1996 (7) TMI 510 - HC - VAT and Sales Tax

Summary

Issues:
Taxability of water charges, cost of ridges and covers, and cost of tender schedules under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:
1. The tax revision case involved a dispute regarding the taxability of three items: water charges, cost of ridges and covers, and cost of tender schedules. The Sales Tax Appellate Tribunal held these items to be taxable.

2. The definition of "sale" under section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957, was crucial in determining tax liability. The definition encompasses every transfer of property in goods by one person to another in the course of trade or business. The key question was whether there was a transfer of property in goods from the petitioner-assessee to its members.

3. The petitioner-assessee, an A.P. Government undertaking, engaged in planning and promoting industrial projects. The Court noted that the petitioner purchased water and sold it to industrial estate allottees, constituting a sale. Similarly, the supply of ridges and covers for consideration after purchase was also considered a sale, as per the definition under the Act.

4. Citing a precedent involving a co-operative society supplying diesel, the Court affirmed that even supplying goods at cost price could amount to a sale subject to sales tax. The judgment established that the supply of water and ridges in this case fell within the ambit of taxable sales.

5. Regarding the cost of tender schedules, the Court analyzed whether the supply was incidental to business activities. Relying on precedents, the Court determined that the supply of tender schedules by the petitioner was not an ancillary activity and did not constitute business in the sale or purchase of tender schedules. Consequently, the cost of tender schedules was held not exigible to sales tax, overturning the Tribunal's decision.

In conclusion, the High Court partially allowed the tax revision case, holding the supply of water and ridges as taxable sales but exempting the cost of tender schedules from sales tax. The decision was based on a detailed analysis of the definition of "sale" under the Andhra Pradesh General Sales Tax Act, 1957, and relevant precedents regarding incidental business activities.