2004 (11) TMI 559 - HC - VAT and Sales Tax

Court overturns flawed tribunal decision, invalidates circulars, and orders fresh assessments

Seven Hills Par Boiled Rice Mill Versus Commissioner of Commercial Taxes, Hyderabad and others

Seven Hills Par Boiled Rice Mill Versus Commissioner of Commercial Taxes, Hyderabad and others - [2008] 11 VST 184 (AP) Issues Involved:1. Validity of the Sales Tax Appellate Tribunal's decision in Satyanarayana Raw and Boiled Rice Mill v. State of A.P.2. Legitimacy of the consequential circulars issued by the Commissioner of Commercial Taxes.3. Appropriateness of the revision orders passed by the Deputy Commissioner (CT) revising the assessment orders under the Central Sales Tax Act, 1956.4. Correct interpretation and application of section 8A(1)(a) read with section 15(c) of the Central Sales Tax Act, 1956.Detailed Analysis:1. Validity of the Sales Tax Appellate Tribunal's decision in Satyanarayana Raw and Boiled Rice Mill v. State of A.P.:The writ petitions were filed by rice millers aggrieved by the Tribunal's decision in Satyanarayana Raw and Boiled Rice Mill v. State of A.P. The Tribunal did not refer to an earlier Three-Member Bench decision in Badarinadh Rice Mill v. State of A.P., which had a contrary view. The court noted that the Tribunal's decision was based on an incorrect interpretation of the provisions, ignoring binding decisions of the High Court.2. Legitimacy of the consequential circulars issued by the Commissioner of Commercial Taxes:The Commissioner of Commercial Taxes issued circulars directing officers to follow the Tribunal's decision. The court found that the circulars were based on an incorrect interpretation of the law and were contrary to established judicial precedents. Therefore, the circulars were set aside.3. Appropriateness of the revision orders passed by the Deputy Commissioner (CT) revising the assessment orders under the Central Sales Tax Act, 1956:The Deputy Commissioner (CT) revised the assessment orders, reducing the rebate granted to the dealers. The court observed that the revisional authority's orders lacked proper reasoning and were merely based on the Tribunal's flawed decision. The court set aside these revision orders as they were prejudicial to the interest of the dealers and not in line with the correct legal interpretation.4. Correct interpretation and application of section 8A(1)(a) read with section 15(c) of the Central Sales Tax Act, 1956:The court examined the provisions of section 8A(1)(a) and section 15(c) of the Act, along with the definition of 'turnover' under section 2(j). It clarified that the turnover includes the aggregate sale prices received in inter-State trade, and the tax component should be determined using the formula provided in section 8A. The court emphasized that the tax levied on paddy should be allowed as a rebate from the Central sales tax on rice procured from such paddy. The court found that the assessing officers had correctly applied the formula and granted the rebate, but the revisional authorities had incorrectly revised these assessments based on the Tribunal's erroneous decision.The court referred to previous decisions, including S. Laxminarayana Gupta's case and Sri Laxmiganapathi Enterprises' case, which supported the correct interpretation of the provisions. The court concluded that the Tribunal's decision in Satyanarayana Raw and Boiled Rice Mill's case was incorrect and did not reflect the Legislature's intention. Consequently, the court set aside the circular of the Commissioner dated February 24, 2003, and the revisional orders.Conclusion:The writ petitions were allowed, and the court declared that the interpretation of section 8A(1)(a) read with section 15(c) by the Tribunal in Satyanarayana Raw and Boiled Rice Mill's case was incorrect. The circulars issued by the Commissioner and the revision orders by the Deputy Commissioner were set aside. The court directed fresh assessments to be made without reference to the flawed circular of the Commissioner. No costs were awarded.