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TMI Blog2005 (10) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... The matter that arises for consideration in these writ petitions is under the Act, rather Value Added Tax (VAT) Act. Under section 5 read with Schedules specified under the Act, goods are exigible to sales tax at varying rates. However, under section 5-B of the Act, concessional tariff has been provided for in the case of goods used as raw material, component part, sub-assembly part, intermediary part and packing material in the manufacture or processing of goods inside the State. Thus, the dealer selling goods meant for being used as raw material for manufacture or processing of goods inside the State is made eligible to tax at concessional rate of four per cent, provided certification is made in form G by such buying dealer. Section 5-B of the Act read with rule 30A of the Andhra Pradesh General Sales Tax Rules, 1957 provides the procedure for grant of registration and for issue of the declarations and it is only after due enquiry by the Commercial Tax Officer concerned, registration is granted in form G2 on the basis of application made in form G1. The petitioner applied in form G1 duly furnishing all relevant particulars and after due enquiry, the Commercial Tax Officer g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rio, has been issuing form G to the petitioner for being used for purchase of cement and that cement was being used in the manufacture of ready-mix concrete. While the matter stood thus, the successor Commissioner of Commercial Taxes issued circular in CCT's Ref. No. AI(4)/1437/2004, dated January 8, 2005 purporting to clarify that the works contractors and traders are not entitled for issue of form G2 in the context of purchase of cement. Further, it was directed to initiate penal proceedings wherever such purchase of cement was utilised for purposes other than those mentioned in G.O. Ms. No. 496, dated July 17, 2001. Subsequently, the Commissioner also issued another circular ostensibly in reply to a letter addressed by the Deputy Commissioner, Begumpet Division, declaring that the instructions issued in references 5th and 6th cited in the said letter must be deemed as annulled instructions issued by the previous Commissioner. While this is so, the Assistant Commissioner, by his communication dated February 28, 2005 deleted cement from the list of items in the G2 certificate of the petitioner, which was, however, set aside by the Appellate Deputy Commissioner by his order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to purchase raw material required for their end-product at concessional rate of tax at 4 per cent under section 5-B of the Act. Under the provisions of section 5-B of the Act read with rule 30-A of the APGST Rules the petitioner filed an application in form G1 for purchase of raw material required for their product, ready-mix concrete, at concessional rate of tax at 4 per cent and cement is included as one of the raw materials in the said application. Accordingly, the petitioner was given registration as a manufacturer under section 5-B of the Act and G2 certificate to enable them to purchase cement at concessional rate of 4 per cent. While the matter stood thus, the State Government exercising the powers under section 5B(1)(b) of the Act issued G.O. Ms. No. 496, dated July 17, 2001. By virtue of this Government Order, cement is made ineligible for the purpose of availing concessional rate of tax of 4 per cent under section 5-B of the Act. Despite the issuance of the above Government Order the petitioner continued to purchase the cement against form G, which is in violation of the provisions of section 5-B of the Act. For the said violation, the petitioner was levied with p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve given our earnest consideration to the respective submissions made by the learned counsel on either side and perused the entire material made available on record, including the impugned proceedings. The only question that falls for consideration in these writ petitions is whether by virtue of inclusion of cement in their registration certificate issued under section 5-B of the Act, the petitioners cannot be denied availing of concessional rate of tax for purchase of cement under G.O. Ms. No. 496, dated July 17, 2001; more so, when the earlier Commissioner (CT) on August 9, 2001 had clarified that cement can be purchased as raw material against form G. For deciding the said question, it is necessary to refer to the provisions under section 5-B(2) and (3)(b)(i) and (ii) of the Act and notification issued under G. O. Ms. No. 496, dated July 17, 2001, which read as under: 5-B. Levy of concessional tax in respect of component parts: (2) if any dealer, (i) not having his manufacturing unit within the State purchases any goods by furnishing a declaration under the proviso to sub-section (1); or (ii) having his manufacturing unit within the State and having purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... white cement, hollow bricks are eligible for concessional rate of tax under section 5B if those manufacturers use cement purchased by them as raw material to produce finished goods for sale. The above provision (section 5-B of the Act) is an enabling provision for levy of concessional tax in respect of component parts. Cement is admittedly one of the component parts for manufacturing ready-mix concrete. Further, there is no dispute as to issuance of clarification by the then Commissioner on August 9, 2001, the issuance of G. O. Ms. No. 496, dated July 17, 2001 and also cancellation of earlier circular by the present Commissioner through his proceedings dated January 8, 2005 and February 10, 2005. Admittedly, these circulars were not issued under section 42-A of the Act. There is no dispute between the parties that the circulars dated August 9, 2001, January 8, 2005 and February 10, 2005 are administrative in character and they are not legally binding, since those circulars are internal communications and not the circulars issued as required under section 42-A of the Act. This court in W. P. No. 13060 of 2004 and batch, dated August 24, 2005(1) held that the circulars, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really the manufacturers to whom the petitioners effected sale of cement were ineligible for purchase of the same at concessional rate against declaration in form G issued, G2 certificates issued in favour of the manufacturers ought to have been cancelled. But, no such cancellation was made till date. As long as the cement was included in registration certificates in form G2, the manufacturers are entitled to purchase cement at concessional rate. If any manufacturer purchases cement against declaration in form G and uses the same contrary to G2 registration certificate and G. O. Ms. No. 496, dated July 17, 2001 or section 5-B of the Act, the departmental authorities can proceed against the buyer for taking appropriate penal action. No provision of the Act or rule authorises any action against the selling dealer and there is no obligation on him to verify the nature of use by his customers, since selling dealers have no control over the activities of the purchasing dealers. Further, as per the circular dated January 8, 2005 of the Commissioner (CT), action was directed to be taken against the purchasing dealers and not against the selling dealers. It is their further case that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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