1988 (8) TMI 398 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the Central sales tax on tapioca powder sold by the petitioner during specific years was leviable under section 8(2-A) of the Central Sales Tax Act, 1956.

Detailed Analysis:
1. The judgment addressed the issue of whether the petitioner-assessee was liable to pay Central sales tax on tapioca powder sales during the years 1978-79, 1979-80, and 1980-81 under section 8(2-A) of the Central Sales Tax Act. The State Government had exempted purchases of tapioca from tax under the Andhra Pradesh General Sales Tax Act through G.O.Ms. No. 930. The assessing authorities subjected the inter-State sales of tapioca powder to tax, leading to an appeal where the Tribunal agreed that tapioca and tapioca powder were the same but rejected the exemption claim under the Central Sales Tax Act.

2. The High Court found that the Tribunal erred in its interpretation. It clarified that the exemption under G.O.Ms. No. 930 was not conditional and covered the entire turnover of tapioca powder sales. Section 8(2-A) of the Central Sales Tax Act stipulates that if goods are exempted under the State law, they cannot be taxed under the Central Sales Tax Act. The Court highlighted that statutory exemptions under section 8(2-A) extend to purchase and sale turnovers, emphasizing that the exemption granted by the State law applies to inter-State transactions as well.

3. The Court referred to a previous decision to differentiate between exemptions under sections 8 and 9 of the State Act, emphasizing that section 9 allows for general exemptions. In this case, the exemption for tapioca under G.O.Ms. No. 930 fell under section 9(1)(i) as a general exemption, covering the purchase point and all points since tapioca was not taxable elsewhere. The judgment concluded that the Tribunal erred in denying the petitioner-assessee's entitlement to exemption under the Central Sales Tax Act for the relevant years.

4. Ultimately, the Court ruled in favor of the petitioner-assessee, directing the exclusion of the disputed turnovers from Central sales tax levy. The judgment did not award costs, and the petitions were allowed.