1994 (11) TMI 399 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the cost of the copper forms part of the turnover and is exigible to sales tax under the APGST Act or the CST Act.
2. Whether the reopening of the assessment for the years 1975-76 and 1976-77 was valid under section 14(4) of the APGST Act.

Issue-Wise Detailed Analysis:

1. Cost of Copper as Part of Turnover:
The primary issue is whether the cost of the copper supplied by the Posts and Telegraphs Department to the assessee forms part of the turnover for sales tax purposes under the Andhra Pradesh General Sales Tax Act (APGST Act) and the Central Sales Tax Act (CST Act). The definition of "turnover" under section 2(s) of the APGST Act includes the total amount set out in the bill of sale or the total amount of consideration for the sale or purchase of goods.

The court examined the agreement between the assessee and the Posts and Telegraphs Department, particularly clauses (1), (2), and (4) of Letter No. 41-6/74-MMS, dated August 27, 1975. The copper wire was supplied on a zero-value basis, and the assessee was obligated to convert it into cables and return it. The profits were calculated including the cost of copper at the Posts and Telegraphs Department's accounting price. The court concluded that there was no sale of copper wire to the assessee; instead, the assessee was compensated for converting the copper wire into cables.

The court rejected the argument that the assessee became the owner of the copper wire, stating that the assessee's position was that of a bailee. The court distinguished this case from previous cases such as Hyderabad Chemicals and Fertilizers Ltd. v. Deputy Commissioner, Commercial Taxes and Goel & Co. v. Sales Tax Officer, where the property in the goods passed to the assessee, which was not the case here.

2. Validity of Reopening Assessments:
The second issue was whether the reopening of the assessments for the years 1975-76 and 1976-77 under section 14(4) of the APGST Act was valid. The Sales Tax Appellate Tribunal had upheld the reopening of the assessments, but the assessee contended that it was barred by limitation and was merely based on a change of opinion.

Given the court's conclusion on the first issue, it found it unnecessary to delve into the second question regarding the validity of reopening the assessments.

Conclusion:
The court dismissed the tax revision cases, holding that the cost of the copper supplied by the Posts and Telegraphs Department does not form part of the turnover for sales tax purposes under the APGST Act or the CST Act. Consequently, the petition was dismissed without costs.