assessing another  

dealer  in  the  State,  namely,  M/s  Hindustan  Aluminium  Corporation  

(hereinafter referred to as “HINDALCO”), who were also engaged in the  

manufacture of ‘properzi’ rods and other products, the Assessing Officer  

had held that ‘properzi’ rods were not ‘Metal’ falling under Entry 24.

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Thus, in the re-assessment, the Assessing Officer held that ‘properzi’  

redraw rods manufactured by the Dealer being a “rolled product” were not  

primary metal and being commercially different from metal, were liable to  

be taxed as an unclassified item at the rate of 10% in terms of Section  

3A(1)(c)  of  the  U.P.  Act.   The re-assessment  resulted in creation of an  

additional demand of Rs.35,19,632/- against the Dealer.   

Being aggrieved, the Dealer preferred separate appeals against the  

assessments under the Regional Sales Tax Act and the Central Sales Tax  

Act.   Relying  on  the  decision  of  this  Court  in  Hindustan  Aluminium  

Corporation  Ltd.  Vs.  State  of  Uttar  Pradesh  &  Anr.1,  the  Deputy  

Commissioner  (Appeals),  Sales  Tax,  Varanasi  vide  his  order  dated  11th  

February,  1993,  allowed  both  the  appeals.   The  Deputy  Commissioner  

(Appeals) found that ‘properzi’ rods manufactured by the Dealer were not  

in the final shape of finished goods and were the basic raw material for the  

manufacture  of  aluminium wires  and,  therefore,  being  a  primary  metal,  

would  attract  tax  at  the  rate  of  2%.   Aggrieved  by  the  said  order,  the  

Revenue took the matter in second appeal to the Tribunal which, vide order  

dated 27th March, 1998, dismissed both the appeals.   

Being dissatisfied, the Revenue filed Revision Petitions before the  

High Court.  As stated above, by the impugned order, the High Court has  

allowed both the Revision Petitions.  Placing reliance on the decision of  1 (1981) 3 SCC 578

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this  Court  in  Hindustan  Aluminium Corporation  Ltd.  (supra)  wherein,  

according  to  the  High  Court,  it  had  been  held  that  aluminium  rolled  

products and extrusions did not fall in the category of metal and were liable  

to be taxed as unclassified item, the High Court has come to the conclusion  

that ‘properzi’ rods manufactured by the Dealer are, in fact, wire bars and  

not  wire  rods,  and  have,  therefore,  to  be  taxed  as  unclassified  items.  

Aggrieved, the Dealer is before us in this appeal.   

Learned counsel appearing on behalf of the Dealer has strenuously  

urged before us that the High Court has mis-directed itself in law in not  

only treating extrusions as similar to ‘properzi’ redraw rods, its decision  

drawing a distinction between the ‘properzi’ redraw rods manufactured by  

the Dealer and the same product manufactured by HINDALCO is clearly  

perverse.  Learned counsel submits that, in fact, observations in para 7 of  

the judgment in Hindustan Aluminium Corporation Ltd. (supra) show that  

in so far as ‘properzi’ redraw rods are concerned, this Court has treated  

these rods as different from rolled products and extrusions and, therefore,  

affirmed the direction of the High Court to the Sales Tax Officers to re-

examine the matter after making further enquiry.  It is asserted that the said  

decision  does  not  conclude  the  issue  against  the  Dealer  as  pleaded  on  

behalf of the Revenue.   Learned counsel also points out that pursuant to  

the remand by the High Court in the case of HINDALCO, the Assessing  

Officer examined the entire issue afresh; by summoning the representatives  

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of other manufacturers to understand the manufacturing process as also the  

commercial value, and then came to the conclusion that ‘properzi’ redraw  

rod is like an ingot - a form of primary metal and, therefore, falls in the  

category of metal and alloy, covered under Entry 24.  According to the  

learned  counsel,  the  assessment  made  in  the  case  of  HINDALCO  on  

remand has attained finality.  It is, thus, pleaded that since the item, viz.  

‘properzi’  redraw rod manufactured by the Dealer  and HINDALCO are  

similar, the Revenue cannot treat two dealers differently for the purpose of  

levying sales tax under the Regional Act as well as the Central Act.

Learned counsel appearing on behalf of the Revenue, on the other  

hand,  supported  the  decision  of  the  High  Court  and  submitted  that  

‘properzi’ redraw rods are manufactured from aluminium ingots and billets;  

being commercially different commodities, the same cannot be considered  

as  primary metal  and,  therefore,  these  have  been correctly  taxed  in  the  

category of unclassified item.  Learned counsel urged that after this Court  

had passed order on 2nd December, 2009, directing the Revenue to disclose  

its  stand  with  regard  to  the  assessment  in  the  case  of  HINDALCO,  

assessments in the case of the said company in respect of assessment years  

2003-04 to 2006-07 have been re-opened under Section 21(2) of the U.P.  

Act and, therefore, the plea of discrimination is not available to the Dealer.  

It  is,  however,  conceded  that  in  so  far  as  assessment  in  the  case  of  

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HINDALCO for the assessment year 1988-89 is concerned, it has attained  

finality and cannot be re-opened.

The  questions  falling  for  consideration  are:  (i)  whether  the  

aluminium ‘properzi’ redraw rods can be classified as metal under Entry 24  

of  the  aforementioned  Notification  dated  30th September,  1983  and  (ii)  

when  admittedly,  the  foundation  for  re-opening  Dealer’s  assessment  in  

respect of assessment year   1988-89 was the assessment in the case of  

HINDALCO,  in  which  case,  after  the  remand  by  the  High  Court,  

assessment for that year has attained finality, can the Revenue be permitted  

to take a different view in the case of the Dealer from that taken in the case  

of HINDALCO in respect of the same assessment year?

In so far as the first question is concerned, we are of the opinion that  

in  the  light  of  the  decision  of  this  Court  in  Hindustan  Aluminium  

Company  Ltd  .  (supra)  wherein,  while  examining  the  question  whether  

aluminium rolled products and extrusions could be described as ‘Metal’  

under Item No.6 (as it then existed) in the Schedule attached with the U.P.  

Act which is materially similar to Entry 24, this Court has observed that  

expression ‘Metal’ has been generally employed to refer to the metal in its  

primary sense,  i.e.  the metal  in the form in which it  is  marketable  as  a  

primary commodity, it is unnecessary for us to delve deep into the issue.  

The  only  question  for  our  consideration  is  whether  the  said  decision  

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conclusively  holds  that  ‘properzi’  redraw  rods  are  not  ‘metal’  in  the  

primary form as such constituting new commercial commodity as held by  

the High Court.  Having carefully gone through the judgment, particularly  

the  observations  in  para  7  thereof,  we  are  convinced  that  in  so  far  as  

‘properzi’ redraw rods are concerned, a distinction has been drawn by this  

Court between ‘properzi’ redraw rods and other aluminium rolled products  

and extrusions and precisely for this reason, the issue was kept open to be  

re-examined  by  the  Sales  Tax  Officer  after  further  enquiry.   As  noted  

above, learned counsel for the Revenue candidly conceded before us that in  

so far as assessment year 1988-89 is concerned, after  fresh enquiry, the  

Assessing  Officer  treated  ‘properzi’  redraw  rods  as  primary  metal,  

classifiable  under  Entry 24.   Admittedly,  this  decision of  the Assessing  

Officer  was  not  questioned  by  the  higher  authorities  and  thus,  attained  

finality.  Moreover, bearing in mind the fact that the same issue has now  

been re-opened in the case of HINDALCO, in respect of assessment years  

2003-04 to 2006-07, we feel that expression of any opinion on the issue, at  

this juncture, would be prejudicial to the interest of either of the parties,  

particularly when HINDALCO is not before us.

Now,  coming to  the  second  issue,  it  is  trite  that  in  view of  the  

inherent  complexity  of  fiscal  adjustment  of  diverse  elements,  a  wider  

discretion is given to the Revenue for the purpose of taxation and ordinarily  

different interpretations of a particular tariff entry by different authorities  

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as such cannot be assailed as violative of Article 14 of the Constitution.  

Nonetheless,  in our  opinion,  two different  interpretations  of  a  particular  

entry by the same authority on same set of facts, cannot be immunised from  

the equality clause under Article 14 of the Constitution.  It would be a case  

of operating law unequally, attracting Article 14 of the Constitution.

In the  present  case,  as  stated  above,  the  basis  for  re-opening the  

assessment of the Dealer in respect of assessment year 1988-89, was the  

view  taken  by  the  Assessing  Officer  in  the  case  of  HINDALCO  that  

‘properzi’  redraw  rods  were  not  primary  metal  in   terms  of  Entry  24.  

Therefore, subsequently when on remand by the High Court as affirmed by  

this  Court,  in  HINDALCO’s  fresh  assessment  in  respect  of  the  said  

assessment year, the said product was held to be a ‘metal’ falling under  

Entry 24, the entire foundation for re-opening of the assessment vanished.  

Having  accepted  the  view  of  the  Assessing  Officer  in  the  case  of  

HINDALCO, the Sales Tax Authorities in the State cannot be permitted to  

take a different stand in the case of the Dealer in respect of a similar item  

for the same assessment year.

For all these reasons, we are of the opinion that the view taken by  

the High Court, distinguishing the case of HINDALCO from that of the  

Dealer, cannot be sustained.

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As a result, the appeal is allowed; the impugned order is set aside  

and that of the Tribunal is restored leaving the parties to bear their own  

costs.   

….........................................J. [ D.K. JAIN ]

….........................................J.         [ T.S. THAKUR ]

NEW DELHI, APRIL 16, 2010.

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