2001 (10) TMI 1123 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Classification of raw rubber sheets under the APGST Act.
2. Tax rate applicable to raw rubber sheets.
3. Nature of raw rubber sheets as either a raw material or a finished product.
4. Interpretation of "rubber products" under entry 101 of the First Schedule to the APGST Act.

Detailed Analysis:

1. Classification of Raw Rubber Sheets under the APGST Act:
The primary issue was whether raw rubber sheets should be classified under entry 101 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957 (APGST Act) or taxed as a general item. The petitioner, M/s. Scindia Rubber Works, argued that raw rubber sheets are not a finished product and should be taxed at the general rate of 4%. The Tribunal, however, held that the raw RMA sheets sold by the petitioner fall under the entry "rubber product" mentioned in entry 101 of the First Schedule to the APGST Act.

2. Tax Rate Applicable to Raw Rubber Sheets:
The assessment officer subjected the petitioner's turnover to a tax rate of 6% as per entry 101 of the First Schedule to the APGST Act. The Assistant Commissioner (Appeals) initially set aside this order, but the Deputy Commissioner (CT) revised it, reinstating the 6% tax rate. The Tribunal upheld this decision, confirming that raw RMA sheets should be taxed at 6% as they fall under entry 101.

3. Nature of Raw Rubber Sheets as Either a Raw Material or a Finished Product:
The petitioner contended that raw RMA sheets are merely dried latex and natural rubber, not a finished product. The Tribunal, however, found that RMA rubber sheets are obtained by processing natural latex rubber through several steps, including coagulation, drying, and packaging. Therefore, RMA rubber sheets are different from latex or natural rubber and are considered "rubber products" under entry 101 of the First Schedule to the APGST Act.

4. Interpretation of "Rubber Products" under Entry 101 of the First Schedule to the APGST Act:
The Tribunal concluded that RMA rubber sheets, being the outcome of various processes applied to latex or natural rubber, are classified as "rubber products" under entry 101. This interpretation was supported by the booklet "Rubber Growers' Companion" and several judicial precedents, including the Supreme Court's decisions in Vijayalaxmi Cashew Company v. Deputy Commercial Tax Officer and K.A.K. Anwar & Co. v. State of Tamil Nadu, which differentiate between raw and processed products.

Conclusion:
The High Court dismissed the tax revision cases, agreeing with the Tribunal's findings that RMA rubber sheets are different from raw latex or natural rubber and should be classified and taxed as "rubber products" under entry 101 of the First Schedule to the APGST Act at a rate of 6%. The Court found no error or flaw in the Tribunal's order, affirming its decision as based on substantial evidence and proper interpretation of the law.