Case Law Details
The buyer of Neyveli Lignite Corporation, a central government undertaking which was sold as scrap, was entitled to pay a lower sales tax, the Supreme Court ruled. It dismissed the appeal of the Commissioner of Commercial Taxes against the ruling of the Madras high court which stated that the levy should take into account that the machinery was total scrap. Since the plant and machinery had outlived its utility, the government appointed Metal Scrap and Trading Corporation Ltd, a government enterprise, to sell them as scrap. It arranged an e-auction in which Chitrahar Traders bid the highest amount. The revenue department then demanded 12 per cent and surcharge as sales tax stating that what was sold was plant and machinery; not scrap. The buyer contended that only 4 per cent could be levied at the rate stipulated for scrap. In fact, it had to use explosives to remove machinery embedded in earth since 1961 and which became utterly useless by 2001. The high court and the Supreme Court accepted the contention of the scrap buyer.
Supreme Court
Commissioner of Commercial Taxes & Ors. Vs. Chitrahar Traders
O R D E R
Delay condoned.
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