Andhra Pradesh High Court - Amravati
M/S Anansuya Traders,Guntur vs State Of Ap By Stat,Asp,Hyd on 13 October, 2022
Author: C.Praveen Kumar
Bench: C.Praveen Kumar
THE HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR
AND
THE HONOURABLE SRI JUSTICE A.V.RAVINDRA BABU
TAX REVISION CASE Nos.79 & 239 of 2003
COMMON ORDER:- (Per Hon'ble Sri Justice C.Praveen Kumar) Heard Sri M.V.K. Moorthy, learned counsel appearing for the petitioners, and the learned Assistant Government Pleader for Commercial Tax appearing for the respondent.
2. Since the issue in both these Tax Revision Cases is one and the same, they are disposed of by this common order.
3. T.R.C.Nos.79 and 239 of 2003 are filed under Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 (for short, "APGST Act") assailing the order, dated 12.09.2002, in T.A.No.112 of 1998 and order, dated 12.09.2002, in T.A.No.111 of 1998 on the file of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (for short, "the Tribunal".)
4. T.R.C.No.79 of 2003 is taken as a lead case to decide the issue involved. The circumstances, which lead to filing of T.R.C.No.79 of 2003, are as under:-
The petitioner is a registered dealer on the rolls of Commercial Tax Officer, Main Bazar, Guntur doing business in V.Belts, Transmission Belts etc., during the relevant assessment 2 year i.e., 1995-1996. The primary authority i.e., the Commercial Tax Officer exempted the turnover relating to the sales of Transmission Belts, by relying upon the judgments of the common High Court at Hyderabad in State of Andhra Pradesh vs. Good Year India Limited1 and the State of Andhra Pradesh vs. Dunlop India Limited, Hyderabad2, holding that Transmission Beltings contain 66.7% cotton and 33.3% rubber and that it is a cotton fabric subjected to process of rubberising and the same is to be classified as "Cotton Fabric" falling under Entry 5 of IV Schedule read with Section 8 of APGST Act and therefore, exempt from the levy of Sales Tax.
The said order was revised by the Deputy Commissioner in respect of turnover relating to 1995-1996 to 15% as per Item 12 of VI Schedule, since Item 101 of First Schedule was shifted as Item 12 of VI Schedule with effect from 01.04.1995. The Deputy Commissioner also relied upon the judgment of the composite High Court of the year 1994 in Good Year India Limited vs. The State of Andhra Pradesh3 to hold that the petitioner herein is liable to pay tax at 15%. Aggrieved by the revision made by the Deputy Commissioner, the dealer preferred the appeal before the Tribunal raising various grounds. By an 1 (1988) 7 APSTJ p.50 2 (1988) 8 APSTJ p.97 3 19 APSTJ p.247 3 order, dated 12.09.2002, the Tribunal, again upon considering the judgment of the composite High Court in Good Year India's case (3 cited supra) dismissed the T.A. The same is challenged in this revision case.
5. Learned counsel for the petitioner mainly submits that in view of the judgment of the Hon'ble Supreme Court in Fenoplast vs. State of Andhra Pradesh and Others4 wherein the judgment of the Andhra Pradesh High Court in Good Year India's case (3 cited supra) was found fault with, the present revision case has to be allowed. He took us through the said judgment and also entries in I Schedule, IV Schedule and VI Schedule coupled with the tax paid under Additional Duties of Excise (Goods of Special Importance) Act, 1957 (for short, "Central Act 58 of 1957" to contend that the petitioner herein is liable for exemption.
6. Learned Assistant Government Pleader for Commercial Tax appearing for the respondent opposed the same contending that there is no illegality in the order impugned, in view of the law laid down by the Division Bench of this Court in Good Year India's case (3 cited supra). She would submit that the Tribunal as well as the revisional authority categorically held 4 MANU/SC/1149/1998 4 that the petitioner herein is liable to pay tax at 15%, which cannot be found fault with.
7. The point that arises for consideration is:
"Whether the petitioner herein is liable to pay tax as directed by the Tribunal/impugned order?"
8. POINT:-
Before proceeding further, it is to be noted here that the assessment period, which is subject matter of dispute in the appeal, is for the year 1995-1996. For the year 1995-1996, Entry 101 of I Schedule was shifted and placed at Item 12 of VI Schedule in view of the introduction of VAT Tax and as such, the petitioner is liable to pay tax at 15%. It is also to be noted here that the Tribunal as well as the Deputy Commissioner relied upon the judgment of the Division Bench of the composite High Court in Good Year India's case (3 cited supra) wherein the High Court, while dealing with the assessment year 1986-1987, held that transmission beltings are liable to tax under Entry 101 of I Schedule to APGST Act though it is a cotton fabric falling under Entry 5 of VI Schedule and distinguished the earlier judgment of the composite High Court in the case of State of Andhra Pradesh v. Good Year India Limited (1 cited supra) mainly on the ground that the case pertains to assessment year 1975-1976 when Entry 101 of I 5 Schedule was not in Statute Book. The fact that the Deputy Commissioner as well as the Tribunal imposed tax basing on the Division Bench judgment of the composite High Court in Good Year India's case (3 cited supra) is not seriously disputed by the learned Assistant Government Pleader. It is also to be noted that the subject matter of dispute is a cotton fabric, which is also not in dispute. In fact, learned State representative did not dispute that transmission beltings sold by the petitioner as cotton fabrics. That being the position, it is now to be seen whether the petitioner is liable to pay any tax.
9. Section 5 of APGST Act, 1957 postulates that every dealer has to pay tax on the quantum of his turnover at the rate specified in the schedules thereto. Section 6 of APGST Act deals with sales tax on declared goods and that it shall be paid at the rates specified in III Schedule of APGST Act. Section 8 of the APGST Act deals with exemption from tax in respect of certain goods subject to such restrictions and conditions as may be prescribed. It is also to be noted here that Entry 5 of IV Schedule of the APGST Act refers to cotton fabrics, man made fabrics and woollen fabrics. Explanation to IV Schedule states that the goods mentioned in items 5, 6 and 7 of this Schedule shall be goods included in the relevant heads and sub-heads of the First Schedule to the Central Act 58 of 1957 but does not 6 include goods where no Additional Duties of Excise are levied under that Schedule. The fact that the petitioner was paying additional excess duty under the Central Act 58 of 1957 is not in dispute and as such, he was exempted from payment of tax under State Sales Tax Act. At that point of time, Item 174 came to be added to I Schedule of the State Sales Tax Act. The said item relates to PVC cloth, water proof cloth, tarpaulin and rexine.
10. At this stage, it is to be observed that the appellants in Fenoplast's case (4 cited supra) challenged imposition of sales tax under Item 174, contending that they are not liable to pay any sales tax under Item 174 as they fall within Item 5 of IV Schedule of the State Sales Tax Act and accordingly, exempted under Section 8 thereof. While upholding the contention of the appellants, a Division Bench of the High Court in the said case, held as under:-
"In our considered view the effect of inclusion of Rexine in Entry 174 of the First Schedule to the A.P. GST Act cannot have the effect of taxing the turnover of the sales or purchases of Rexine at the rate mentioned in Schedule I in view of the provisions of Section 6 of the A.P. GST Act read with Section 15 of the CST Act, as pointed out above, and thus that entry has to be read down to authorise exigibility of sales tax on the turnover of declared goods including Rexine subject to the provisions of Section 6 of the A.P. GST Act read with Section 15 of the CST Act, namely, that sales 7 tax cannot exceed 4% of the turnover and that it shall not be levied at more than one stage."
This was challenged before the Hon'ble Supreme Court by way of Special Leave. After taking into consideration the various entries in different Schedules, the Hon'ble Supreme Court held as under:-
"4. The Explanation to the Fourth Schedule of the State Sales Tax Act makes it clear that the expressions used in Item 5 thereof have the meaning that is assigned to them in the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The words "cotton fabrics, man-made fabrics and woollen fabrics" in Item 5 must, therefore, be read in the light of Item 59.03 of the First Schedule to the said Additional Duties of Excise (Goods of Special Importance) Act, 1957 which refers to textile fabrics, impregnated cloth -- covered or laminated. The appellants' product, Rexine cloth, is covered by Item 59.03 and the appellants were, at the relevant times, liable to pay and paid additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. By reason of Section 8 of the State Sales Tax Act, therefore, they were exempt from tax thereunder in respect of their Rexine cloth. The inclusion of Item 174 in the First Schedule to the State Sales Tax Act could make no difference to this position. The High Court was in error in its attempt to read down Item 174 it failed to give due weight to the categorical terms of Section 8.
5. The appeal is, therefore, allowed. The judgment of the High Court is set aside to the extent aforestated. There shall be no order as to costs."8
In view of the above findings and since the petitioner has paid additional tax under the Central Act 58 of 1957 and in view of the admitted decision that the subject matter of dispute is a cotton fabric, learned counsel submits that the petitioner is entitled for exemption.
11. The findings of the Hon'ble Supreme Court, in our view, clearly applies to the case on hand. Explanation to IV Schedule of the State Sales Tax Act makes it clear that the expression used in Item 5 thereof has the meaning that is assigned to in the Central Act 58 of 1957. Hence, the words cotton fabrics, man made fabrics and woollen fabrics in Item 5 of IV Schedule, have to be read in the light of Item 59.03 of the I Schedule to Central Act 58 of 1957, which refers to textile fabrics, impregnated cloth covered or laminated. Therefore, the appellants' product is covered by Item 59.03 and the appellants were liable to pay and accordingly, paid additional duties of excise under the Central Act 58 of 1957. Having regard to the above, the petitioner is liable for exemption, in view of Section 8 of the State Sales Tax Act. Hence, inclusion of Entry 101 of I Schedule would not make any difference to this decision. Accordingly, the impugned order in T.R.C.No.79 of 2003 is set aside and T.R.C.No.79 of 2003 is allowed. As the petitioner in T.R.C.No.239 of 2003 is also similarly placed, the impugned 9 order in T.R.C.No.239 of 2003 is also set aside and accordingly, the same is allowed.
12. Accordingly, both the Tax Revision Cases are allowed. There shall be no order as to costs.
Miscellaneous petitions pending, if any, in these Tax Revision Cases shall stand closed.
_______________________________ JUSTICE C.PRAVEEN KUMAR ________________________________ JUSTICE A.V.RAVINDRA BABU Date : 13.10.2022 AMD 10 183 THE HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HONOURABLE SRI JUSTICE A.V.RAVINDRA BABU TAX REVISION CASE Nos.79 & 239 of 2003 Date : 13.10.2022 AMD