2004 (11) TMI 526 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of provisions under Andhra Pradesh General Sales Tax Act, 1957 regarding taxation on purchase of water.
2. Determination of whether the transaction involving payment for water constitutes a sale under the Act.
3. Evaluation of the role of Visakhapatnam Municipal Corporation in supplying water and its implications on tax liability.

Analysis:
The case involved a tax revision petition challenging an order passed by the Sales Tax Appellate Tribunal concerning the taxation of water purchased by Hindusthan Shipyard Limited from Visakhapatnam Municipal Corporation. The Commercial Tax Officer levied tax on the water purchase, which was upheld by the Deputy Commissioner on appeal. However, the Appellate Tribunal allowed the appeal, leading to the State filing the revision case.

The State contended that the Municipal Corporation, under the Visakhapatnam Municipal Corporation Act, was responsible for supplying water and collecting pipeline service charges, indicating that the transaction was not a sale subject to tax. The State argued that the Corporation's collection of minimum charges did not constitute a sale of water but rather a service of pipeline connection.

The Appellate Tribunal, after reviewing the case, determined that even if water was supplied to the customer, the charges collected were for transport and not for the water itself. The Tribunal concluded that the payment made by Hindusthan Shipyard Limited to the Municipal Corporation was not taxable under the Andhra Pradesh General Sales Tax Act. As there was no evidence to suggest that the Corporation sold water to the respondent, the Court upheld the Tribunal's decision and dismissed the revision petition.

The Court's decision was based on the absence of proof that the Municipal Corporation sold water to the respondent for a price, thereby affirming that the transaction did not fall under the purview of taxable sales. Consequently, the tax revision case was dismissed, with no costs imposed, and the petition was ultimately dismissed.