1995 (12) TMI 348 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of a government order for concessional tax rate on transactions involving asbestos cement sheets supplied to nationalized banks.

Analysis:
The case involved tax revision cases concerning assessments for the years 1986-87 and 1985-86 under the Andhra Pradesh General Sales Tax Act, 1957. The dispute centered around whether transactions where asbestos cement sheets were supplied to nationalized banks at the instance of certain banks qualified for a concessional tax rate under G.O. Ms. No. 172. The government order specified that the concessional rate of tax applied only to goods manufactured in the state and sold to public sector undertakings for their own use or captive consumption. The department argued that the banks did not use or consume the cement sheets but directed them to customers who utilized the goods for their purposes, thus not meeting the conditions of the government order.

The Sales Tax Appellate Tribunal found that the banks did not use the cement sheets themselves but directed delivery to customers who utilized the goods. The petitioner contended that since the banks placed orders and paid for the supplies, it implied usage for their business purposes. However, the Tribunal held that the banks did not use the goods themselves, and the customers were the end users, thus not meeting the criteria for concessional tax rate under the government order.

The Court upheld the Tribunal's findings, emphasizing that the intention of the government order was to grant concessional tax rates only when goods were sold for the use or captive consumption of public sector undertakings. Since the banks did not use the cement sheets themselves but directed them to customers, the conditions of the government order were not satisfied. The Court dismissed the tax revision cases, stating that no question of law was involved, and the findings were based on facts, thus upholding the Tribunal's decision.

In conclusion, the Court's judgment affirmed that the transactions involving the supply of asbestos cement sheets to nationalized banks did not qualify for the concessional tax rate under the government order due to the banks not using the goods themselves but directing them to customers for their use. The decision highlighted the importance of meeting the specific criteria outlined in government orders for availing concessional tax rates.