2010 (11) TMI 880 - HC - VAT and Sales Tax

The Tribunal should have left open the question of classification, and the applicable entry, to be examined in a more appropriate case, inasmuch as the rate of tax is only eight per cent irrespective of whether the petitioners goods fell under entry 1 or 83 of the First Schedule, merits acceptance. It was wholly unnecessary for the Tribunal to have examined the question of classification, whether the petitioners goods fell within entry 1 or entry 83 of the First Schedule, and to have recorded a finding that the petitioners goods fell under entry 1 of the First Schedule. Appeal allowed.

Summary

Issues Involved:
1. Classification of goods sold by the petitioner under the Andhra Pradesh General Sales Tax Act.
2. Applicability of concessional tax rates on sales to SCCL.
3. Jurisdiction and exercise of revisional powers by the Deputy Commissioner.
4. Validity of the Tribunal's findings and directions.

Issue-wise Analysis:

1. Classification of Goods Sold by the Petitioner:
The petitioner, an authorized dealer of Caterpillar Inc., sold spare parts of earth-moving machinery in the year 2001-02 and filed returns claiming these spares fell under entry 83 of the First Schedule to the Andhra Pradesh General Sales Tax Act, taxable at eight percent. The Commercial Tax Officer accepted this classification and extended the benefit of a concessional rate of tax. However, the Deputy Commissioner, relying on the Supreme Court judgment in Bose Abraham v. State of Kerala, treated the goods as backhoe loaders under entry 1 of the First Schedule and levied tax at 13 percent. The Tribunal later held that earth-moving machinery and its parts fell under entry 1 of the First Schedule as motor vehicles, but the applicable tax rate was eight percent. The High Court found it unnecessary for the Tribunal to have examined the classification question since the tax rate was eight percent irrespective of the entry.

2. Applicability of Concessional Tax Rates on Sales to SCCL:
The petitioner claimed a concessional tax rate of four percent on sales to SCCL based on certificates issued under G.O.Ms. No. 694 dated September 10, 1998. The Tribunal held that this notification was deemed rescinded by G.O.Ms. No. 390 dated June 12, 2001, which rescinded G.O.Ms. No. 38 dated January 17, 1997. The High Court disagreed, stating that G.O.Ms. No. 694 was not rescinded by G.O.Ms. No. 390 and that the petitioner was entitled to the concessional rate even after June 12, 2001.

3. Jurisdiction and Exercise of Revisional Powers by the Deputy Commissioner:
Under Section 20(1) of the Andhra Pradesh General Sales Tax Act, the Commissioner can revise orders prejudicial to the interests of Revenue. The Deputy Commissioner exercised this power, treating the petitioner's goods under entry 1 and levying a 13 percent tax. The High Court noted that the Deputy Commissioner's jurisdiction was valid as the revision was based on the premise that the applicable tax rate for entry 1 goods was 13 percent, leading to a perceived monetary loss for the Revenue. The Tribunal's subsequent finding that the tax rate was eight percent did not affect the Deputy Commissioner's jurisdiction.

4. Validity of the Tribunal's Findings and Directions:
The Tribunal remanded the matter to the assessing authority for verification of certificates issued by SCCL and allowed the concessional rate of tax until June 12, 2001. The High Court found the Tribunal erred in deeming G.O.Ms. No. 694 rescinded by G.O.Ms. No. 390 and held that the petitioner was entitled to the concessional rate even after June 12, 2001. The High Court also accepted the petitioner's contention that the Tribunal should have left the classification question open for a more appropriate case.

Conclusion:
The High Court set aside the Tribunal's order to the extent it denied the concessional tax rate post-June 12, 2001, and allowed the tax revision case, affirming the petitioner's entitlement to the concessional rate and leaving the classification question open for future determination.