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2007 (5) TMI 327 - SC - VAT and Sales TaxRevision petition filed by the appellant under section 22(1) of the Andhra Pradesh General Sales Tax Act 1957 dismissed - Held that - Appeal allowed. Learned counsel for the appellant conceded that there was no claim by the appellant about sale of certified seeds. Rule 7 deals with marking or labelling. It appears that the Tribunal proceeded on the basis that the seeds were required to be certified and truthfully labelled for the purpose of eligibility for exemption. In reality as clearly stated in the clarificatory memorandum they are alternatives.The High Court also proceeded on the same basis overlooking the clarificatory memorandum. In the circumstances it would be appropriate for the Tribunal to examine the factual aspect keeping in view the clarificatory memorandum providing alternatives.
Issues Involved:
1. Exemption eligibility under G.O. Ms. No. 604 for certified and truthfully labelled seeds. 2. Interpretation of the clarificatory memorandum regarding the exemption. 3. Requirement of evidence to establish the nature of seeds for tax exemption. Detailed Analysis: Issue 1: Exemption Eligibility under G.O. Ms. No. 604 for Certified and Truthfully Labelled Seeds The appellant, M/s. Shakthi Seeds (P) Ltd., claimed tax exemption under G.O. Ms. No. 604, dated April 9, 1981, for sales of "certified and truthfully labelled seeds." The Deputy Commissioner (CT) revised the Commercial Tax Officer's assessment, proposing tax on the items purchased from unregistered dealers, arguing that the appellant was liable as first purchasers within Andhra Pradesh. The appellant contended that they were entitled to exemption, treating the seeds as truthfully labelled and certified. The Tribunal and subsequently the High Court dismissed the appellant's claims, stating that both conditions-certified and truthfully labelled-must be met for exemption. Issue 2: Interpretation of the Clarificatory Memorandum Regarding the Exemption The appellant argued that the Tribunal misinterpreted G.O. Ms. No. 604 by requiring both conditions (certified and truthfully labelled) to be met simultaneously. The appellant referred to the Government's clarificatory memorandum dated April 26, 1994, which stated that either certified seeds or truthfully labelled seeds are eligible for exemption. The Tribunal and High Court overlooked this clarification, leading to the dismissal of the appellant's revision petition. Issue 3: Requirement of Evidence to Establish the Nature of Seeds for Tax Exemption The Tribunal dismissed the appellant's appeal, citing a lack of satisfactory evidence proving that the seeds were certified and truthfully labelled. The appellant clarified that they purchased processed seeds from farmers, treated them with fungicides, and sold them as truthfully labelled seeds under their brand name. The Tribunal's reasoning emphasized that not all fungicide-treated seeds are certified and truthfully labelled, and the High Court failed to consider the substance of the clarificatory memorandum. Conclusion: The Supreme Court noted that the Tribunal and High Court erred in interpreting G.O. Ms. No. 604 by requiring both conditions to co-exist for exemption. The clarificatory memorandum clearly provided alternatives-either certified or truthfully labelled seeds. The Tribunal should re-examine the factual aspects, considering the memorandum's provision of alternatives. The appellant must produce evidence to show that the seeds were truthfully labelled, and the authorities can require the dealer to justify the exemption claim. Final Judgment: The appeal was allowed, and the case was remanded to the Tribunal for re-examination, with the parties free to present fresh evidence. The Tribunal must consider the clarificatory memorandum and determine the eligibility for exemption based on whether the seeds were truthfully labelled. No orders were made as to costs.
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