Civil Appeal No 814 of 1964
Appeal by special leave from the judgment and order dated October 24 1961 of the Madhya Pradesh High Court in Misc
Petition No 125 of 1958
IN Shroff for the appellants
CB Agarwala and C P Lal for the respondent
The Judgment of the Court was delivered by Subba Rao J
This appeal by special leave raises the question of the intepretation of Item No 39 of the Notification 753 No 58 dated October 24 1953 hereinafter called the Notification  issued by the Government of Madhya Bharat under the Madhya Bharat Sales Tax Act Samvat 2007 Act No 30 of 1950 hereinafter called the Act
The facts are as follows  Hiralal the respondent is the manager of a joint Hindu family carrying on business in the name and style of Messrs Tilokchand Kalyanmal
The joint family owns a re rolling mill situated in Indore City called the Central India Iron and Steel Company
The said family purchases scrapiron locally and imports iron plates from outside and after converting them into bars flats and plates in the Mills sells them in the market
The respondent made a default in furnishing the returns prescribed by section 7i of the Act for the period April 1 1954 to March 31 1955
On February 27 1956 the Sales tax
Officer Indore determined the taxable turnover at Rs 226000and the sales tax payable thereon at Rs 8000 and he also imposed a penalty of Rs 1000 under section 14 1 c of the Act
On the same day he issued demand notices to the respondent for the payment of the said sales tax and the penalty
On September 10 1956 the respondent filed a petition in the High Court of Madhya Bharat afterwards Madhya Pradesh under articles 226 and 227 of the Constitution for the issue of appropriate writs quashing the assessment of tax and penalty and to restrain the State from giving effect to the said orders of the Sales tax Officer
A Divi sion Bench of the High Court held that the iron bars flats and  plates sold by the respondent were exempted from sales tax under the Notification
In that view the orders of the Sales tax Officer were quashed
The state has filed the present appeal by special  leave
The only question in this appeal is whether the said iron bars flats and plates are not iron and steel within the meaning of  Item No 39 of the Notification
Parliament enacted Essential Goods Declaration and Regulation of Tax on Sales or Purchases Act 1952 Act No 52 of  1952 which came into force on August 9 1952
In Schedule I of the said Act iron and steel were declared essential for the life of the community
Thereafter the Government of Madhya
Bharat in exercise of the powers conferred by section 5 of the Act issued the Notification as also Notification No 59 dated October 24 1953
The material part of Schedule I of Notification 58 reads 754 No tax shall be payable on the sale of the following goods SNo
Description of goods
39 Iron and steel
Notification No 59 described the goods sales of which were taxable at particular rates
Schedule IV thereof reads  List of articles under section 5 of the Madhya Bharat Sales Tax Act 1950 on the assessable sale proceeds of which sales tax at the rate of Rs 32 per cent
shall be payable showing the nature of articles on which the tax is payable
Name of article Stage of sale in Madhya Bharat at which the tax is payable
9  goods prepared from any Sale by imported or pro metal sale by importer or producer
ducer
other than gold and silver 
Learned counsel for the State contends that the expression iron and steel means iron and steel in the original condition  and not iron and steel in the shape of bars flats and plates
In our view this contention is not sound
A comparison of the said two Notifications brings out the distinction between rawmaterials of iron and steel and the goods prepared from iron and steel  while the former is exempted from tax the latter is taxed Therefore iron and steel used as raw material for manufacturing other goods are exempted from taxation
So long as iron and steel continue to be raw materials they enjoy the exemption
Scrap iron purchased by the respondent was merely re rolled into barsflats and plates
They were processed for convenience of sale
The raw materials were only re rolled to give them attractive and acceptable forms
They did not in the process lose their character as iron and steel
The dealer sold iron and steel in the shape of bars flats and plates and the customer purchased iron and steel in that shape
We therefore hold that the bars flats and plates sold by the assessee are iron and steel exempted under the Notification
The conclusion arrived at by the High Court is correct
In the result the appeal fails and is dismissed with costs
Appeal dismissed


Summary:
The respondent as head of a joint Hindu family owned a re rolling mill at which scrap iron locally purchased and iron plate  imported from outside were converted into bars flats and plates in the Mills and thereafter sold in the market
The sales tax authorities held that iron bars flats and plates sold by the respondent were not iron and steel  exempted by notification No 58 dated October 1953 issued under the Essential Goods Declaration and Regulation of Sales and Purchasees Act 1952
In a petition under articles 226 and 227 filed by the respondent challenging the said assessment the High Court decided that iron bars flats and plates were exempted under the notification
The State appealed to this Court
HELD  Goods prepared from metals other than gold and silver are made taxable by notification No 59 whereas notification No 58 exempts iron and steel from tax
A comparison of the said two notifications brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel
While the former is exempted from tax the latter is taxed
Therefore iron and steel used as rawmaterial for manufacturing other goods are exempted from taxation
So long as iron and steel continue to be raw materials they enjoy the exemption
Scrap iron purchased by the respondent was merely rerolled into bars flats and plates for convenience of sale
The rawmaterials were only re rolled to give them attractive and acceptable forms
They did not in the process lose their character as iron and steel
The bars flats and plates sold by the respondent were therefore iron and steel exempt under the notification
754 D G