SEZ exemption harmonisation under VAT law preserved Entry 59-A, defeating a narrower Section 7-A restriction.

Section 7-A of the Andhra Pradesh Value Added Tax Act, 2005 did not override Entry 59-A of Schedule I where both provisions could operate concurrently. Entry 59-A granted exemption for goods sold to units, operators, developers, co-developers and contractors engaged in the processing area of a Special Economic Zone, while Section 7-A imposed a narrower conditional exemption. The court applied the principle that a non-obstante clause prevails only in the presence of a real and irreconcilable conflict, and found no such inconsistency. The continued existence of Entry 59-A also supported harmonisation rather than implied repeal. The assessee was therefore entitled to the exemption for sales made in execution of the works contract, and the assessment, appellate and penalty orders were liable to be set aside.

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Issues: Whether Section 7-A of the Andhra Pradesh Value Added Tax Act, 2005 overrides Entry 59-A of Schedule I to the Andhra Pradesh Value Added Tax Act, 2005 so as to deny the exemption claimed for sales made in the course of execution of the works contract in a Special Economic Zone.

Analysis: Entry 59-A grants exemption for goods sold to units, operators, developers, co-developers and contractors engaged in the processing area of the Special Economic Zone, while Section 7-A provides a more restrictive exemption subject to specified conditions. A non-obstante clause operates only where there is a real conflict between two provisions. The two provisions were capable of operating simultaneously, and no irreconcilable inconsistency existed. The continued presence of Entry 59-A, until its later deletion, also supported harmonisation rather than implied repeal or exclusion.

Conclusion: Section 7-A did not displace Entry 59-A, and the petitioner remained entitled to the exemption under Entry 59-A for the sales made in execution of the works contract. The impugned assessment, appellate and penalty orders were liable to be set aside, in favour of the assessee.

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