2003 (7) TMI 669 - HC - VAT and Sales Tax

Summary

Issues:
Exemption under A.P. General Sales Tax Act for waste paper items.

Analysis:
The judgment of the Andhra Pradesh High Court in T.R.C. Nos. 132 and 287 of 2001 dealt with the controversy surrounding the exemption to be granted under the A.P. General Sales Tax Act for three specific items sold by the petitioners, namely kraft box waste, sweeping kraft, and duplex waste as per G.O. Ms. No. 130, dated February 14, 1989. The petitioner, a dealer of waste paper, sought exemption under this Act, but the assessing authority, Appellate Deputy Commissioner, and Sales Tax Tribunal denied the exemption. The primary question raised for adjudication was whether the term "waste paper" in the G.O. includes all kinds of waste paper.

The High Court also considered other writ petitions filed by different assessees seeking classification of various paper wastes as "waste paper" under the G.O. Ms. No. 130, dated February 14, 1989, and subsequent relief. The main issue revolved around interpreting the term "waste paper" in the G.O. and whether it encompasses all types of waste paper. The Court analyzed the arguments presented by the Senior Counsel for the petitioners, emphasizing that the items in question fall within the definition of waste paper and should be exempted from sales tax.

The Senior Counsel contended that historical interpretations and subsequent government notifications supported the inclusion of kraft box waste, sweeping kraft, and duplex waste under the definition of waste paper. The Court noted that the lack of a specific definition for "waste paper" implies that all papers rendered useless can be considered as waste paper. Reference was made to entry No. 143 of the First Schedule to the Act, which further clarified the inclusion of various paper categories under the waste paper definition.

The Special Government Pleader argued that while waste paper was initially fully exempted, subsequent notifications restricted the exemption to specific items, excluding certain paper wastes. However, the Court held that the items sold by the petitioners fell within the ambit of waste paper, as clarified by G.O. Ms. No. 540, dated September 5, 2002, which specifically exempted kraft box waste, sweeping kraft, and duplex waste from sales tax.

Upon reviewing all evidence and legal provisions, the Court concluded that the Sales Tax Tribunal erred in interpreting waste paper and distinguishing between different paper items. The Court ruled in favor of the petitioners, declaring that the items sold by them were entitled to exemption from sales tax under G.O. Ms. No. 130, dated February 14, 1989, and G.O. Ms. No. 540, dated September 5, 2002. The Court allowed the tax revision cases and writ petitions, granting the requested relief to the petitioners.