1988 (6) TMI 322 - HC - VAT and Sales Tax

Issues Involved:

1. Whether the transactions in question are export sales falling under the second limb of section 5(1) of the Central Sales Tax Act.
2. Whether the State of Andhra Pradesh has no jurisdiction to bring the transactions to tax under the Andhra Pradesh General Sales Tax Act since they are inter-State transactions exigible to tax only by the State of Maharashtra under the Central Sales Tax Act.
3. Whether "manganese" in entry 1 of the Second Schedule to the Andhra Pradesh General Sales Tax Act takes within its purview "ferro manganese".

Issue-wise Detailed Analysis:

1. Export Sales under Section 5(1) of the Central Sales Tax Act:

The Tribunal considered whether the transactions in question qualify as export sales under the second limb of section 5(1) of the Central Sales Tax Act. Both Members of the Tribunal concluded that the transactions do not fall under this category, thereby ruling in favor of the Revenue and against the dealers.

2. Jurisdiction of Andhra Pradesh to Tax Inter-State Transactions:

The Tribunal also examined whether the State of Andhra Pradesh has the jurisdiction to tax these transactions under the Andhra Pradesh General Sales Tax Act, given that they are inter-State transactions and thus should be taxed by the State of Maharashtra under the Central Sales Tax Act. The Tribunal again ruled in favor of the Revenue, concluding that Andhra Pradesh does have jurisdiction.

3. Classification of "Ferro Manganese" under the Andhra Pradesh General Sales Tax Act:

The primary issue revolved around whether "ferro manganese" falls within the purview of "manganese" as defined in entry 1 of the Second Schedule to the Andhra Pradesh General Sales Tax Act. The Tribunal was divided on this issue:

- Majority Opinion (Chairman and Accountant Member): The majority held that "ferro manganese" is indeed "manganese" within the meaning of entry 1 of the Second Schedule. The reasoning was that manganese in its pure form is rarely available and is generally dealt with in forms such as "manganese ore," "ferro manganese," and "silico manganese." The intention of the legislature was to tax these forms as they are the commercially available forms of manganese. Therefore, the Minerals and Metals Trading Corporation, being the last purchaser in the State, is liable to pay the tax, not the dealers.

- Minority Opinion (Departmental Member): The minority view was that "ferro manganese" is a distinct product obtained through a manufacturing process involving manganese ore and other elements like ferro silicon. Hence, it should be treated as "general goods" and taxed under section 5(1) of the Act, making the dealers liable for the tax.

The High Court agreed with the majority opinion, emphasizing that the legislature's intention was to tax "ferro manganese" and "silico manganese" as forms of manganese, given that pure manganese is rarely sold or purchased. The Court also noted that interpreting the entry in commercial parlance is crucial, as manganese in its pure form is hardly dealt with commercially.

Conclusion:

The High Court upheld the majority opinion of the Tribunal, ruling that "ferro manganese" is included within the meaning of "manganese" in entry 1 of the Second Schedule to the Andhra Pradesh General Sales Tax Act. Consequently, the Minerals and Metals Trading Corporation, being the last purchaser, is liable to pay the tax, and the assessees/dealers are not liable under section 5(1) of the Act. The other contentions were not considered as they became irrelevant in light of this conclusion. All the tax revision cases were dismissed without costs, and the advocate's fee was set at Rs. 1,500 consolidated.

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