1995 (3) TMI 445 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of Section 5-E of the Andhra Pradesh General Sales Tax Act, 1957 to hire transactions.
2. Whether the transactions in question are inter-State transactions.
3. The impact of G.O. Ms. No. 1388 dated December 23, 1985, and its subsequent rescission by G.O. Ms. No. 606 dated July 3, 1993.
4. The principle of single point taxation under the APGST Act.

Summary:

Issue 1: Applicability of Section 5-E of the Andhra Pradesh General Sales Tax Act, 1957
The court considered whether the hire transactions of the assessee are subject to tax u/s 5-E of the APGST Act. The assessee, a registered dealer, claimed exemption for rentals received, arguing that such assessment would violate Article 286 of the Constitution of India, Section 4 of the Central Sales Tax Act, and Section 38 of the APGST Act. The assessing authority rejected this claim, but the Appellate Deputy Commissioner granted partial relief, which was later revised by the Commissioner of Commercial Taxes. The court found that the transactions between the assessee and its customers were integrally connected and could not be split into separate transactions of purchase and lease.

Issue 2: Whether the Transactions in Question are Inter-State Transactions
The court held that the transactions are inter-State transactions falling within the ambit of Section 3(a) of the Central Sales Tax Act, 1956. The movement of goods from one state to another was a result of the contract between the assessee and the lessee. The court emphasized that the situs of the sale is irrelevant in determining whether a sale is an inter-State transaction. The court concluded that the transactions were inter-State sales and thus not subject to tax under the APGST Act.

Issue 3: Impact of G.O. Ms. No. 1388 and its Subsequent Rescission by G.O. Ms. No. 606
The court examined the exemption granted by G.O. Ms. No. 1388, which exempted dealers from tax payable u/s 5-E of the APGST Act, provided the goods had suffered tax under the Act. This exemption was rescinded by G.O. Ms. No. 606. The court held that the exemption was valid only until the date of rescission and that the principle of promissory estoppel did not apply. The court also ruled that the rescission was effective from the date of its publication in the Gazette.

Issue 4: Principle of Single Point Taxation under the APGST Act
The court discussed the legislative intent of single point taxation under the APGST Act. It held that goods which have already suffered tax cannot be subjected to tax again, even under the deemed sale provision u/s 5-E. The court concluded that a deemed sale cannot be taxed if the goods have already suffered tax.

Conclusion:
The court allowed Special Appeal No. 1 of 1995, setting aside the order of the Commissioner of Commercial Taxes and affirming the view of the Appellate Deputy Commissioner. It also allowed the five writ petitions, setting aside the assessment orders and remanding the cases to the original assessing authority for fresh assessment in compliance with the statutory rules and the law declared in this judgment. No costs were awarded.