1996 (6) TMI 332 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of condition in eligibility certificate restricting collection of sales tax by a small-scale unit.
2. Interpretation of section 6-A of the A.P. General Sales Tax Act, 1957.
3. Relevance of section 30-B in prohibiting the collection of sales tax.

Analysis:

Issue 1:
The petitioner, a small-scale industrial unit, challenged the condition in the eligibility certificate prohibiting the collection of sales tax. The petitioner argued that the condition was illegal and frustrated the purpose of the incentives provided by the State Government. The Court referred to a previous judgment that upheld a similar condition, emphasizing that the exemption from sales tax for small-scale industries aims to enhance price competitiveness. The Court dismissed the petitioner's contention, stating that the exemption does not grant the right to collect sales tax during the exemption period.

Issue 2:
The petitioner relied on section 6-A of the A.P. General Sales Tax Act, 1957, to support their claim that they could collect tax despite the exemption. However, the Court found this argument misconceived. Section 6-A does not authorize a dealer enjoying exemption under section 9 to collect sales tax. The Court clarified that when an exemption is granted under section 9, collecting sales tax by the petitioner is impermissible.

Issue 3:
The petitioner also contended that the absence of section 30-B during the relevant period allowed them to collect sales tax. The Court disagreed, highlighting the prohibitions under section 30-B against collecting tax on goods exempted under the Act. The Court emphasized that even without section 30-B, no individual or dealer can collect tax on goods exempted by the Government under section 9. The Court upheld the prohibition against collecting sales tax, ultimately dismissing the writ petition.

In conclusion, the High Court of Andhra Pradesh upheld the validity of the condition in the eligibility certificate restricting the collection of sales tax by the small-scale unit. The Court clarified that sections 6-A and 30-B do not permit the collection of sales tax during the exemption period. The writ petition was dismissed, and no costs were awarded.