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1995 (10) TMI 210 - HC - VAT and Sales Tax
Issues:
1. Interpretation of the provisions of the Andhra Pradesh General Sales Tax Act regarding the levy of additional tax and surcharge on turnover relating to sales of component parts. 2. Determination of whether additional tax and surcharge are attracted on the turnover pertaining to sales of component parts under section 5-B of the Act. 3. Clarification on the applicability of section 5-A and section 6-B of the Act to turnover under section 5-B. Detailed Analysis: 1. The judgment of the High Court of Andhra Pradesh dealt with an appeal under section 23(1) of the Andhra Pradesh General Sales Tax Act, 1957, arising from an order passed by the Commissioner of Commercial Taxes revising the assessment for the assessment year 1982-83. The appellant was assessed to tax on a net turnover relating to the sales of general engineering goods, capacitors, and laminations used in electrical fans covered by declarations in form "G1" under section 5-B of the Act. The assessing authority had taxed the turnover at 4 per cent without additional tax or surcharge. The Commissioner revised the assessment by imposing additional tax under section 5-A and surcharge under section 6-B, which was challenged in the appeal. 2. The key issue in the appeal was the interpretation of section 5-B of the Act, which provides for a concessional tax on sales of component parts used in the manufacture of specified finished products within the State. The Court emphasized that the intention behind section 5-B was to incentivize manufacturers to produce goods within the State by providing a concessional rate of tax. The Court held that the tax leviable under section 5-B is at a maximum of 4 per cent and that additional tax or any other tax cannot be added to this rate. The liability to pay tax under section 5-A does not arise concerning transactions under section 5-B, as section 5-B is an independent charging section for component parts. 3. The Court also addressed the issue of surcharge, highlighting a Division Bench judgment that concluded that the concessional tax provided under section 5-B should not be subject to surcharge under section 6-B. The Court agreed with the Division Bench's interpretation, emphasizing the non obstante clause in section 5-B and the legislative intent to provide concessional rates for certain transactions. Consequently, the Court allowed the appeal, setting aside the Commissioner's order and ruling that no costs were to be incurred. In conclusion, the High Court's judgment clarified the application of sections 5-B, 5-A, and 6-B of the Andhra Pradesh General Sales Tax Act, emphasizing the concessional tax rates for component parts and the inapplicability of additional tax and surcharge to turnovers under section 5-B.
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