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Judgment
M.N. Rao, J.—In respect of the assessment year 1986-1987 the following two turnovers :
Inter-State sale of hybrid jawar seed... Rs. 18,728 at 4% not covered by declaration in form C. 2. Inter-State sales of cotton-seed not... Rs. 72,376 at 8% covered by "C" declarations.
were brought to tax under the Central Sales Tax, 1956 (for short "the CST Act") by the assessing officer rejecting the contention of the assessee that u/s 8(2-A) of the CST Act, it is entitled to exemption. The case of the assessee was that by virtue of G.O.Ms. No. 604, Revenue(S), dated April 9, 1981, when once exemption was granted in respect of the above turnovers under the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the APGST Act") the assessing officer had no power to hold that the dealer was not entitled to exemption u/s 8(2-A) of the CST Act. The assessing officer was of the opinion that G.O.Ms. No. 604, Revenue(S), dated April 9, 1981 is not of a general nature but a conditional one and, therefore, although under the APGST Act the turnovers in question were eligible for exemption, the same advantage the assessee could not get under the CST Act. The first appellate authority affirmed that view. On appeal, the Sales Tax Appellate Tribunal following its earlier view in Pinakini Seeds v. State of Andhra Pradesh (1988) 6 APSTJ 140 dismissed the appeal. Aggrieved by that the present tax revision case was filed by the petitioner.
G.O.Ms. 604, Revenue(S), dated April 9, 1981 is in the following terms :
"In exercise of the powers conferred by sub-section (1) of section 9 of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act VI of 1957), the Governor of Andhra Pradesh hereby exempts from the tax payable under the said Act the sales or purchases of all varieties of certified and truthfully labelled seeds for agricultural purposes."
Government subsequently issued a clarification in Memo No. 13630/CT-II-2/89-19, Rev. (CT-II) Department dated April 26, 1994, the operative portion of which reads :
"The Government have examined the matter in consultation with the Agricultural and Co-operative Department and they hereby clarify that both certified seeds and truthfully labelled seeds are exempt from tax as per the order issued in G.O.Ms. No. 604, Revenue(S) Department dated April 9, 1981 and G.O.Ms. No. 129, Rev. (CT-II) Department dated February 14, 1989 as they are two types of seeds sold for agricultural purposes."
G.O.Ms. No. 129, (C.T. - III) Revenue dated February 14, 1989 reads :
"In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), the Governor of Andhra Pradesh hereby exempts from payment of tax under the said Act on the sales of all varieties of certified and truthfully labelled seeds for agricultural purposes in the course of inter-State trade or commerce with effect from the 15th February, 1989."
The judgment of the Sales Tax Appellate Tribunal in Pinakini Seeds case (1988) 6 APSTJ 140 was reserved by a Division Bench of this Court in Pinakini Seeds Vs. State of Andhra Pradesh, . Interpreting G.O.Ms. No. 604, the Division Bench held :
"As stated above, ''certified and truthfully labelled seeds'' are seeds which have been so classified under the ''Seeds Act''. Therefore, the requirements of the G.O., are only indicative of the nature of the goods which are entitled to exemption and do not specify any circumstance or condition under which the seeds are entitled to exemption. The submission that the expression ''for agricultural purposes'' specifies the circumstance or the condition subject to which the exemption is available cannot be accepted for the simple reason that that expression qualifies the term ''seeds'' but does not specify a condition or a circumstance."
On that view, the Division Bench concluded that G.O.Ms. No. 604 is a general exemption and as such the turnover in dispute qualified for exemption under sub-section (2-A) of section 8 of the CST Act.
It is necessary in this context to notice section 8(2-A) of the CST Act which is in the following terms :
"8. Rates of tax on sales in the course of inter-State trade or commerce. - (1) .......
(2-A) Notwithstanding anything contained in sub-section (1-A) of section 6 or in sub-section (1) or clause (b) of sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sale tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name, shall be nil or, as the case may be, shall be calculated at the lower rate.
Explanation. - For the purposes of this sub-section a sale or purchase of any goods shall not be deemed to be except from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods."
Section 9 of the APGST Act confers power on State Government to notify exemption and reduction of tax or interest. A Division Bench of this Court speaking through one of us (M. N. Rao, J.) in Vinod Solvent Extracts (P) Ltd. Vs. The State of Andhra Pradesh, interpreting section 8(2-A) of the CST Act held :
"...........if the turnover or any part of the turnover relating to sale or purchasing of any goods was exempted under the sales tax law of the State, the same cannot be subjected to tax under the Central Sales Tax Act."
The contention of the learned Government Pleader that the exemption granted under G.O.Ms. No. 604 is a conditional one and, therefore, although the turnovers in question could be exempted from the purview of taxation under the APGST Act, the same must be brought to tax under the CST Act cannot be accepted since the very same contention was rejected by another Division Bench of this Court in Pinakini Seeds Vs. State of Andhra Pradesh, . As the judgment in question rendered by the Tribunal was based on its own earlier judgment in Pinakini case (1988) 6 APSTJ 140 , which was reversed by the Divisional Bench of this Court in Pinakini Seeds Vs. State of Andhra Pradesh, : holding that the exemption under G.O.Ms. No. 604 is a general one, it is not open to the learned Government Pleader to once again reiterate the same argument which was considered and rejected earlier by another Division Bench.
A further contention raised by the learned Government Pleader that since the view taken by the Division Bench in Pinakini Seeds Vs. State of Andhra Pradesh, : was based upon the Supreme Court Decision in Pine Chemicals Ltd. and Others Vs. Assessing Authority and Others, which was subsequently reversed in Commissioner of Sales Tax, J and K and Others Vs. Pine Chemicals Ltd. and Others, , we should not accept the Pinakini Seeds Vs. State of Andhra Pradesh, : as a binding precedent, in our considered opinion does not merit acceptance. The question that fell for consideration in Pine Chemicals Ltd. and Others Vs. Assessing Authority and Others, which was subsequently reviewed and reserved in Commissioner of Sales Tax, J and K and Others Vs. Pine Chemicals Ltd. and Others, related to identification of the exempted goods qua the goods or the dealer. Such a controversy has not arisen for resolution in the present case before us. We are, therefore, not inclined to discuss the other aspects of the aforesaid Pine Chemicals Ltd. and Others Vs. Assessing Authority and Others, , decided by the Supreme Court. What is uncontroversial is that the disputed turnovers were exempted from the tax net under the APGST Act. As the Division Bench of this Court in Pinakini Seeds Vs. State of Andhra Pradesh, , interpreted G.O.Ms. No. 604, as a general exemption, the disputed turnovers must be exempted from the tax net u/s 8(2-A) of the CST Act.
The T.R.C. is, therefore, allowed. The order of the Sales Tax Appellate Tribunal confirming the view of the Appellate Deputy Commissioner and the assessing authority is set aside. The two disputed turnovers shall be excluded from the purview of the tax u/s 8(2-A) of the CST Act. If the tax has already been collected from the petitioner, the same shall either be refunded or adjusted against the future liabilities of the petitioner.
Petition allowed.