1996 (11) TMI 492 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of exemption under G.O.Ms. No. 604 dated April 9, 1981 under the Andhra Pradesh General Sales Tax Act, 1957 (APGST Act) and its applicability to Central Sales Tax Act, 1956 (CST Act).
2. Application of section 8(2-A) of the CST Act regarding exemption from tax.
3. Consideration of conflicting judgments and precedents regarding the nature of exemption under G.O.Ms. No. 604.

Analysis:
The judgment by the High Court of Andhra Pradesh involved the interpretation of the exemption under G.O.Ms. No. 604 dated April 9, 1981, which exempted sales of certified and truthfully labelled seeds for agricultural purposes under the APGST Act. The assessing officer had brought two turnovers to tax under the CST Act for the assessment year 1986-1987, rejecting the contention that the dealer was entitled to exemption under section 8(2-A) of the CST Act. The dispute revolved around whether the exemption under G.O.Ms. No. 604 was conditional or general in nature. The assessing officer argued that the exemption was conditional, while the petitioner contended it was general, relying on the Division Bench's interpretation in Pinakini Seeds case.

The Court considered the subsequent clarification issued by the government in 1994, affirming that both certified and truthfully labelled seeds were exempt from tax under G.O.Ms. No. 604. Additionally, G.O.Ms. No. 129 dated February 14, 1989, exempted sales of certified and truthfully labelled seeds for agricultural purposes in the course of inter-State trade under the CST Act. The Division Bench's interpretation in Pinakini Seeds case emphasized that G.O.Ms. No. 604 provided a general exemption, making the turnovers in question eligible for exemption under section 8(2-A) of the CST Act.

The Court referred to its previous judgment in Vinod Solvent Extracts case, stating that if turnover was exempted under the State sales tax law, it could not be taxed under the CST Act. The contention that the exemption under G.O.Ms. No. 604 was conditional was rejected, as it had been previously dismissed by another Division Bench in Pinakini Seeds case. The Court also addressed the argument regarding the binding precedent of Pine Chemicals Ltd. cases, clarifying that the issue in those cases was different from the present matter. Ultimately, the Court allowed the Tax Revision Case, setting aside the Tribunal's order and excluding the disputed turnovers from tax under section 8(2-A) of the CST Act, with provisions for refund or adjustment of collected tax.

In conclusion, the judgment resolved the issues by affirming the general nature of the exemption under G.O.Ms. No. 604, thereby granting the petitioner relief from tax liability under the CST Act for the specified turnovers.