2001 (2) TMI 996 - HC - VAT and Sales Tax

Issues Involved:

1. Entitlement of the petitioner-dealer to the benefit of set-off of sales tax paid on purchases of rerollable iron scrap against the sales tax payable on the finished product.
2. Interpretation of G.O. Ms. No. 774, dated July 9, 1985, and its applicability to the petitioner-dealer.
3. Consideration of relevant case laws and their applicability to the current case.

Detailed Analysis:

Issue 1: Entitlement of the petitioner-dealer to the benefit of set-off of sales tax paid on purchases of rerollable iron scrap against the sales tax payable on the finished product.

The petitioner, a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957, purchased rerollable iron scrap worth Rs. 36,34,973 during the assessment year 1986-87, got it manufactured into finished goods, and sold the finished products for Rs. 41,00,972. The petitioner claimed a set-off of tax paid on purchases from the tax payable on the finished goods as per G.O. Ms. No. 774, dated July 9, 1985. The assessing authority rejected this claim, stating that the petitioner is not a reroller within the meaning of the G.O. However, the Appellate Deputy Commissioner allowed the claim, which was later revised and denied by the Joint Commissioner (CT) and confirmed by the Sales Tax Appellate Tribunal. The petitioner contended that owning a reroller or mini steel plant-cum-reroller is not a prerequisite for availing the benefit, as both purchases and sales were conducted within the State, thus meeting the G.O.'s requirements.

Issue 2: Interpretation of G.O. Ms. No. 774, dated July 9, 1985, and its applicability to the petitioner-dealer.

The G.O. stipulates that the tax levied and collected on the sale or purchase of steel ingots, billets, or rerollable scrap within the State shall be reduced by the tax levied on rerolled finished products manufactured within the State by steel rerollers and mini steel plants-cum-rerollers. The Appellate Tribunal found that the petitioner fulfilled the first three conditions of the G.O. but failed to meet the fourth condition, which requires the finished products to be manufactured by steel rerollers and mini steel plants-cum-rerollers. The Tribunal concluded that the benefit was intended only for these entities and not for dealers who hire rerollers.

Issue 3: Consideration of relevant case laws and their applicability to the current case.

The petitioner cited several judgments to support their claim:

- Bulbu Prasad Amarnath v. Commissioner of Sales Tax, U.P. [1964] 15 STC 46 (All.): This case defined "manufacturer" broadly, but the court found it irrelevant to the current issue.
- M. Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes), Anantapur [1971] 27 STC 18 (AP): This case defined "miller" and was found not applicable to the current issue.
- B.G. Somanna & Sons v. State of Andhra Pradesh [1972] 30 STC 281 (SC): This case dealt with tax levies on millers and last dealers, but did not support the petitioner's claim.
- Sri Venkateswara Rice, Ginning and Groundnut Oil Mill Contractors Co. v. State of Andhra Pradesh [1971] 28 STC 599 (SC): Similar to the above cases, it was found not relevant.
- State of Andhra Pradesh v. Pottimurthy Subbarao & Co. [1979] 44 STC 19 (AP): This case supported the Revenue's stance that the benefit is intended only for specific manufacturers.

The court also referred to Novopan India Ltd. v. Collector of Central Excise and Customs, Hyderabad 1994 (73) ELT 769 (SC), which held that any ambiguity in a tax exemption notification should be resolved in favor of the State.

Conclusion:

The court concluded that the G.O. intended to benefit only steel rerollers and mini steel plants-cum-rerollers and not dealers who hire rerollers. The petitioner's reliance on various judgments did not support their claim for the set-off. The Tribunal's order was upheld, and the tax revision case was dismissed, affirming that the petitioner-dealer is not entitled to the benefit of the G.O.

Petition dismissed.

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