2008 (3) TMI 460 - SC - VAT and Sales Tax

Low-density polyethylene (LDPE) granules being used in the manufacture of cable-sheathing compound - Held that - Appeal dismissed. The High Court has in its order observed that the finding recorded by the Tribunal that the respondent processed LDPE granules for a certain purpose, but granules remain LDPE granules and it is not a new product, is a finding of fact and the Tribunal being the final fact-finding authority under the Andhra Pradesh General Sales Tax Act, 1957 and there being no evidence on record to show that a new product had come into being which was marketable and known to the commercial world, no interference with the order of the Tribunal was called for.

Summary

Issues:
1. Set-off of tax on the purchase of low-density polyethylene (LDPE) granules.
2. Interpretation of the finding regarding the processing of LDPE granules and the creation of a new product.

Analysis:

Issue 1: Set-off of tax on the purchase of LDPE granules
The case involved the respondent purchasing LDPE granules for the manufacture of cable-sheathing compound and claiming a set-off of tax on the said purchase. Initially, the Commercial Taxes Officer allowed the set-off, but the Deputy Commissioner of Commercial Taxes, in the exercise of revisional jurisdiction, set aside this order. The respondent then appealed to the Andhra Pradesh Sales Tax Appellate Tribunal, which overturned the revisional authority's decision and upheld the respondent's entitlement to the set-off. Subsequently, the High Court, in Tax Revision Case Nos. 212, 237, and 238 of 1998, affirmed the Tribunal's order, leading to the challenge in C.A. Nos. 6102-6104 of 2002 for assessment years 1990-91, 1991-92, and 1992-93. For assessment years 1994-95 and 1995-96, the High Court, relying on its earlier decision in State of Andhra Pradesh v. Repute Plastic Colours Ltd., allowed the appeals filed by the respondent, leading to the challenge in C.A. Nos. 6093-6094 of 2002.

Issue 2: Interpretation of the finding on LDPE granules processing
The High Court, in its order, noted that the Tribunal's finding that the respondent processed LDPE granules for a specific purpose, but the granules remained LDPE granules and did not transform into a new product, was a factual determination. The High Court further observed that since there was no evidence to demonstrate the creation of a new marketable product known to the commercial world, the Tribunal's decision stood as the final fact-finding authority under the Andhra Pradesh General Sales Tax Act, 1957. The Supreme Court concurred with the High Court's assessment that the Tribunal's finding being a factual determination could not be interfered with. Consequently, the appeals were dismissed, and no costs were awarded.

In conclusion, the Supreme Court upheld the decisions of the High Court and the Tribunal regarding the set-off of tax on the purchase of LDPE granules and the interpretation of the processing of LDPE granules as not resulting in the creation of a new product. The judgment emphasized the importance of factual findings by the Tribunal and the limited scope of interference by higher courts in such matters.