1998 (11) TMI 635 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of relevant entries in the First Schedule of the Andhra Pradesh General Sales Tax Act, 1957.
2. Power of the Government to issue circulars interpreting the entries in the Schedule to the APGST Act, 1957.
3. Validity of Government Order dated September 16, 1997, and the Commissioner's Order dated November 10, 1997.
4. Tax rate applicable to imported refined oils.

Detailed Analysis:

1. Interpretation of Relevant Entries in the First Schedule of the Andhra Pradesh General Sales Tax Act, 1957:
The petitioners, dealing with edible oils, contended that they were paying a sales tax of 2% under items 24A and 24B of the First Schedule of the APGST Act. They argued that the Government's policy was to levy minimal tax on essential commodities like vegetable oils, as evidenced by G.O. Ms. No. 401 and G.O. Ms. No. 415. The Government of Andhra Pradesh amended the schedule of tax rates on edible oils through Act No. 27 of 1996, effective from August 16, 1995, introducing entries 24A, 24B, 24C, and 24D, which specified the tax rates for different types of oils.

2. Power of the Government to Issue Circulars Interpreting the Entries in the Schedule to the APGST Act, 1957:
The Court examined whether the Government had the authority to issue the order dated September 16, 1997, directing assessing officers to interpret entries 24A and 24B in a specific manner. Section 42 of the APGST Act provides the Government with the power to remove difficulties through orders published in the Gazette, while Section 42-A allows the Commissioner to issue instructions to subordinate officers. The Court concluded that the Government has no power to interpret the statute in a vacuum or direct assessments based on its interpretation, as assessing authorities perform quasi-judicial functions and must interpret the provisions independently.

3. Validity of Government Order Dated September 16, 1997, and the Commissioner's Order Dated November 10, 1997:
The Government order dated September 16, 1997, interpreted entries 24A and 24B to apply a concessional rate of 2% only to oils obtained from non-refined oils that had been taxed under entry 24A, directing a 10% tax on imported refined oils not covered under entry 24A. The Court found this order ultra vires the Act, as the Government lacked the power to issue such an interpretation. Consequently, the Commissioner's order dated November 10, 1997, which was based on the Government order, was also quashed.

4. Tax Rate Applicable to Imported Refined Oils:
The Court analyzed entries 24A and 24B, determining that non-refined vegetable oils are taxable at 2% under entry 24A, while refined vegetable oils obtained from non-refined oils taxed under entry 24A are also taxable at 2% under entry 24B. However, imported refined oils that had not been taxed under entry 24A were subject to a 10% tax under the Seventh Schedule. The Court rejected the petitioners' argument for a 2% tax on all refined oils, emphasizing that the statute must be interpreted as written, without judicial amendment.

Conclusion:
The writ petitions were partly allowed, quashing the Government order dated September 16, 1997, and the consequential Commissioner's order dated November 10, 1997. The Court did not grant the relief sought by the petitioners to interpret item 24B to include all refined oils at a 2% tax rate, as such an interpretation would require legislative amendment beyond the Court's power. The suspension of the order was granted for four weeks, and certified copies of the order were to be furnished to the parties promptly.

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