Durga Industries vs Sales Tax Officer

A.K. Sikri, J.—This writ petition is preferred by the Petitioner invoking the provisions of Article 226 and/or 227 of the Constitution of India. The Petitioner seeks quashing of orders dated 1st June, 1989 whereby reassessment of the Petitioner for the assessment year 1983-84 was finalized. The Petitioner has also impugned the order dated 23rd January, 1990 whereby the appeal of the Petitioner in respect of assessment for the year 1985-86 was rejected by the Assistant Commissioner, Zone-V. The aforesaid orders (hereinafter referred to the "impugned orders") were passed by the authorities under the following circumstances.

The Petitioner is a registered partnership registered under the Delhi Sales Act, 1975 as well as the Central Sales Act, 1956. Its business consists of manufacturing of cycle parts in general and "Fork legs" in particular which is carrying on the business under the name and style of M/s Durga Industries. As per the Petitioner, it is allowed to purchase the following goods free of tax as per the following entry in column 2 (a) of the C.R.''s"-

Welding rod and Iron wire w.e.f. 12.11.1997

Acids, cutting oil, Gas w.e.f. 15.2.1979

Cylinder, Copper coated Welding w.e.f. 6.4.1983

Wires & Calcium carbide: Light Diesel Oil

The Petitioner had purchased "Electrodes which according to the Petitioner was covered by the aforesaid entry and, therefore, no sales tax was payable.

In the assessment year 1983-84, the Petitioner filed its return which was processed and assessment orders dated 11th January, 1988 were passed by the Sales Tax Officer opining that the Petitioner was entitled to exemption on account of purchase of electrodes, cutting oil, acid and LDO and allowed the exemption on the basis of registration certification issued to the Petitioner. Thereafter, this assessment was reopened and reassessment order dated 1st June, 1989 was passed u/s 24(1) of the Delhi Sales Tax Act. However, while framing the reassessment in respect of assessment year 1983-84, the Assessing Officer passed orders dated 1st June, 1989 stating that the Petitioner was liable to tax on the amount of purchase price of "electrodes" holding this purchase as unauthorized and calling upon the Petitioner to pay this additional sales tax.

Likewise, in respect of assessment year 1985-86 assessment orders dated 22nd January, 1990 were passed whereby the Petitioner was taxed at the rate of 7% on the purchase welding rods worth `64558/- and an additional amount of `4519/- was credited. Against this order, the Petitioner went in appeal and the appellate authority confirmed the orders thereby dismissing the appeal vide orders dated 12th August, 1991. After the dismissal of this appeal, the Petitioner approached this Court by way of present petition challenging the reassessment order dated 1st June, 1989 in respect of assessment year 1983-84 and order dated 12th August, 1991 in respect of assessment year 1985-86. Perusal of the orders of the Sales Tax authorities below reveled shows that they have relied upon a Division Bench judgment of this Court in the case of Commissioner, Sales Tax Vs. Standard Metal Industries, . On the basis of this judgment, conclusion was drawn that the electrodes and iron chains which are used by the dealer in the process of manufacturer of iron chains and bolts cannot be recorded as "raw material". On the strength of the said judgment, a Circular No. 1/1990-91 had been issued by the Additional Commissioner, Sales Tax vide which all the assessing authorities had been directed to check the records of the dealer registered and deleted the item Oxygen, electrodes, acetylene gas, calcium carbide etc. which do not go into the finish product but are consumed in the process of manufacture. The Circular also provided that failure to comply with the instructions contained therein would render the AO to be personally liable for any revenue loss on this account.

Based on the aforesaid ratio in that case, the submission of learned Counsel for the Petitioner was that in the present case the "electrodes do not really disappear and in fact become a part and parcel of the finish product and, therefore, would continue to remain "raw material" and thus shall be covered by the exemption entry and, therefore, no sale tax was payable. After taking note of the aforesaid contention, the Division Bench took the view that in view of the latest judgment of Supreme Court in the case of Ballarpur Industries (supra) decision of Division Bench of this Court in Standard Metal industries (supra) needed reconsideration and matter was referred to the larger Bench. This is how the reference arises for decision as to whether the Division Bench judgment of this Court in Standard Metal Industries (supra) still holds the field, and if not, what would be the impact thereof in the present writ petition.

When the matter came up for hearing on 18.02.2011, nobody appeared on behalf of the Petitioner. Mr. Bhatia, who was present in the Court was requested to assist, as he is taken on the panel of the Advocates for Sales Tax Department. Though he informed that notification for his appointment is yet to be issued, on our request he agreed to assist. According to him, it appears that this Petitioner firm stood dissolved much earlier and not in the business any longer. That could be the reason that nobody appeared on behalf of the Petitioner at the time of hearing as well. It is also a matter of record that the Delhi Sales Tax Act has since been repelled and in its place, Delhi Value Added Tax (DVAT) Act has been enacted.

For all these reasons, we are of the view that it is not necessary to answer the reference. It has been rendered in fructuous in view of the aforesaid facts and circumstances of this case. The writ petition is accordingly dismissed as in fructuous and also in default because of no representation on behalf of the Petitioner.