1969 (9) TMI 96 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the assessee-firm is entitled to exemption from sales tax on the turnover related to the supply of metal from its quarries.
- Interpretation of the exemption under G.O. Ms. No. 1091, Revenue dated 10th June, 1957, in relation to the sales of metal quarried by the assessee-firm.
- Determining if the transactions in question qualify as "earth work and gravel quarrying contracts" under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:
The High Court of Andhra Pradesh addressed two tax revision cases concerning the turnover of an assessee-firm related to the supply of metal from its quarries. The firm claimed exemption from sales tax on the grounds of owning the land, paying land tax, and the applicability of G.O. Ms. No. 1091, Revenue dated 10th June, 1957. The Sales Tax Appellate Tribunal rejected the exemption claim, emphasizing that paying land tax does not automatically exempt the turnover from sales tax. The core issue revolved around whether the firm could claim exemption under the mentioned government order.

The court examined the definition of "goods" under the Andhra Pradesh General Sales Tax Act, 1957, which includes materials to be used in construction or repair of property. The firm argued that the sales of metal quarried from its land should be exempted under item No. 11 of the G.O., pertaining to "earth work and gravel quarrying contracts." However, the court noted that the exemption applies to contracts involving the severance of materials from land before sale, which was not evident in the firm's transactions. Previous case laws were cited to support the distinction between quarrying contracts and sales of quarried materials, reinforcing that mere supply agreements do not qualify for exemption.

Despite the firm's contention that the exemption should cover the sales of quarried metal, the court found no legal basis for such an interpretation. The court concluded that the transactions did not meet the criteria for exemption under the G.O. Consequently, the revision cases were dismissed, affirming the liability of the assessee-firm to pay sales tax on the disputed turnover. The judgment emphasized the necessity of contractual agreements involving the severance of materials from land to qualify for the specified exemption.