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2025 (4) TMI 435 - HC - VAT / Sales TaxApplicable rate of tax - inter-State sale of paints - to be taxable @ 10% or @ 15%? - Section 8 of the Central Sales Tax Act - HELD THAT - Section 5 of the APGST Act deals with levy of tax on sales or purchase of the goods and Section 5A of the APGST Act deals with levy of tax on turnover. Serial No.8 of Sixth Schedule of the APGST Act deals with paints and other goods and the rate of tax in respect of the sales of the said goods is 15 paise in the Rupee i.e. 15%. So far as the said rate of tax is concerned admittedly the Government issued G.O. Ms. No. 252 dated 19.05.1995 directing the tax leviable under the Sixth Schedule more particularly in respect of sales of paints manufactured by cottage and small scale industries @ 7 paise in the Rupee with effect from 01.04.1995. The assessment is in respect of the turnovers for the year 1997 and 1998 i.e. after issuance of the said G.O. Ms. No. 252 dated 19.05.1995. Further nothing is placed on record in the case on hand by the Department that the Assessee is not a Small Scale Industry unit. In such an event the contention raised on behalf of the State that the said G.O. has no application to the Assessee merits no acceptance. In the present case by virtue of G.O. Ms. No. 252 dated 19.05.1995 the disputed rate of tax on turnover insofar as the State is concerned is 7%. In the light of Section 8 (2) (b) which provides for higher rate of tax than the rate applicable in terms of the rate of tax under Sixth Schedule the tax @ 10% on the turnover on paints is liable to be paid. The learned Appellate Tribunal after considering these aspects in the proper perspective in the considered opinion of this Court has rightly allowed the appeal by fixing the tax leviable on the disputed turnover @ 10%. In such view of the matter the question of law is answered in favour of the Assessee and against the State. Conclusion - The applicable tax rate for the Assessee s inter-State sales is 10% consistent with the CST Act. The Tax Revision Case is dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal issue in this case was the determination of the applicable tax rate for inter-State sales of paints by the Assessee, a small-scale industrial unit, under the Central Sales Tax Act (CST Act) and the Andhra Pradesh General Sales Tax Act (APGST Act). Specifically, the question was whether the tax rate should be 10% or 15%, given the provisions of G.O. Ms. No. 252 and Section 8 (2) (b) of the CST Act. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The relevant legal provisions include Section 8 of the CST Act, which governs the rates of tax on sales in the course of inter-State trade or commerce, and Section 5 of the APGST Act, which deals with the levy of tax on sales or purchase of goods. G.O. Ms. No. 252, issued under the APGST Act, provided a concessional tax rate of 7% for paints manufactured by small-scale industries. Court's Interpretation and Reasoning The Court focused on the interpretation of Section 8 (2) (b) of the CST Act, which states that the tax rate for inter-State sales should be the higher of 10% or the rate applicable within the State. The Court also considered G.O. Ms. No. 252, which reduced the tax rate for small-scale industries to 7% under the APGST Act. Key Evidence and Findings The Court noted that the Assessee was recognized as a small-scale industry and that there was no evidence to suggest otherwise. The Appellate Tribunal had previously allowed the Assessee's appeal, applying the 10% tax rate based on the CST Act, despite the State's argument that the higher rate of 15% should apply. Application of Law to Facts The Court applied Section 8 (2) (b) of the CST Act, determining that the applicable tax rate should be 10%, as it was higher than the 7% rate provided by G.O. Ms. No. 252 but lower than the 15% rate argued by the State. The Court concluded that the Appellate Tribunal correctly applied the law by setting the tax rate at 10% for the disputed turnover. Treatment of Competing Arguments The State argued that the 15% tax rate should apply, as the turnover was not covered by C/D Forms, and that G.O. Ms. No. 252 was not applicable to inter-State sales. The Assessee contended that the 10% rate was appropriate under the CST Act, given the small-scale industry status and the provisions of G.O. Ms. No. 252. The Court sided with the Assessee, finding the State's argument unpersuasive. Conclusions The Court concluded that the Appellate Tribunal's decision to apply a 10% tax rate was correct, as it aligned with the provisions of the CST Act and the status of the Assessee as a small-scale industry. The appeal by the State was dismissed. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning The Court emphasized the application of Section 8 (2) (b) of the CST Act, stating: "The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1) -- (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher." Core Principles Established The judgment reinforced the principle that the CST Act's provisions take precedence in determining the applicable tax rate for inter-State sales, and that specific concessions under State law, such as those in G.O. Ms. No. 252, must be considered in conjunction with the CST Act. Final Determinations on Each Issue The Court determined that the applicable tax rate for the Assessee's inter-State sales was 10%, consistent with the CST Act, and dismissed the State's appeal. The decision was based on the Assessee's status as a small-scale industry and the proper interpretation of the relevant legal provisions.
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