1999 (4) TMI 582 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to circular issued by Commissioner of Commercial Taxes, Andhra Pradesh under the A.P. General Sales Tax Act, 1957; Interpretation of section 5(3) and section 15(ca) of the Central Sales Tax Act; Validity of circular in light of explanation to section 7(b) of the A.P. General Sales Tax Act.

Analysis:
The judgment dealt with writ petitions filed by rice millers challenging a circular issued by the Commissioner of Commercial Taxes, Andhra Pradesh, or assessment orders made under the A.P. General Sales Tax Act, 1957. The circular in question was related to the tax exemption on the purchase of paddy for rice export. The petitioners contended that the circular did not consider the explanation to section 7(b) of the A.P. General Sales Tax Act, which they argued extended tax exemption to their transactions. The court noted that the circular did not address this crucial provision, leading to the circular's invalidation.

The court highlighted the provision of section 5(3) of the Central Sales Tax Act, which deems the last sale or purchase preceding the export as part of the export transaction. The addition of clause (ca) to section 15 in 1996 further expanded the scope of immunity for export transactions involving rice. The petitioners argued that clause (ca) aimed to grant tax exemption to dealers purchasing paddy for export obligations. However, the government pleader contended that purchases of paddy before the sale occasioning export were not covered by section 5(3) and clause (ca).

The court emphasized the importance of the explanation to section 7(b) of the A.P. General Sales Tax Act, which included the last sale or purchase before export within the exemption. It noted that the circular failed to consider this provision, leading to a flawed interpretation. Consequently, the court set aside the circular, allowing affected assessments to be redone. The judgment clarified that the petitioners could challenge the denial of exemption under section 5(3) and section 15(ca) independently without being bound by the Commissioner's circular.

In the final disposition, the court allowed certain writ petitions where assessments were based on the invalidated circular, setting aside the assessment orders. However, petitions where exemption claims were denied independently were dismissed, allowing petitioners to seek remedies under the Act. The judgment highlighted the need for a comprehensive consideration of relevant provisions and invalidated the circular for its narrow approach, emphasizing the importance of a holistic interpretation in tax matters.