Concessional tax eligibility for cement ended after the later Government Order, while penalty failed for notice under the wrong provision.

Cement lost concessional purchase eligibility once the Government Order dated 17.07.2001 excluded it from the eligible goods list, and the earlier registration certificate could not override that change. The proviso to the order applied only to specified finished goods, and ready-mix concrete was not treated as a qualifying finished product; the assessment to normal tax was therefore upheld. Penalty proceedings, however, were invalid because the notice and action were taken under Section 7-A(2) even though any liability arose, if at all, under Section 5-B(2). As the assessee was not put on notice under the correct provision, the penalty orders were set aside.

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Issues: (i) Whether cement could be purchased at the concessional rate under Section 5-B of the Andhra Pradesh General Sales Tax Act, 1957 after the Government Order dated 17.07.2001 excluded cement from the eligible goods list; (ii) Whether the penalty proceedings initiated under Section 7-A(2) were valid when the case disclosed liability, if any, only under Section 5-B(2).

Issue (i): Whether cement could be purchased at the concessional rate under Section 5-B of the Andhra Pradesh General Sales Tax Act, 1957 after the Government Order dated 17.07.2001 excluded cement from the eligible goods list.

Analysis: Once the Government Order dated 17.07.2001 came into force, cement stood excluded from the category of goods eligible for concessional purchase. The earlier G2 registration certificate could not override the later statutory position. The proviso to the Government Order extended the concession only to manufacturers of finished goods of the kind specified in the proviso, and the activity involved did not answer that description. The Court also relied on the clarification in Circular No. 237 of 1996 that ready-mix concrete is not a finished product of the kind contemplated by the proviso.

Conclusion: The assessee was not entitled to purchase cement at the concessional rate after 17.07.2001, and the assessment on normal tax was upheld.

Issue (ii): Whether the penalty proceedings initiated under Section 7-A(2) were valid when the case disclosed liability, if any, only under Section 5-B(2).

Analysis: Section 7-A(2) applies to the issue or production of a false bill, voucher, declaration, certificate or similar document, whereas Section 5-B(2) is a separate penal provision tied to the misuse of the declaration mechanism under Section 5-B. The show-cause and penalty action were taken specifically under Section 7-A(2), and there was no corrigendum or other correction converting the notice into one under Section 5-B(2). As the assessee was never put to notice of penalty under the correct provision, the penalty proceedings suffered from a substantive defect.

Conclusion: The penalty proceedings and the consequential penalty orders were invalid and were set aside.

Final Conclusion: The challenge to the assessment failed, but the challenge to the penalty succeeded, resulting in affirmation of the tax demand and setting aside of the penalty orders.

Ratio Decidendi: A later Government Order withdrawing concessional eligibility controls the entitlement to concessional purchase, and a penalty imposed under a provision not invoked in the notice cannot be sustained when the assessee was not afforded notice under the provision actually applicable.

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