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TMI Blog2024 (5) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial Tax Officer (for short, "the CTO") exempted the disputed turnover of Rs. 52,860/- of inter-State Sales of HDPE Fabrics from the sales tax under Central Sales Tax Act (CST). The CTO granted such exemption observing that the commodity was generally exempted under the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the APGST Act"). The CTO passed the order in Assessment No. 527/1997-98 (CST) dated 05.10.1998. 4. The Deputy Commissioner (CT) No. 1 Division, Vijayawada, In R.P. No. 2/1999-2000, vide order dated 11.08.1999 revised the assessment and subjected the disputed turnovers to tax at 10%, withdrawing the exemption granted by CTO taking the view that the HDPE Woven Fabrics should be treated as articles of plastics falling under Item No. 187 of the I Schedule, and do not fall under item No. 5 of the IV Schedule. They are classified under 3923.90 of Central Excise Tariff Act, 1985. The HDPE Woven Fabrics cannot be treated as generally exempted as they are wholly made up of plastics and cannot be treated as cloth, hence, levy or exemption of excise duty would not matter. 5. The Appellate Tribunal allowed T.A. No. 1456 of 1999 of the dealer vide order dated 23.07.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort, "the CTO") exempted the disputed turnover of Rs. 75,960/- of inter-State Sales of HDPE Fabrics from the sales tax under Central Sales Tax Act (CST). The CTO granted such exemption observing that the commodity was generally exempted under the APGST Act. The CTO passed the order in Assessment No. 527/1996- 97 (CST) dated 06.01.1998. The Deputy Commissioner (CT) No. 1 Division, Vijayawada, In R.P. No. 1/1999-2000, vide order dated 11.08.1999 revised the assessment and subjected the disputed turnovers to tax at 10%, withdrawing the exemption granted by CTO. The Appellate Tribunal allowed T.A. No. 1455 of 1999 of the dealer vide order dated 25.07.2002. The Deputy Commissioner (CT) and the Appellate Tribunal passed their respective orders, same as in impugned in T.R.C. No. 210 of 2002. 11. Challenging the aforesaid orders, the State has preferred the revision petitions, under Section 22(1) of APGST Act, 1957. 12. The revision petitions were admitted. QUESTIONS OF LAW: 13. The following questions of law are framed in the memo of revision on which learned Government Pleader advanced the submissions:- "i) Whether the disputed turnovers relating to the sale of HDPE woven sacks is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NDENT: 18. Ms. Jyoti Ratna Anumolu, submitted that the 'H.D.P.E. Woven Fabrics' is a man-made fabric. The appellate Tribunal while recording such a finding also had the advantage of seeing the sample of the fabric, before it. It found that the commodity was in the form of a cloth, woven from monofilament of plastic and came to the conclusion that the commodity was covered by 'man-made fabric' in item No. 5 of IV Schedule. She submitted that, such is a finding of fact, not open to interference in the exercise of revision jurisdiction; particularly when there is no challenge to such finding nor any question of law on such aspect has been framed by the revisionists. 19. Ms. Jyothi Ratna Anumolu further submitted that the 'man-made fabric' is included in the relevant head and sub heads of the I schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and 'nil rate' is also a rate of additional duty. Thus, both the conditions under the Explanation to item No. 5 in IV Schedule are satisfied. The order of the Appellate Tribunal granting exemption is perfectly legal and justified. She placed reliance in Usha Martin Industries (supra), Collector of Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including. 1. Monofilament rods, sticks and profile shapes of plastics 2. Tubes, pipes and hoses, fittings therefor (for eg., joints, elbows, Flanges) of plastics. 3. Floor coverings of plastics, whether or not self-adhesive in rolls or in the form of titles; wall or ceiling covering of plastics; 4. Plates, blocks, (sheets excluding laminated sheets), film foil, tape, strip and other flat shapes." 25. Section 8 of APGST Act, 1957 reads as under: "8. Exemption from tax in respect of certain goods Subject to such restrictions and conditions as may be prescribed including conditions as to licences and licence fees, a dealer who deals in the goods specified in the 1 (Fourth Schedule) shall be 2(exempt from tax under this Act in respect of such goods." 26. Item No. 5 of the IV Schedule of APGST Act, 1957 with explanation provides as under: "5. Cotton fabrics, man-made fabrics and woolen fabrics" 6 to 12............................. Explanation: "The goods mentioned in entries 5, 6 and 7 of this Schedule shall be goods included in the relevant heads and sub-heads of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "specified in the First Schedule to this Act by Act 7 of 1986, Section 3 (w.e.f. 28-2-1986). C. Substituted by The Finance Act (32 of 1994), Section 63(a)." 30. Section 3 of the Act No. 58 of 1957 provides for Levy and collection of additional duties. As per Section 3(1), there shall be levied and collected in respect of the goods described in column (3) of the First Schedule produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto, duties of excise at the rate or rates specified in column (4) of the said Schedule. Sub Section (2) provides that the duties of excise referred to in sub-section (1) in respect of the goods specified therein shall be in addition to the duties of excise chargeable on such goods under the Central Excises and Salt Act, 1944 (1 of 1944), or any other law for the time being in force, and as per sub section (3), the provisions of the Central Excises and Salt Act, 1944 (1 of 1944) and the rules made thereunder, including those relating to refunds, exemptions from duty, offences and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption under the notification, the goods must be made from raw material on which excise duty has, as a matter of fact, been paid, and has been paid at the "appropriate" or correct rate. Unless the manufacturer has paid, the correct amount of excise duty, he is not entitled to the benefit of the exemption notification. 9. Where the raw material is not liable to excise duty or such duty is nil, no excise duty is, as a matter of fact, paid upon it. To goods made out of such material the notification will not apply. 10. The notification is intended to give relief against the cascading of excise duty - on the raw material and again on the goods made therefrom. There is no cascading effect when no excise duty is payable upon the raw material and the hardship that the notification seeks to alleviate does not arise." 35. In Vazir Sultan Tabaco (supra), Section 37(1) of the Finance Act, 1978, levied a special duty of excise equal to 5% of the amount of excise duty chargeable on goods. The levy came into effect on and from 01.03.1978 and was to remain in force till 31.03.1979. This levy was in addition to the duties of excise chargeable of such goods under the law in force. The questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. It does not, in our opinion, make removal the taxable event. The taxable event is the manufacture. But the liability to pay the duty is postponed till the time of removal under Rule 9-A of the said Rules. In this connection, reference may be made to the decision of the Karnataka High Court in Karnataka Cement Pipe Factory Industrial Estate v. Superintendent of Central Excise [(1986) 23 ELT 313 (Kant)] where it was decided that the words 'as being subject to a duty of excise' appearing in Section 2(d) of the Act are only descriptive of the goods and not to the actual levy. 'Excisable goods', it was held, do not become non-excisable goods merely by the reason of the exemption given under a notification. This view was also taken by the Madras High Court in Tamil Nadu (Madras State) Handloom Weavers Cooperative Society Ltd. v. Assistant Collector of Central Excise [(1978) 2 ELT (J) 57 (Mad)] . On the basis of Rule 9-A of the said rules, the Central Excise authorities were within the competence to apply the rate prevailing on the date of removal. We are of the opinion that even though the taxable event is the manufacture or the production of an excisable article, the duty c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res; (c) baggage; (d) currency and negotiable instruments; and (e) any other kind of moveable property;" In addition thereto, Section 2(14) defines "dutiable goods" as follows: "2. (14) 'dutiable goods' means any goods which are chargeable to duty and on which duty has not been paid;" 81. Under the Central Excise Act, 1944 in the definition of the words "excisable goods" under Section 2(d), the very specification or inclusion of goods in the First and Second Schedules of the Central Excise Tariff Act would make them excisable goods subject to duty. Under the Customs Act, the provisions seem to be somewhat different. While by virtue of Section 2(22) all kinds of moveable property would be "goods" but it is only those goods which would be regarded as "dutiable goods" under Section 2(14) which are chargeable to duty and on which duty has not been paid. The expression "chargeable to duty on which duty has not been paid" indicates that goods on which duty has been paid or on which no duty is leviable, and therefore no duty is payable, will not be regarded as "dutiable goods". It is only if payment of duty is outstanding or leviable that goods will be regarded as dutiable goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied. It must be shown that such good i) is included in the I Schedule to the Act No. 58 1957, and ii) once it so shown, it has to be further established that on such good additional duties of excise are levied. If the additional duties of excise are not levied then that good would not be covered in Entry 5. Meaning thereby that such good, which though included in the I Schedule of the Act 58 of 1957, but if the duty has not been levied under the Act 58 of 1957, such good, would be outside the purview of entry 5. On such good, the exemption from tax would not be available under Section 8 of the APGST Act. 42. In our view, nil rate of duty means that no additional duties are levied. 43. If the argument of the learned counsel for respondent, that nil rate of duty is also a rate of duty and therefore, even if the 'nil rate' of duty is levied under the Act No. 58 of 1957 still such good would not be liable for tax, is accepted, then that would render the 2nd part of the Explanation as redundant. There was no need for the Legislature to legislate the 2nd part in the Explanation, i.e "but does not include goods where no additional duties of excise are levied under that Schedule". There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax, Lucknow and another (2023) 4 SCC 231, the Hon'ble Apex Court held that the exemption/deduction provision should be considered and given a literal meaning. The settled position of law, is that in case of an exemption notification/exemption provision, the same is required to be construed literally and the person claiming the exemption must satisfy all the conditions of exemption provision. Paras 9 and 12 of AMD Industries Limited (supra) are as follows: "9. In the case of "expansion or modernisation", the exemption shall be available, if there is an additional production as a result of such modernisation or expansion. In the present case, we are concerned with the case of "diversification". Therefore, the goods manufactured after diversification must be different goods from the goods manufactured before such diversification. As per the settled position of law, in case of an exemption notification/exemption provision, the same is required to be construed literally and the person claiming the exemption must satisfy all the conditions of exemption provision. 12. The words used in Section 4-A are very clear and unambiguous. As per the settled proposition of law and as observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein." This was also reaffirmed in a number of judgments, such as CIT v. Ace Multi Axes Systems Ltd. [CIT v. Ace Multi Axes Systems Ltd., (2018) 2 SCC 158] 57. The Constitution Bench, in Commr. of Customs v. Dilip Kumar & Co. [Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1] endorsed as following : (SCC pp. 19 & 23-24, paras 24 & 34) "24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution ["265. Taxes not to be imposed save by authority of law.-No tax shall be levied or collected except by authority of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the APGST Act. 49. The submission of the learned counsel for the respondent that nil rate is also a rate of duty, may be correct for the purposes of the Additional Duties of Excise Act, 1958, as once such good is included in the I Schedule thereto, it may be subject to levy of additional duty i.e., the duty may be levied at same time, at an affective rate, but, when it comes to the APGST Act, 1957, for the purpose of Section 8 read with entry 5 in the IV Schedule and the Explanation, mere inclusion of the good in the I Schedule to Act No. 58 of 1957 is not sufficient. If it is so included, only the first part of the Explanation would be satisfied. The 2nd part of the Explanation would be satisfied only when the additional duty is levied on such good under Act No. 58 of 1957. 50. At this stage, we observe that the Appellate Tribunal has recorded specifically that HDPE Woven Fabric though the material used is plastic, it is to be considered as man-made fabric under item No. 5 of the IV Schedule. Before the Appellate Tribunal, the commodity itself was produced as is evident from the judgment of the Appellate Tribunal which found that the commodity was HDPE Woven Fabric, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that the appellate authority or the Land Board, or the Taluk Land Board, as the case may be, has either decided erroneously, or failed to decide, any question of law." 55. In Baby (supra), finding was recorded on the question of existence of tenancy. That was a question of fact. The Hon'ble Apex Court held that mere non consideration of relevant documents including the relevance of certain judicial proceedings would not strictly fall within Section 103 of that Act. The same would not be covered by expression "has either decided erroneously or failed to decide any question of law". The Hon'ble Apex Court however further held that, the High Court had still the power under Article 227 of the Constitution of India to quash the orders passed by the Tribunal if the findings of fact had been arrived at by non-consideration of the relevant and material documents, the consideration of which could have led to an opposite conclusion. The power of the High court under the Constitution of India was held always to be in addition to the powers of revision under Section 103 of the Act. Paras 5 and 6 of Baby (supra), read as under: "5. It is very clear that the jurisdiction can be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions would be an erroneous order. A revision under Section 22(1) would lie if the question of law has been decided erroneously. It may not be on erroneous question of fact. 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. CONCLUSION: 60. On the Questions of Law framed above, we hold as under: Question No.(i): The disputed turnover relating to the sale of HDPE Woven fabric was not entitled for exemption from tax under Section 8 of the Andhra Pradesh General Sales Tax Act, 1957. Question of Law No.(ii): Sales Tax Appellate Tribunal is not justified in allowing the cases of the respondents by setting aside the orders of the Deputy Commissioner (ST) No.2/99-2000, dated 11.08.1999, No. 46/98-99 dated 22.03.1999 & No. 1/99-2000, dated 11.08.1999. RESULT: 61. In the result, the Tax Revision Case Nos. 210, 211 and 212 of 2002 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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