2024 (5) TMI 720 - HC - VAT and Sales Tax

Classification of goods - HDPE woven sacks - articles of plastics falling under Item No. 187 of the I Schedule or fall under item No. 5 of the IV Schedule? - exemption from sales tax as covered by item 5 of IV schedule to APGST Act. Whether the disputed turnovers relating to the sale of HDPE woven sacks is entitled for exemption from sales tax as covered by item 5 of IV schedule to APGST Act? - HELD THAT - The HDPE Woven Fabrics even if included in the I Schedule under the head and sub head entry No. 59.03 with nil rate may be subject to or liable for the additional duties to be levied under that Act No. 58 of 1957 but unless and until the additional duty is levied i.e actual levy with some percentage and not nil rate it would be excluded from the category of goods mentioned in entry 5 of IV Schedule of the APGST Act. It would be liable to tax under APGST Act and would not be exempted from tax under Section 8 of the APGST Act. Woven Fabric is made with plastic granules. It may be man-made fabric in entry 5 of the IV Schedule but it does not qualify for exemption from tax as though included in the I Schedule of the Act No. 58 of 1957 but there is no additional duties levied on such good. The HDPE Woven Fabric being made of plastic would be an article of plastic under entry 187 in I Schedule. In Entry 187 it is not excluded. What has been excluded is HDPE Woven Sacks which is a different item - HDPE Woven Fabric was liable for taxation under the APGST Act 1957. The Appellate Tribunal has erroneously decided the question of law regarding the taxability or exemption from tax with respect to the HDPE Woven Fabrics. Whether the STAT justified in allowing the appeals by setting aside the Revisional orders of the DC (CT)? - HELD THAT - In Kerala Ayurveda Vydyasala Limited 1999 (1) TMI 550 - SUPREME COURT the Hon ble Apex Court held that the jurisdiction can be exercised by the High Court under Section 103 of the Kerala Land Reforms Act only if the Tribunal had decided any question of law erroneously or has failed to decide the question of law. In that case no question of law was formulated by the High Court. There was also no finding recorded that the Appellate Tribunal had either decided a question of law erroneously or failed to decide the question of law. Therefore the Hon ble Apex Court held that the High Court acted without jurisdiction in interfering with the orders of the appellate Tribunal. There cannot be any dispute on the proposition of law that the power of revision is open to be exercised by this court only when the Appellate Tribunal has either erroneously decided a Question of Law or has failed to decide any Question of Law. Present is a case of erroneously deciding a question of law. It cannot be said that the question of law has been decided according to law. The decision of the Appellate Tribunal on a question of law is erroneous. Such an order would be open to interference. It cannot be said that the order is not open for interference in the exercise of revisional jurisdiction under Section 22 of the APGST Act 1957. The Tax Revision are allowed.

Summary

Issues Involved:
1. Exemption from sales tax for HDPE Woven Fabrics.
2. Justification of Sales Tax Appellate Tribunal's decision in setting aside the Revisional orders of the Deputy Commissioner (CT).

Summary of Judgment:

Issue 1: Exemption from Sales Tax for HDPE Woven Fabrics

The main question was whether the disputed turnovers relating to the sale of HDPE Woven Fabrics were entitled to exemption from sales tax as covered by item 5 of the IV Schedule to APGST Act. The Commercial Tax Officer (CTO) initially exempted the turnovers, considering HDPE Woven Fabrics as generally exempted under the APGST Act. However, the Deputy Commissioner revised this assessment and subjected the turnovers to tax, arguing that HDPE Woven Fabrics should be treated as articles of plastic under Item No. 187 of the I Schedule, and not as man-made fabrics under Item No. 5 of the IV Schedule.

The Appellate Tribunal held that HDPE Woven Fabrics were man-made fabrics and thus exempt under Item No. 5 of the IV Schedule, even if the additional duty rate was nil. However, the High Court found that the explanation to Item No. 5 of the IV Schedule excludes goods where no additional duties of excise are levied, and a nil rate of duty means no additional duties are levied. Therefore, HDPE Woven Fabrics do not qualify for exemption from tax under Section 8 of the APGST Act as they do not meet both conditions of the explanation.

Issue 2: Justification of Sales Tax Appellate Tribunal's Decision

The High Court reviewed whether the Sales Tax Appellate Tribunal (STAT) was justified in allowing the dealer's appeals by setting aside the Revisional orders of the Deputy Commissioner (CT). The court found that the STAT had erroneously interpreted the law regarding the taxability of HDPE Woven Fabrics. The High Court concluded that the STAT had decided the question of law erroneously, thus warranting interference under Section 22(1) of the APGST Act.

Result:

The Tax Revision Cases Nos. 210, 211, and 212 of 2002 were allowed. The orders dated 25.07.2002, passed by the Andhra Pradesh State Sales Tax Appellate Tribunal in T.A.Nos. 1456 of 1999, 634 of 1999, and 1455 of 1999 were set aside. The orders of the Deputy Commissioner (ST) imposing tax liability on the respondents were restored. No order as to costs. Consequently, the Miscellaneous Petitions, if any, pending shall also stand closed.