1982 (12) TMI 157 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the turnover relating to the sale of pillow covers is exempt from tax under section 8 of the Andhra Pradesh General Sales Tax Act, read with item 5 of the Fourth Schedule to the Act.
2. Whether the Commercial Tax Officer has jurisdiction to review or reopen the assessment orders under section 14(4)(cc) of the Act.
3. Whether the power under section 14(4)(cc) can be exercised for turnovers relating to periods before the enforcement of the section.

Detailed Analysis:

Issue 1: Tax Exemption for Pillow Covers

The principal question is whether the turnover relating to the sale of pillow covers is exempt from tax under section 8 of the Andhra Pradesh General Sales Tax Act, read with item 5 of the Fourth Schedule. The petitioner, a registered dealer, contends that pillow covers made exclusively of cotton should be exempt under "cotton fabrics" as per item 5 of the Fourth Schedule. The court examined the definition of "cotton fabrics" as per the Additional Duties of Excise (Goods of Special Importance) Act, 1957, which does not specifically define "cotton fabrics" but excludes certain processed fabrics. The court applied the common parlance test, concluding that "cotton fabric" is generally understood as cotton cloth and not as items made from it, such as pillow covers. The court cited precedents to support this interpretation, noting that items like pillow covers, which are identifiable and marketable commodities, are not treated as mere cotton fabric. Consequently, the court held that pillow covers do not fall under "cotton fabrics" and are not exempt from tax under item 5 of the Fourth Schedule.

Issue 2: Jurisdiction to Review or Reopen Assessment Orders

The further questions in W.P. Nos. 5732 and 5374 of 1979 concern the jurisdiction of the Commercial Tax Officer to review or reopen assessment orders under section 14(4)(cc) of the Act. The petitioner argued that the officer lacked jurisdiction to revise the assessments for the years 1976-77 and 1977-78, as the amendment introducing section 14(4)(cc) came into force on 17th January 1978. The court clarified that while the amendment is retrospective, the power to review or reopen assessments applies to orders made on or after the amendment's enforcement date. Since the assessment orders in question were made after 17th January 1978, the officer had jurisdiction to issue notices under section 14(4)(cc).

Issue 3: Exercise of Power for Periods Before Enforcement

The court also addressed whether the power under section 14(4)(cc) could be exercised for turnovers relating to periods before the enforcement of the section. The court held that the exercise of this power is related to the assessment order, not the assessment year. Since the orders were made after the amendment came into force, the officer was within his rights to issue notices. However, the court emphasized that a mere change of opinion does not justify the exercise of power under section 14(4)(cc). The exemption granted originally was based on the officer's interpretation that pillow covers were cotton fabrics, and this interpretation cannot be revised merely due to a change in opinion.

Judgments Delivered:

1. W.P. Nos. 5732 and 5374 of 1979: The court allowed these writ petitions, quashing the show cause notices issued by the Commercial Tax Officer. The court held that the power under section 14(4)(cc) could not be exercised based on a mere change of opinion regarding the nature of the goods. Costs were awarded to the petitioner.

2. W.P. Nos. 6666 and 6673 of 1982: The court dismissed these writ petitions, holding that the turnover relating to the sale of pillow covers is not exempt from tax under item 5 of the Fourth Schedule and is not covered by item 87 of the First Schedule. Costs were awarded to the respondent.

This comprehensive analysis addresses all relevant issues and preserves the legal terminology and significant phrases from the original judgment.

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