1995 (1) TMI 345 - HC - VAT and Sales Tax

High Court rules in favor of petitioner in tax revision case on tanned hides turnover rate

The High Court of Andhra Pradesh ruled in favor of the petitioner in a tax revision case concerning the rate of tax payable on the turnover of tanned ... - Issues:Rate of tax payable on the turnover of tanned hides and skins under the Central Sales Tax Act.Analysis:The judgment of the High Court of Andhra Pradesh addressed the issue of the rate of tax payable on the turnover of tanned hides and skins under the Central Sales Tax Act. The relevant provision in question was section 8 of the Central Sales Tax Act, which prescribed a tax rate of 4 per cent on turnover for inter-State trade transactions. However, the State Government had the authority to reduce or exempt tax under this provision in the public interest. In this case, the State Government issued G.O. Ms. No. 890, setting the tax rate at 2 per cent for the turnover of tanned hides and skins in Andhra Pradesh, subject to payment of tax under the Andhra Pradesh General Sales Tax Act. Additionally, G.O. Ms. No. 537 exempted certain specified goods, including tanned hides and skins, from tax under the State Act from April 1, 1984. This exemption aimed to prevent tax refund obligations under the Central Sales Tax Act.The petitioner, a dealer, had paid tax at 2 per cent for the assessment year 1984-85 under the Central Sales Tax Act. However, the Deputy Commissioner revised the tax rate to 4 per cent, citing non-payment of tax under the Andhra Pradesh General Sales Tax Act as the reason. The petitioner appealed to the Tribunal, which upheld the revisional authority's decision. The petitioner then filed a tax revision case challenging the Tribunal's order. The petitioner argued that G.O. Ms. No. 537 exempted the turnover from tax, making the 4 per cent tax rate illegal. The petitioner also cited a Tribunal order in a similar case supporting the 2 per cent tax rate under the Central Act.The High Court found in favor of the petitioner, noting that G.O. Ms. No. 537 exempted the turnover of tanned hides and skins from tax under the State Act, effective from March 1, 1985. As the relevant assessment year was 1984-85, this exemption applied, and payment of tax under the State Act was not a prerequisite for tax under the Central Sales Tax Act. The Court disagreed with the Tribunal's view that the petitioner could not benefit from both Government Orders simultaneously and highlighted the Tribunal's contradictory stance in another case. Consequently, the Court set aside the Tribunal's order, allowing the tax revision case in favor of the petitioner, without costs.