1987 (4) TMI 470 - HC - VAT and Sales Tax

Andhra Pradesh HC upholds exemption for cashew-nut exports, quashes tax assessments, and denies government appeal

The Andhra Pradesh High Court upheld the petitioner's claim of exemption for turnover representing 'export purchase of cashew-nuts,' based on a Division ... - Issues:1. Sales tax assessment for multiple years2. Claim of exemption under section 5(3) of the CST Act3. Conflict of judicial opinion regarding classification of goods4. Consideration of referring the matter to a Full Bench5. Quashing of impugned notices and provisional assessmentSales Tax Assessment for Multiple Years:The petitioner, a dealer and exporter of cashew-nuts, filed writ petitions challenging show cause notices issued for sales tax assessments for different years. The assessments involved turnovers and additional taxes under the Andhra Pradesh General Sales Tax Act. The petitioner claimed exemption for turnover representing 'export purchase of cashew-nuts.'Claim of Exemption under Section 5(3) of the CST Act:The petitioner contended that raw cashew-nuts purchased in Andhra Pradesh were for complying with agreements to export cashew-nut kernel, asserting that both are the same goods. The Commercial Tax Officer initially accepted the exemption claim, but later proposed revisions based on conflicting interpretations of whether raw cashew-nuts and kernel are distinct commercial products.Conflict of Judicial Opinion Regarding Classification of Goods:A conflict arose between the petitioner's position, supported by a Division Bench judgment, and the government's stance citing decisions from other High Courts. The government argued that raw cashew-nut and cashew-nut kernel are separate commercial products, contrary to the petitioner's claim. The court acknowledged the conflicting views but upheld the Division Bench judgment as binding on sales tax authorities in Andhra Pradesh.Consideration of Referring the Matter to a Full Bench:Despite the conflicting opinions, the court declined to refer the matter to a Full Bench for reconsideration. The court emphasized the precedent set by the Division Bench judgment and the acceptance of this interpretation by sales tax authorities in the state.Quashing of Impugned Notices and Provisional Assessment:Ultimately, the court quashed the impugned notices for revision of sales tax assessments and set aside the provisional assessment for a specific year. The court directed the sales tax authorities to make a final assessment based on the Division Bench judgment and required the petitioner to provide supporting agreements/orders for the export of cashew-nut kernel. The writ petitions were allowed without costs, and the request for leave to appeal to the Supreme Court was rejected.This detailed analysis of the judgment from the Andhra Pradesh High Court highlights the key issues, arguments presented by both parties, the court's reasoning, and the final decision reached regarding the sales tax assessments and exemption claim under the CST Act.