2024 (5) TMI 662 - HC - VAT and Sales Tax

Exemption from tax - Levy of turnover tax under Section 5-A (vi) of the APGST Act - second sales of Pulp Moulded Egg Trays which fell under Item 19 of the First Schedule - G.O. Ms. No. 1091 dated 31.10.1994 under Section 9 (1) of the APGST Act, 1957 grants general exemption, from levy of turnover tax under Section 5A (1) 2nd proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units or not - exemption on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small-Scale Industrial Units - exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956. Whether the G.O. Ms. No. 1091 dated 31.10.1994 under Section 9 (1) of the APGST Act, 1957 grants general exemption, from levy of turnover tax under Section 5A (1) 2nd proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units? - HELD THAT - In exercise of the powers conferred by Section 9 (1) of the Andhra Pradesh General Sales Tax Act, 1957, the State Government issued Notification-I in G.O. Ms. No. 1091 dated 31.10.1994 granting exemption from the tax payable under A.P.G.S.T Act on the sale of Pulp Moulded Egg Trays manufactured by the Small-Scale Industries (SSI) - G.O. Ms. No. 1091 thus grants exemption on the sale of the Pulp Moulded Egg Trays manufactured by the Small-Scale industrial units. The Pulp Moulded Egg Trays which are manufactured by the Small-Scale industrial units, only, call for exemption. If not manufactured by the Small-Scale industrial units it would not be exempted. In THE STATE OF MAHARASHTRA VERSUS SHRI VILE PARLE KELVANI MANDAL ORS. 2022 (2) TMI 720 - SUPREME COURT , the question was whether the charitable educational institution was entitled to the exemption from payment of electricity duty post 01.09.2016 i.e. as per the provisions of the Maharashtra Electricity Duty Act, 2016? The Hon ble Apex Court while answering the aforesaid question/issue laid down as to how to interpret and/or consider the statutory provisions in the taxing statute and the exemption notifications - The Hon ble Apex Court held that it is for the assessee to show by construction of the exemption clause/notification that it comes within the purview of exemption. The assessee/citizen cannot rely on ambiguity or doubt to claim benefit of exemption. The rationale is not to widen the ambit at the stage of applicability. However, once the hurdle is crossed, the notification is constructed liberally. In GIRIDHAR G. YADALAM VERSUS COMMISSIONER OF WEALTH TAX AND ANR. 2016 (1) TMI 826 - SUPREME COURT it was held that in a taxing statute it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. Purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results. In the present case, the G.O. Ms. No. 1091 dated 31.10.1994 is under consideration which was not under consideration in the aforesaid cited judgments. Therefore, whether the notification of G.O. Ms. No. 1091, issued under Section 9 (1) falls under the general exemption for the purposes of the APGST Act is to be considered, independently, applying the principle of law, the precedents in various judgments, depending inter alia upon the language of the Government Order as also other relevant factors. The question whether G.O. Ms. No. 1091 is a notification granting general exemption under Section 9 (1) for the purpose of the State tax is be construed from its language for the purpose of the A.P.G.S.T Act. But that would not mean that it is a notification granting general exemption also for the purpose of the C.S.T Act. Under C.S.T Act the word generally has been explained in Section 8(2A) of that Act, and for the G.O. Ms. No. 1091 to qualify for exemption to the assessee it will have to fulfill the requirements of Section 8(2A), which aspect would be considered shortly under Question C as framed. Whether the exemption from levy of tax under G.O. Ms. No. 1091 dated 31.10.1994 on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small-Scale Industrial Units? - HELD THAT - In DELHI TRANSPORT CORPORATION VERSUS BALWAN SINGH AND ORS. 2019 (2) TMI 2105 - SUPREME COURT the Hon ble Apex Court held that it is a well settled principle of interpretation that when the words of a statute are clear and unambiguous, there cannot be a recourse to any principle of interpretation other than the rule of literal construction. In Dr.(Major) Meeta Sahai v. State of Bihar 2019 (12) TMI 1672 - SUPREME COURT the Hon ble Apex Court held that it is a settled canon of statutory interpretation that as a first step, the Courts ought to interpret the text of the provision and construct it literally. Provisions in a statute must be read in their original grammatical meaning to give its words a common textual meaning. However, this tool of interpretation can only be applied in cases where the text of the enactment is susceptible to only one meaning. Nevertheless, in a situation where there is ambiguity in the meaning of the text, the Courts must also give due regard to the consequences of the interpretation taken. The notification in clear words grants exemption on the sale of Pulp Moulded Egg Trays which are manufactured by the Small-Scale industrial units. So the exemption is on the sale if the commodity is manufactured by Small-Scale industrial units. From the plain language of the notification it does not follow that the sale should also be by the Small-Scale industrial units alone, which has manufactured it - Since the respondent herein is the Small-Scale industrial unit, we are considering the sale by SSI only and not making any observation with respect to the sale by any other dealer/assessee. So far as the respondent assessee is concerned the sale by it of the kind of the commodity exempted under G.O. Ms. No. 1091, would be entitled for exemption. Whether the Respondent Assessee-Dealer is entitled for exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956? - HELD THAT - The Hon ble Apex Court in Pine Chemicals Ltd. 1994 (10) TMI 262 - SUPREME COURT observed that for attracting the exemption provided by the government order, it had to be established that (i) the goods, the sale or purchase of which is claimed to be exempt from tax, are manufactured by a large or medium scale industry and (ii) that the said goods are manufactured and sold within five years from the date the said industrial unit has gone into production - The Hon ble Apex Court held that the idea behind sub-section (2-A) of Section 8 of the Central Sales Tax Act was to exempt the sale or purchase of the goods from the Central Sales Tax where the sale or purchase of such goods was exempt generally under the State sales tax law. It was held that due regard must be given and due meaning to the expression generally which occur in sub-section (2-A) and which expression has been defined in the explanation. The Hon ble Apex Court observed that if the said expression had not been there, it could probably have been possible to argue that inasmuch as the goods sold by a particular manufacturer-dealer were exempt from the State tax in his hands, they must equally be exempt under the Central Act. G.O. Ms. No. 1091, dated 31.10.1994 grants exemption from the tax payable under Andhra Pradesh General Sales Tax Act on the sale of pulp moulded egg trays manufactured by the Small-Scale Industrial Units. On comparing G.O. Ms. No. 1091, dated 31.10.1994 with G.O. Ms. No. 159, dated 26.03.1971 of Jammu Kashmir as was involved in Pine Chemicals Ltd. what is found is that the pulp moulded egg trays is mentioned in G.O. Ms. No. 1091, whereas in G.O. No. 159 of Jammu Kashmir the goods were not mentioned. What was mentioned was with reference to the industrial unit, so long as it was (i) a large or medium scale industry, and (ii) it manufactured and sold goods within the five years of its going into production - the exemption vide G.O. Ms. No. 1091, dated 31.10.1994 is not a general exemption within the meaning of Section 8 (2A) of the Central Sales Tax Act. It cannot be covered under the expression generally under Section 8 (2A) read with its explanation. Exemption under G.O. Ms. No. 1091 may be available under the State Act, Section 5-A (i) (vi), but the same would not be available under the Central Sales Tax Act, Section 8 (2A), only because exemption is available under the State Act. All the Tax Revision Cases are dismissed.

Summary

Issues Involved:
1. Whether G.O. Ms. No. 1091 dated 31.10.1994 under Section 9 (1) of the APGST Act, 1957 grants 'general' exemption from levy of turnover tax under Section 5A (1) 2nd proviso (vi) of the APGST Act, 1957 on the sales of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units.
2. Whether the exemption from levy of tax under G.O. Ms. No. 1091 dated 31.10.1994 on the sale of Pulp Moulded Egg Trays manufactured by S.S.I is available to the manufacturing unit alone or it would also be available to the sales of such commodity by other Small-Scale Industrial Units.
3. Whether the Respondent Assessee-Dealer is entitled for exemption from levy of tax under Section 8(2-A) of the Central Sales Tax Act 1956.

Summary:

Issue 1: General Exemption under G.O. Ms. No. 1091

G.O. Ms. No. 1091, dated 31.10.1994, issued under Section 9 (1) of the APGST Act, 1957, grants exemption from tax on the sale of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units. This exemption is considered a general exemption under Section 5A (1)(vi) of the APGST Act, 1957, as it does not impose any restrictions or conditions as contemplated by Sub-Section (2) of Section 9. The notification provides a general exemption for the purposes of the APGST Act, 1957.

Issue 2: Applicability of Exemption to Sales by Non-Manufacturing SSIs

The exemption under G.O. Ms. No. 1091 applies to the sale of Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units. The language of the notification does not restrict the exemption to sales by the manufacturing unit alone. Therefore, the sale of Pulp Moulded Egg Trays by another Small-Scale Industrial Unit, even if it did not manufacture the trays, is also entitled to the exemption. The exemption applies to the commodity manufactured by SSIs, irrespective of whether the selling unit is the manufacturer.

Issue 3: Exemption under Section 8(2-A) of the Central Sales Tax Act

Section 8 (2A) of the Central Sales Tax Act, 1956, requires that the exemption be a general exemption under the State law for it to apply under the Central Act. The explanation to Section 8 (2A) clarifies that an exemption is not deemed general if it applies only in specified circumstances or under specified conditions. G.O. Ms. No. 1091 grants exemption only to Pulp Moulded Egg Trays manufactured by Small-Scale Industrial Units, which is a specified condition. Therefore, the exemption under G.O. Ms. No. 1091 does not qualify as a general exemption under Section 8 (2A) of the Central Sales Tax Act, and the respondent is not entitled to exemption from Central Sales Tax.

Conclusions:

(i) G.O. Ms. No. 1091 dated 31.10.1994 grants a general exemption under the APGST Act, 1957, for the purposes of Section 5A(1)(vi).

(ii) The plain language of G.O. Ms. No. 1091 entitles the respondent to exemption from tax on the commodity in question.

(iii) G.O. Ms. No. 1091 does not grant a general exemption under the Central Sales Tax Act, Section 8 (2A).

(iv) The Sales Tax Appellate Tribunal correctly held that the respondent is entitled to exemption under the APGST Act, 1957.

(v) The respondent is not entitled to claim exemption from Central Tax under Section 8 (2A) of the Central Sales Tax Act, 1956, based on G.O. Ms. No. 1091.

Result:

All Tax Revision Cases are dismissed with the aforesaid clarifications. Pending miscellaneous petitions, if any, shall stand closed in consequence.