1998 (8) TMI 562 - HC - VAT and Sales Tax

Summary

Issues:
Exemption claim on second sales turnover under A.P.G.S.T. Act, 1957.

Analysis:
1. The case involved a tax revision filed by the revenue against the order of the Sales Tax Appellate Tribunal regarding the exemption claimed by the Associated Cement Companies Limited on second sales turnover. The Tribunal held that the turnover in question should be exempted from tax under the A.P.G.S.T. Act, 1957, based on the agreement between the assessee and Hemadri Cements Limited. The revenue challenged this decision.

2. The main argument presented by the revenue was that there was an agreement between the assessee and Hemadri Cements Limited for manufacturing and supplying cement on a job-work basis, implying no direct sale between them. Therefore, the revenue contended that the sales by the assessee to customers should be considered as first sales, attracting sales tax. The revenue relied on specific clauses in the agreement to support this argument.

3. However, the Court rejected the revenue's argument, stating that the clauses in the agreement did not establish that Hemadri Cements Limited was manufacturing cement on job-work basis for the assessee. The Court emphasized that the absence of raw material supply by the assessee to Hemadri Cements Limited was crucial in determining the nature of the transactions. Additionally, the Court found that the clauses cited by the revenue did not alter the fundamental nature of the transactions as second sales exempted from tax.

4. The Court also distinguished a previous case involving works contract from the current scenario, emphasizing the unique circumstances of each case. The Court ultimately agreed with the Tribunal's view that the sales by the assessee to customers, based on the cement purchased from Hemadri Cements Limited, did not constitute first sales and were therefore exempted from sales tax as second sales.

5. Consequently, the tax revision case filed by the revenue was rejected, affirming the Tribunal's decision regarding the exemption of the turnover from sales tax under the A.P.G.S.T. Act, 1957.