2001 (11) TMI 994 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the exemption granted by the State Government under section 9(1) of the Andhra Pradesh General Sales Tax Act qualifies for exemption under section 8(2A) of the Central Sales Tax Act.

Issue-wise Detailed Analysis:

1. Nature of Exemption Under Section 9(1) of the Andhra Pradesh General Sales Tax Act:

The petitioners, dealers and manufacturers of cotton hank yarn, claimed exemption for inter-State sales of hank yarn based on a notification (G.O. Ms. No. 1067, dated September 19, 1985) issued under section 9(1) of the Andhra Pradesh General Sales Tax Act. The Deputy Commissioner of Commercial Taxes initiated revisional proceedings, contending that the exemption was conditional and not general, thus not applicable to inter-State sales under section 8(2A) of the Central Sales Tax Act. The Sales Tax Appellate Tribunal upheld this view, leading to the present tax revision cases.

2. Interpretation of Section 9 and Relevant Provisions:

Section 9(1) of the State Act allows the State Government to exempt or reduce the tax on sales or purchases of any specified class of goods or by any specified class of persons. Sub-section (2) allows these exemptions or reductions to be subject to restrictions and conditions. The notification in question exempted sales of hank yarn to registered dealers in the State and to weavers, master weavers, co-operative societies, or other recognized associations of weavers for consumption in their industry in the State.

3. Argument of the Petitioners:

The petitioners argued that the exemption granted under the notification was general for registered dealers within the State and should extend to inter-State transactions under section 8(2A) of the Central Sales Tax Act. They contended that the notification did not impose any specific conditions or restrictions for registered dealers, thus qualifying as a general exemption.

4. Argument of the Government Pleader:

The Government Pleader argued that the exemption was not general but conditional, as it was granted to a specified class of dealers and consumers under specified conditions. Therefore, it did not qualify for exemption under section 8(2A) of the Central Sales Tax Act.

5. Analysis of Relevant Case Law:

Several judgments were cited by both parties to support their arguments. The Supreme Court in cases like Indian Aluminium Cables Ltd. v. State of Haryana and Commissioner of Sales Tax v. Pine Chemicals Ltd. emphasized that exemptions granted under specified conditions or circumstances are not general exemptions under section 8(2A) of the Central Sales Tax Act. Conversely, judgments like Bashir Oil Mills v. Maharashtra Sales Tax Tribunal and Anandi Roller Flour Mills Ltd. v. Commissioner of Commercial Taxes supported the view that exemptions without specific conditions or restrictions qualify as general exemptions.

6. Examination of Notification and Statutory Provisions:

The Court examined the notification and relevant statutory provisions. It noted that the exemption under the notification was granted to registered dealers in the State without any specific conditions or restrictions. The Court also considered section 12 of the State Act, which mandates registration for dealers dealing with goods specified in the Third Schedule, including hank yarn.

7. Conclusion:

The Court concluded that the exemption granted under the notification was a general exemption for registered dealers in the State. Since only registered dealers could deal with hank yarn, the exemption applied to the entire class of dealers. Therefore, the exemption qualified as a general exemption under section 8(2A) of the Central Sales Tax Act, extending the benefit to inter-State transactions.

Judgment:

The Court set aside the orders of the Sales Tax Appellate Tribunal and restored the orders of the assessing officer, allowing the tax revision cases and granting the exemption for inter-State sales of hank yarn.

Result:

All tax revision cases were allowed, and the orders of the assessing officer were restored. No costs were awarded.