2015 (6) TMI 1054 - HC - VAT and Sales Tax

Levy of purchase tax u/s 4 - agriculture product processors i.e. (1) rice millers, or (2) dhal millers, or (3) soyabean oil millers, or (4) cotton millers - whether in the nature of levy on farmers - Held that - in the light of the provisions under Section 4 (4) of the VAT Act and under the CST Act, in K.G.F. COTTONS(P) LTD. v . ASST. COMMR. (CT) (T AND AP) 2015 (5) TMI 804 - ANDHRA PRADESH HIGH COURT matter remanded back.

Summary

Issues Involved:
1. Levy of tax on the purchase value of pulses proportionate to the value of husk under Section 4(4)(i) of the VAT Act.
2. Levy of purchase tax on consignment sales of cotton seed under Section 4(4) of the VAT Act.
3. Applicability of Section 4(4) of the VAT Act when finished goods are taxable under the VAT Act or Central Sales Tax Act.
4. Interpretation and application of Section 4(4) of the VAT Act in light of the CST Act and relevant judicial precedents.
5. Validity of impugned orders and the requirement for remand to the authorities for fresh consideration.

Detailed Analysis:

1. Levy of Tax on the Purchase Value of Pulses Proportionate to the Value of Husk:
The petitioners, who are dall mills, argued that they have paid tax on the sale of de-husked pulses and claimed exemption for husk under Entry 41 of the First Schedule to the VAT Act. The grievance was against the assessing authority's orders levying tax on the purchase value of pulses proportionate to the value of husk at 4% under Section 4(4)(i) of the VAT Act.

2. Levy of Purchase Tax on Consignment Sales of Cotton Seed:
Petitioners involved in the purchase of raw cotton (Kapas) and subsequent sale of ginned cotton and cotton seed products contended that they had paid applicable taxes under the VAT Act. They challenged the levy of purchase tax on consignment sales of cotton seed under Section 4(4) of the VAT Act.

3. Applicability of Section 4(4) of the VAT Act:
The petitioners claimed that since the finished goods manufactured from the goods purchased from unregistered dealers are taxable either under the VAT Act or the Central Sales Tax Act, purchase tax under Section 4(4) of the VAT Act should not be levied again.

4. Interpretation and Application of Section 4(4) of the VAT Act:
A Division Bench of the High Court had previously elaborated on similar issues in the case of K.G.F. COTTONS(P) LTD. v. ASST. COMMR. (CT) (T AND AP). Key points from the judgment include:
- Section 4(4) aims to prevent tax evasion by taxing transactions either at the point of sale or purchase.
- The term "taxable goods" excludes goods exempt from tax under the Act.
- The tax under Section 4(4) is levied on the VAT dealer purchasing goods from unregistered dealers, not on the farmer/agriculturist.
- The tax rate on declared goods like pulses and cotton should not exceed 4%/5% as per Section 15 of the CST Act.
- The judgment emphasized that the tax should be levied on the input proportionate to the output when a common input is used to produce multiple outputs.

5. Validity of Impugned Orders and Requirement for Remand:
The court set aside the impugned orders and remitted the matters back to the authorities for fresh consideration in light of the Division Bench judgment. The authorities were directed to pass new orders after giving the petitioners an opportunity to be heard.

Conclusion:
Following the Division Bench judgment, the court did not delve into the merits of each case but set aside the impugned orders. The matters were remanded back to the authorities to pass fresh orders in accordance with the law and the Division Bench's judgment, ensuring the petitioners are given an opportunity to be heard. The writ petitions were disposed of without costs, and any pending miscellaneous petitions were closed.