1990 (9) TMI 306 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entry 102 of Schedule I of the Andhra Pradesh General Sales Tax Act, 1957 in relation to the classification of reinforced cement concrete pipes and asbestos cement pressure pipes as "water supply and sanitary fittings" for tax purposes.

Analysis:
The writ petition was filed by the Andhra Pradesh Concrete Pipe Manufacturing Association and Tirumala Cement Pipe Industry seeking a writ of mandamus to amend instructions issued by the Commissioner of Commercial Taxes. The dispute arose from the classification of reinforced cement concrete pipes and asbestos cement pressure pipes for tax purposes under entry 102 of Schedule I of the Andhra Pradesh General Sales Tax Act, 1957. The petitioners argued that these pipes should be taxed at a lesser rate as general goods under section 5(1) of the Act, citing the judgment of the Supreme Court in Deputy Commissioner of Sales Tax v. G.S. Pai & Co. The Commissioner had issued a clarification stating that these pipes fall under "water supply and sanitary fittings" and are subject to a 9% tax rate. The petitioners contended that the Commissioner's interpretation was incorrect and would lead to excessive taxation.

The Supreme Court's interpretation of the words "water supply and sanitary fittings" was crucial in determining the tax liability of the pipes in question. The Court referred to the Supreme Court's decision in Deputy Commissioner of Sales Tax v. G.S. Pai & Co., where it was clarified that heavy pipes laid underground for water supply are not considered "sanitary fittings" or "water supply fittings." The Court emphasized that the expression "water supply and sanitary fittings" must be understood in conjunction, and pipes carrying water, whether underground or overground, do not fall within this category unless they are considered fittings of a building or attached to it. The Court concluded that the Commissioner's interpretation was erroneous and clarified the scope and applicability of the Supreme Court judgment.

In light of the above analysis, the Court held that the pipes in question, used exclusively for rural water supply schemes and not as part of a building, should not be classified as "water supply and sanitary fittings" for tax purposes. The Court emphasized that the pipes must be considered as fittings of a building to fall under this category. The judgment provided clarity on the interpretation of the Supreme Court decision and allowed for the application of entry 102 of Schedule I only to the extent that the pipes are used as water or sanitary fittings in relation to a building. The writ petition was disposed of accordingly, with no order as to costs.

This detailed analysis highlights the key legal arguments, interpretation of relevant legal provisions, and the court's reasoning in resolving the tax classification issue concerning reinforced cement concrete pipes and asbestos cement pressure pipes under the Andhra Pradesh General Sales Tax Act, 1957.