2011 (12) TMI 459 - HC - VAT and Sales Tax

Entitlement to claim exemption under the relevant statutory notifications issued by the Government under section 9 of the Andhra Pradesh General Sales Tax Act 1957 declined - Held that - There is no dispute that the TTD and Girijan Society are exempted from payment of sales tax as well as purchase tax. When the purchaser of the goods is exempted the sales tax cannot be collected from the petitioner who is a selling dealer applying the ratio in Peekay Re-Rolling Mills (P) Ltd. 2007 (3) TMI 356 - SUPREME COURT OF INDIA . In the result we feel constrained to set aside the orders of the Sales Tax Appellate Tribunal holding that the question of law was erroneously decided by them. These tax revision cases shall stand allowed and they shall be remitted to the assessing officer to pass appropriate consequential orders and refund/adjust the excess tax if any paid already.

Summary

Issues:
1. Interpretation of statutory notifications for exemption under the Andhra Pradesh General Sales Tax Act, 1957.
2. Applicability of exemption to sales made to Tirumala Tirupathi Devasthanam and Girijan Primary Corporation Marketing Society.
3. Legal implications of exemption granted to buyers on the liability of the selling dealer for tax collection.

Issue 1: Interpretation of statutory notifications for exemption under the Andhra Pradesh General Sales Tax Act, 1957.
The case involved a registered dealer engaged in the business of purchase and sale of goods, including supplies to Tirumala Tirupathi Devasthanam and Girijan Society. The petitioner claimed exemption under two government orders issued under section 9 of the Act. The court analyzed the language of the notifications and concluded that when buyers were exempted from paying tax on purchases, the selling dealer should also be exempted from tax liability on sales to such buyers. This interpretation was supported by the Supreme Court's judgment in Peekay Re-Rolling Mills (P) Ltd. v Assistant Commissioner, emphasizing that exemption for the purchaser should extend to the seller as well.

Issue 2: Applicability of exemption to sales made to Tirumala Tirupathi Devasthanam and Girijan Primary Corporation Marketing Society.
The court examined the two government orders exempting TTD and Girijan Society from tax on their purchases. It noted that the plain reading of the orders indicated clear exemption for these entities. The petitioner's reliance on these notifications was found to be valid, as the language of the orders explicitly exempted TTD and Girijan Society from tax liability on their purchases, which implied exemption for the selling dealer as well.

Issue 3: Legal implications of exemption granted to buyers on the liability of the selling dealer for tax collection.
The court emphasized that when buyers like TTD and Girijan Society were exempted from sales tax and purchase tax, the selling dealer should not be held liable for tax collection on sales to these exempted buyers. Drawing from the legal principle established in the Peekay Re-Rolling Mills case, the court held that the burden of tax cannot be shifted to the selling dealer when the purchaser is exempted from payment. Consequently, the orders of the Sales Tax Appellate Tribunal were set aside, and the tax revision cases were allowed, directing the assessing officer to make necessary adjustments and refunds, if applicable.

In conclusion, the judgment provided a detailed analysis of the statutory notifications, the implications of exemptions granted to specific buyers, and the legal principles governing tax liability for selling dealers in cases of buyer exemptions. The decision clarified the interplay between exemptions for buyers and sellers under the Andhra Pradesh General Sales Tax Act, ensuring a fair application of tax laws in line with established legal precedents.