1976 (10) TMI 134 - HC - VAT and Sales Tax

Summary

Issues:
1. Applicability of sales tax on imported wet batteries purchased by a partnership firm.
2. Interpretation of items under the Andhra Pradesh General Sales Tax Act.
3. Assessment of sales tax on unserviceable batteries sold by the petitioner's firm.
4. Determination of the correct category for taxation of the batteries.

Analysis:

The High Court of Andhra Pradesh addressed the issue of sales tax applicability on imported wet batteries purchased by a partnership firm. The petitioner firm, registered under the Maharashtra General Sales Tax Act and the Central Sales Tax Act, bought 451 unserviceable batteries from the Naval Stores Depot in Andhra Pradesh. The firm contended that these batteries were not usable for generating power but for salvaging their lead content. The sale release order explicitly stated that no sales tax was payable by the purchaser, with the Indian Navy undertaking to pay any leviable tax to the appropriate authorities.

The Commercial Tax Officer assessed the transaction under item 1 of the First Schedule to the Andhra Pradesh General Sales Tax Act, which pertains to goods used in motor vehicles. However, the court noted that the size and weight of the batteries indicated they were not meant for motor vehicles, as they were 40 inches in height and unsuitable for typical vehicle use. The batteries were considered scrap by the Naval Stores Depot, further supporting the argument that they did not fall under item 1 for taxation purposes.

The respondent argued that the batteries could be classified under item 38 of the First Schedule as electrical goods, attracting a lower tax rate. Nevertheless, the court rejected this assertion, emphasizing that batteries are not typically classified as electrical goods under the Act. It was concluded that if the batteries did not fit into specific categories, they would be subject to the general entry and taxed at a lower rate of 4 paise in the rupee.

Consequently, the court allowed the writ petition, quashed the assessment order and demand notice issued by the Commercial Tax Officer, and directed a reassessment based on the observations made in the judgment. The respondent was ordered to bear the costs of the petition, including the advocate's fee. The judgment clarified the correct tax treatment for the batteries, highlighting the importance of accurate categorization under the sales tax legislation.