2001 (2) TMI 997 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the exemption granted under G.O. Ms. No. 377 applies to inter-State transactions.
2. Interpretation of section 8(2-A) of the CST Act concerning general exemptions under the APGST Act.
3. Necessity of a separate notification under the CST Act for inter-State transaction exemptions.

Issue-wise Detailed Analysis:

1. Whether the exemption granted under G.O. Ms. No. 377 applies to inter-State transactions:
The core issue in this appeal is whether G.O. Ms. No. 377, Revenue dated May 2, 1991, which exempts wheat and wheat products sold or purchased by roller flour mills within Andhra Pradesh, extends to inter-State transactions under section 8(2-A) of the CST Act. The Commissioner of Commercial Taxes revised the Appellate Deputy Commissioner's order, arguing that the exemption under G.O. Ms. No. 377 was issued under section 9(1) of the APGST Act and not under section 8(5) of the CST Act, thus not applicable to inter-State sales. The revisional authority cited the Supreme Court's decision in Commissioner of Sales Tax, Jammu and Kashmir v. Pine Chemicals Ltd., which held that without a specific notification under the CST Act, the exemption does not extend to inter-State sales.

2. Interpretation of section 8(2-A) of the CST Act concerning general exemptions under the APGST Act:
The appellant argued that the revisional authority erred by not considering section 8(2-A) of the CST Act, which states that transactions exempt under the APGST Act are automatically exempt under the CST Act if the exemption is general and not conditional. The appellant cited several cases, including Pine Chemicals Ltd., Sri Venkateswara Hybrid Seeds Co., and Vinod Solvent Extracts (P.) Ltd., to support the interpretation that general exemptions under the APGST Act apply to inter-State transactions under the CST Act.

3. Necessity of a separate notification under the CST Act for inter-State transaction exemptions:
The appellant contended that the exemption under G.O. Ms. No. 377 is a general exemption and does not require a separate notification under the CST Act. The Court examined the text of G.O. Ms. No. 377, which exempts wheat and wheat products sold or purchased by roller flour mills within the State for five years. The Court noted that section 9(1) of the APGST Act allows for exemptions or reductions in tax and that such exemptions can be general or conditional. The Court found that G.O. Ms. No. 377 did not impose specific conditions or restrictions, thus constituting a general exemption.

Conclusion:
The Court concluded that G.O. Ms. No. 377 grants a general exemption to roller flour mills, which should extend to inter-State transactions under section 8(2-A) of the CST Act. The Court rejected the revisional authority's view that a separate notification under the CST Act is necessary. The Court restored the Appellate Deputy Commissioner's order, allowing the appeal and setting aside the revisional authority's order. The judgment emphasized that the exemption under G.O. Ms. No. 377 is general and applicable to inter-State transactions, aligning with section 8(2-A) of the CST Act.