2004 (3) TMI 732 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether oil well cement class "G" (HSR type) is considered cement under the Andhra Pradesh Tax on Entry of Goods into Local Areas Act, 2001.
2. The applicable tax rate for oil well cement class "G" (HSR type) before and after its specific notification.

Issue-wise Detailed Analysis:

1. Whether oil well cement class "G" (HSR type) is considered cement under the Andhra Pradesh Tax on Entry of Goods into Local Areas Act, 2001:

The primary contention of the petitioner was that oil well cement class "G" (HSR type) is not similar to ordinary cement used in construction and should not be taxed as cement under the Act. The petitioner argued that this type of cement is exclusively used in drilling oil wells and has no utility in construction activities. The petitioner highlighted the distinct chemical composition and usage of oil well cement compared to ordinary Portland cement. The court examined the provisions of section 3 of the Act, which stipulates that goods and their tax rates must be notified by the Government. The petitioner argued that oil well cement class "G" (HSR type) was not included in the general category of cement notified on May 3, 2001, and thus should not be taxed as such.

The court considered various judgments, including the Supreme Court's ruling in Associated Cement Co. Ltd. v. State of Madhya Pradesh, which emphasized understanding terms in their common parlance unless specified otherwise. The court concluded that oil well cement class "G" (HSR type) is a different commodity from ordinary Portland cement in common usage and parlance. This conclusion was supported by correspondence from the Commissioner of Commercial Taxes, Andhra Pradesh, which indicated that oil well cement was not intended to be taxed as ordinary cement.

2. The applicable tax rate for oil well cement class "G" (HSR type) before and after its specific notification:

The petitioner contended that oil well cement class "G" (HSR type) was not subject to tax prior to its specific notification on September 12, 2002, by G.O. Ms. No. 552, which set a tax rate of 4 percent. The Commercial Tax Officer had levied a 16 percent tax on the oil well cement imported by the petitioner from June 2001 to January 2002, based on the general notification for cement. The Appellate Deputy Commissioner later set aside this provisional assessment, holding that oil well cement was liable to tax at 4 percent only from the date of the specific notification.

The court upheld the petitioner's argument that oil well cement class "G" (HSR type) was not taxable as cement before its specific notification on September 12, 2002. Consequently, the court ruled that the petitioner was not liable to pay entry tax at 16 percent for the period from April 30, 2001, to September 11, 2002. However, the petitioner was liable to pay tax at 4 percent from September 12, 2002, onwards, as per the specific notification.

Judgment Summary:

The court allowed Writ Petition No. 2316 of 2004, holding that the petitioner was not liable to pay entry tax on oil well cement class "G" (HSR type) from April 30, 2001, to September 11, 2002, but was liable to pay tax at 4 percent from September 12, 2002, onwards. Writ Petition No. 2323 of 2004 was also allowed based on the same reasoning. Writ Petition No. 2309 of 2004 was dismissed as it was not pressed by the learned Senior Counsel. The rule nisi was made absolute accordingly.