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TMI Blog2012 (2) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... ly clarifies a position inherent and integral to the policy of the Union as set out in the three letters of the 1st respondent. Thus no illegality in the circular dated May 22, 2010 issued by the Commissioner of Commercial Taxes, Andhra Pradesh, nor in proceedings initiated by the concerned assessment authorities for levy of tax from the petitioners, warranting interference under article 226 of the Constitution. W.P. dismissed. - Writ Petition Nos. 23547, 27312, 27326,27345 of 2011 - - - Dated:- 28-2-2012 - GODA RAGHURAM AND RAVI SHANKAR N., JJ. For the Appellant : B. Chandra Shekhar For the Respondents : The Government Pleader for Revenue, B. Venkatadri, Government Pleader for Commercial Taxes, Smt. K. Mani Deepika and Rama Rao Gantannagari ORDER:- The order of the court was made by GODA RAGHURAM J. These writ petitions present an identical challenge and are therefore heard and disposed of by this common order. Heard Sri B. Chandrasekhar-learned counsel for the petitioners; the learned Standing Counsel for Central Government for respondent No. 1; and Sri B. Venkatadri-the learned Special Government Pleader for Commercial Taxes for other respondents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed November 21, 2007, October 21, 2008 and November 13, 2009, for the KMS 2007-08, 2008-09 and 2009-10, respectively, addressed several State Governments including Andhra Pradesh informing that it has decided to give additional incentive bonus of ₹ 50 per quintal (over and above the bonus of ₹ 50 per quintal already announced) for procurement of paddy, subject to the condition that the State fully exempts this bonus amount from all State taxes and levies. According to the petitioners, pursuant to the first respondent's letters referred to above, the State was notifying the bonus and petitioners were purchasing paddy from the farmers duly paying them the bonus amounts. The petitioners submitted their returns for the turnovers for the three years in question. In view of the letters of the 1st respondent referred to above they excluded the incentive bonus of ₹ 50 per quintal from computation of turnovers, on the assumption that no tax on this amount was leviable, being exempt. The petitioners admit that after converting the paddy into rice by milling operations, the same is supplied to the FCI to the extent of 75 per cent of the converted rice and the remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ans: The rice millers are eligible for VAT exemption on the bonus amount, reimbursed by FCI on the paddy, purchased by the rice millers in proportionate to the levy rice, supplied by them. (2) Whether the rice millers are eligible to calculate bonus amount proportionate to the rice sold within the State in open market and claim VAT exemption on relevant turnover? Ans: The rice millers are NOT eligible to deduct any amount in respect of the rice, sold in the open market within the State and are not entitled to claim VAT exemption on such turnover. (3) Whether the rice millers, are eligible to calculate bonus amount proportionate to the inter-State sales of rice turnover and claim CST exemption on the relevant turnover? Ans: The rice millers are NOT to deduct any amount from the turnover of the inter-State sales of rice and are not entitled to claim CST exemption on the relevant turnover. Therefore all the Deputy Commissioners (CT) are directed to verify this aspect and take appropriate action to assess the tax correctly by disallowing any irregular deductions from the taxable turnover under rule 16(c) of the APVAT Rules. SD/-G. LAKSHMI PRASAD Additional Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I/ State Agencies and that in case of levy rice the State should ensure that the entire amount of bonus has been paid to the farmers; similarly, the first respondent's letter dated November 1, 2009 enjoins that the State should ensure that the bonus amount is paid to farmers whose paddy is purchased by the FCI/State Agencies during KMS 2009-10 and that suitable instructions should be issued by the State under intimation to the FCI. The counter adopts the clear position that when rice is sold in the open market by rice millers there is no occasion for the FCI or State Agencies to pay incentive bonus to the rice millers and therefore the rice millers would not be entitled for exemption on any part of the turnovers pertaining to sales otherwise than to the FCI/State Agencies, since no incentive bonus is paid either by the FCI or State Agencies. The issues: In the context of the challenge and the response, the issue that falls for consideration is whether the impugned circular violates the letters issued by the first respondent for the three KMS's in question; and if so, whether it is unsustainable. Analyses: Rule 16(2)(c) of the APVAT Rules, 2005, to the extent rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice, to farmers and reimbursement to the millers by the FCI/State Agencies (of the incentive component) is only for rice supplied towards levy. It is only the incentive bonus reimbursed by the Union through the FCI/State Agencies, which is enjoined by the Union to be exempt from State taxes and levies. The conclusion: On the aforesaid analyses, as rightly pleaded in the Commissioner's counter and clarified in the impugned circular, rice millers are not entitled to any exemption from liability to tax under the provisions of the APVAT Act, 2005 in respect of any part of turnovers of sales made otherwise than to FCI/State Agencies and no exemption on any part of the turnover of sales made in the open markets, otherwise than towards levy is comprehended in the policy of the Union of India exemplified by the letters dated November 21, 2007, October 21, 2008 and November 13, 2009. Even otherwise, value added tax is levied under the provisions of the APVAT Act, 2005, a legislation referable to the exclusive State legislative field enumerated in entry 54 of List II of the Seventh Schedule to the Constitution (the State List) which is subject only to the provisions of entry 92 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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