State of Andhra Pradesh vs Stypack (P) Limited

Suddala Chalapathi Rao, J

The above Tax Revision Case is filed aggrieved by the order dated 27.10.2000 passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (STAT) in T.A.No.793/96, setting aside the order passed by the Appellate Deputy Commissioner (CT), Hyderabad (Rural) Division in Appeal No.R/174/94-95 dated 04.03.1996.

The main challenge is made in the above revision is, “Whether the provisions of G.O.Ms.No.574 Revenue, dated 09.06.1987 passed under Section 9 of the Andhra Pradesh General Sales Tax Act 1957 (for short, Act) granted exemption to all dealers in respect of inter-state sales under Section 8(2A) of CST Act, 1956.”

The brief facts of the case are that the assessee are dealers on the rolls of Commercial Tax Officer, Sarrornagar and engaged in business of manufacturing of Polysterine Plastic Granuals and was assessed for the assessment year 1991-92 and was denied exemption for the said plastic granules under the said G.O.Ms.No.574 Revenue, dated 09.06.1987. The said orders were confirmed by Appellant Deputy Commissioner (CT), Hyderabad in Appeal No.R/174/94-95, dated 04.03.1996. On appeal the STAT has passed the impugned order under appeal holding out that the respondent/assessee is entitled to set off inter-state sales tax paid under CST Act in pursuance of GOMs.No.574 Revenue, dated 09.06.1987.

The main contention of the learned Assistant Government Pleader (Taxes) is that G.O.Ms.No.574 dated 09.06.1987 is not general in nature and that it is conditional. If the conditions mentioned in trade are fulfilled, only then the assessee can avail the benefit out of the same. It is further contended that the STAT under erroneous view and facts has set-aside the well considered judgments of the Appellate Deputy Commissioner and contended that the assessee is not entitled to be set-off for the amount paid under CST Act in respect of inter-state sales.

Heard Mr. T.Chaitanya Kiran, learned Assistant Government Pleader for petitioner/revenue.

On a perusal of the orders passed by the STAT, the STAT has allowed the appeal by placing reliance on Hindustan Paper Corporation Limited v. State of Kerala and others (1993) 89 STC 473, wherein it was held that exemptions granted under a notification under State law exempting turnover of sales of Newsprint by plant in the State for two years from the date of starting of production, the exemption is available for the inter-state sales also, as the said notification was general in nature. A similar view was earlier also taken in M/s. Vinodsolvent Extracts Private Limited v. The State of A.P., 1989 (8) APSTJ 148 when the State Government has issued G.O.Ms.No.930 dated 28.07.1977 under Section 9(1) of the Act 1957 exempting ‘from the tax payable under the State Act (APGST Act) w.e.f. 01.08.1977, wherein the question of the inter-state sale of Tapicca Powder affected by the petitioner was subjected to tax under the APGST Act, the Division Bench of this Court has held that the exemption in respect of the said commodity covered by the G.O.Ms.No.930 dated 28.07.1997 was a general exemption and consequentially the tax payable under inter-state sale is also required to be exempted.

In the case of Anandi Roller Mills Limited v. Commissioner of Commercial Taxes MANU/AP/1360/2001 also, the Hon’ble Apex Court examining the G.O., issued under Section 9(1) of the Act, held that Sub-section (2) of Section 9 specifies that the exemption from tax or interest or reduction in the rate of tax notified under Sub-section (1), under Clause (a) may extend to the whole of the State or to any specified area or areas therein, and under Clause (b) that such exemption or reduction may subject to such restrictions and conditions as may be specified in the notification be also applicable to inter-state sales.

As seen from Sub-section (1) of Section 9, it provides for exemption in respect of tax payable by any specified class of persons; whereas Sub-section (2) provides specific restrictions and conditions for grant of exemption or reduction in the rates of tax. The Hon’ble Apex Court held that the Government Orders issued in G.O.Ms.No.377 to benefit specified class of persons viz., Roller Floor Mills, as provided under Section 9(1) (ii) of the Act and there is no reference to any specified restrictions or conditions upon compliance of which, the Roller Floor Mills are entitled to the exemption. Further, though the exemption is available only for five years. Such exemption for a limited period cannot be construed as a restricted or conditional exemption. When once the exemption granted under Section 9(1) of the APGST Act is of general in nature, then it has to be construed that such a benefit would also be available to the inter-state transactions.

The appropriate provision in CST Act is Section 8(2A), which is reproduced as under for the benefit of appreciation and proper understanding.

"Section 8 : Rate of tax on sales in the course of inter-State trade or commerce.—

(1).............

(2)...............................

(a)...............................

(b)...............................

(2-A) Notwithstanding anything contained in Sub-section (1A) of Section 6 or 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 sales 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 exempt 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."

Perusal of Sub-section (2-A) of Section 8 of CST Act, holds that the said section begins with non-obstante clause, which shows that the said provision overrides any other provision contrary to it. A perusal of explanation under the said sub-section shows that it was explained as what is meant under by ‘exemption from tax generally’ under the sales tax law of the appropriate State. From the above consideration of explanation, it is clear that exemption shall not be considered as a general exemption, if the exemption is granted only in specified circumstances or under specified conditions.

On a plain reading of Section 9 together with sub-section (2-A) of Section 8 of CST Act and explanation, the specified restrictions or conditions are contemplated under the clause (b) of Section 9(2) of the Act. In the instant view of the matter, G.O.Ms.No.574 Revenue dated 09.06.1987, there is no specific conditions envisaged under the above provisions of the Act. As such, the said G.O., is general exemption and no specific restrictions or conditions are prescribed to claim such exemption.

Hence the said G.O.Ms.No.574 dated 09.06.1987 is general in nature granting exemption to all the dealers on whom tax is levied for sale of plastic and plastic articles in the State of Andhra Pradesh. The petitioner/revenue has not showed any condition stipulated in the said G.O.Ms.No.574 Revenue dated 09.06.1987 to hold that said G.O. is conditional and not general exemption. Thus, we hold that the order of STAT is justified in holding that G.O.Ms.No.574 Revenue dated 09.06.1987 is general exemption.

Therefore, in view of the above, the Tax Revision Case fails and is hereby dismissed by confirming the order passed by the Sales Tax Appellate Tribunal, Hyderabad in T.A.No.793/96, dated 27.10.2000. There shall be no order as to costs. Miscellaneous applications, pending if any, shall stand closed.