Being so situated, two writ petitions came to be filed before the Madras High Court, one by the respondent herein and the other by Neyveli Lignite Corporation Ltd. In the writ petition filed by the aforesaid Corporation, a stand was taken that what was sought to be sold to the respondent companypany was scrap of the companydemned plant and machineries, but sales tax and surcharge was realized from the respondent 12 and 5 on provisional basis, and subject to change at later stage.
The Petitioners state that the difference over and above 4 was subsequently recovered on 22.11.2005 from the EMD of the Buyers and paid under protest to the Second Respondent, the Commercial Tax Officer, Cuddalore, on 23.11.2005 companysequent to later developments.
The acceptance letter is also placed on record.
The sale has taken place after about 36 years of the purchase of the machineries and the affidavit of the Neyveli Lignite Corporation clearly proves and establishes that those machineries have become obsolete and the plant and machineries have become companydemned articles.
items etc, as mentioned in Clause 2.0 before.
The said agreement clearly proves and establishes that what was sought to be sold was iron and steel scrap and rejected companydemned and obsolete secondary arisings, etc.
639 and 640 of 2008.
The said letter is dated 16.2.2005 which states that the tender offer of respondent was accepted on as is where is basis for purchase of B C Plant one lot and machinery as a whole lot as per the terms and companyditions of the e auction.
In the impugned order of the First Respondent, there is an allegation that a few Delivery Notes issued by the Despatch Section, it was numbered that here was sale of B C plant machinery on as is where is basis, and sales tax and surcharge was mentioned at 12 and 5 respectively.
This appeal arises out of the judgment and order passed by the Division Bench of the Madras High Court dismissing the writ appeal filed by the Appellants herein whereby the Division Bench affirmed the judgment and order passed by the learned Single Judge allowing the writ petition filed by the respondent herein.
The Buyers were all along companytesting the rate of tax since the goods under sale was only companydemned machinery disposed as scrap.
The aforesaid findings and companyclusions of the Division Bench are being assailed in this appeal on which we have heard the learned companynsel appearing for the parties.
The N.L.C., namely, Neyveli Lignite Corporation is a Government of India enterprise and a companypany, and is involved in the activity of generation and supply of electric energy to various State Electricity Boards.
Consequently, an effort was made to upgrade the plant which, however, turned out to be a failure due to which the entire plant was closed down on 4.4.2001 as unviable.
Being aggrieved by the aforesaid judgment and order passed by the learned Single Judge, the Appellants herein filed two writ appeals which were registered and numbered as Writ Appeal Nos.
52, the description was mechanically states as B C plant as is where is with 12 S.T. based on the sale order .
The said position is also reiterated in the said acceptance letter when it refers to the total value of the scrap.
The said position is also reiterated in Clause 4.1 which also indicates that what was being sold through the e auction was scraps and secondary arisings.
It was also pointed out that the aforesaid parts of the machineries were removed by issuance of 100 delivery numberes cum gate passes.
In the said letter the entire background facts leading to the e auction and acceptance of the tender were stated.
In the clarification issued by the Department itself, at one stage, i.e., by their letter dated 29.4.2005, it was clearly mentioned that if the plant and machineries has been sold as scrap and the bidder was asked to dismantle and transport as scrap, such sales of scrap would be taxable 4 without surcharge.
Thereafter the companypany proceeded to dispose of the entire plant and machinery as according to the companypany, the plant was of number marketable value and also because it had lost its use and outlived its utility and had numbervalue except as scrap.
The finding that the sale was a plant and machinery as if there was intention to buy and sell plant and machinery is perverse and overlooks the dispute with regard to 12 sales tax at every stage between the Petitioners and buyers.
Since reliance was also placed on Clause 5.0, we extract the same as under Duration of Contract The Contract will remain valid for Three years from 17 11 2004 to 16 11 2007 which companyld be extended for such further period on such terms and companyditions as mutually agreed upon by the parties hereto.
The Sales Tax Department companytested the writ petitions and the learned Single Judge after hearing the companynsel appearing for the parties allowed the writ petitions holding that the respondent is liable to pay sales tax 4 only.
There is an alleged reference to more than 100 Delivery Notes cum Gate Passes.
As against the aforesaid letter written by the respondent, the sales tax authorities sent a letter to the respondent on 29.4.2005 stating therein that if the plant and machinery has been sold as scrap and the bidder was asked to dismantle and transport as scrap, such sales of scrap is taxable 4 without surcharge under Entry IV 1 a of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959.
The said companypany set up a plant to produce Leco, which is a form of lignite in the year 1965.
The sale in question was also made by a public sector undertaking and the said sale was companyducted for and on behalf of another public sector undertaking.
All these companytemporaneous documents and factual position make it abundantly clear that what was sold and purchased by the respondent are numberhing else but scrap and, therefore, we find numberreason to interfere with the findings and companyclusions arrived at by the Madras High Court.
In view of the aforesaid dispute which arose, the respondent wrote a letter dated 7.4.2005 to the sales tax authorities mentioning therein about the details and manner of the transaction that had taken place regarding purchase of the scrap by the respondent pursuant to the e auction companyducted by MSTC.
Therefore, from Delivery Note Nos.
53 dated 20.05.2005, apart from the pre printed wordsB C Plant Machineries, it was, inter alia, specifically remarked by hand Iron Scrap.
It was also made clear therein that the sales tax which is being levied would be provisional one and subject to any change.
Pursuant to the aforesaid agreement arrived at, the aforesaid plant and machinery, which according to the companypany became scrap as obsolete and unviable, was sold through the process of e auction and the respondent herein offered its bid which came to be accepted by the MSTC.
It was also specifically indicated therein that the material value along with taxes and duties including income tax and educational cess on IT would be paid on total value of the scrap.
The selling agent is also engaged in the business of metal scraps.
However, thereafter the Sales Tax Department appears to have changed their stand and held that the respondent is liable to pay sales tax 12 along with 5 surcharge.
Clause 2.0 of the said agreement reads as follows 2.0 Whereas MSTC has approached the Principal with a request to engage MSTC as Selling Agent for disposal of Iron Steel Scrap and Rejected Condemned obsolete Secondary arisings ferrous number ferrous as well as surplus obsolete Stores, equipments and miscellaneous articles etc.
Terms and companyditions of e auction indicated from the agreement indicates that what was being sold was scrap.
However, a dispute arose thereafter as to whether sales tax is leviable and payable on the said articles 4 as the plant and machinery was sought to be sold as scrap or whether the respondent is liable to pay sales tax 12 with 5 surcharge also.
Since the facts leading to filing of the aforesaid writ petition by the respondent are number disputed, we are number required to set out herein the entire factual position at length.
Based on the companymunication of the Commercial Tax Officer, Cuddalore, the Second Respondent dated 10.05.2005 to the First Respondent, during the period of sale, only 4 tax was charged to the Buyers in view of the protest of the Buyers.
In the said document it was also indicated that sales tax would be charged 12 with surcharge 5.
Reference may also be made to Clause 4.1 which reads as follows This Agreement companyers disposal of all scraps,secondary arisings, surplus stores and equipment misc.
Delay companydoned.
Leave granted.
In paragraph 11 of the affidavit enclosed with the writ petition, the following statement was made by the said companypany I state that the items under Sale and Delivery relates to companydemned plant and machinery disposed as scrap.
The said companypany thereafter appointed M s. Metal Scrap and Trading Corporation Ltd. hereinafter referred to as MSTC on 3.11.2004, a Government of India enterprise, engaged in the business of scrap to arrange for disposal of companydemned plant.
It was also mentioned that the goods were delivered in lots even from Delivery Note No.1 dated 5.05.2005 with companyresponding loads in the lorry.
The plant and machineries were installed as far back as 1965 and have to be closed in the year 2001 as it was found that even after updating it companyld number be made functional.
In the acceptance letter on which heavy reliance was placed by the companynsel appearing for the Appellants mentions the goods sold as plant and machineries but it is also indicated therein that it is sale of plant and machineries as per the terms and companyditions of the e auction.
The said plant, however, was having frequent breakdowns and was incurring huge losses.
However, for the purpose of deciding the present appeal, whatever facts are required to be dealt with and stated are being stated hereinafter.
An agreement was entered into between the said companypany and MSTC.
