TaxTMI 
TaxTMI 
2024 (5) TMI 720
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.... Woven Fabrics. For the Assessment year 1997-98 (CST), the Commercial Tax Officer (for short, "the CTO") exempted the disputed turnover of Rs. 52,860/- of inter-State Sales of HDPE Fabrics from the sales tax under Central Sales Tax Act (CST). The CTO granted such exemption observing that the commodity was generally exempted under the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the APGST Act"). The CTO passed the order in Assessment No. 527/1997-98 (CST) dated 05.10.1998. 4. The Deputy Commissioner (CT) No. 1 Division, Vijayawada, In R.P. No. 2/1999-2000, vide order dated 11.08.1999 revised the assessment and subjected the disputed turnovers to tax at 10%, withdrawing the exemption granted by CTO taking the view that the HDPE Woven Fabrics should be treated as articles of plastics falling under Item No. 187 of the I Schedule, and do not fall under item No. 5 of the IV Schedule. They are classified under 3923.90 of Central Excise Tariff Act, 1985. The HDPE Woven Fabrics cannot be treated as generally exempted as they are wholly made up of plastics and cannot be treated as cloth, hence, levy or exemption of excise duty would not matter. 5. The Appellate Tribunal allo....
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....ven Fabrics. For the Assessment year 1997-98, the Commercial Tax Officer (for short, "the CTO") exempted the disputed turnover of Rs. 75,960/- of inter-State Sales of HDPE Fabrics from the sales tax under Central Sales Tax Act (CST). The CTO granted such exemption observing that the commodity was generally exempted under the APGST Act. The CTO passed the order in Assessment No. 527/1996- 97 (CST) dated 06.01.1998. The Deputy Commissioner (CT) No. 1 Division, Vijayawada, In R.P. No. 1/1999-2000, vide order dated 11.08.1999 revised the assessment and subjected the disputed turnovers to tax at 10%, withdrawing the exemption granted by CTO. The Appellate Tribunal allowed T.A. No. 1455 of 1999 of the dealer vide order dated 25.07.2002. The Deputy Commissioner (CT) and the Appellate Tribunal passed their respective orders, same as in impugned in T.R.C. No. 210 of 2002. 11. Challenging the aforesaid orders, the State has preferred the revision petitions, under Section 22(1) of APGST Act, 1957. 12. The revision petitions were admitted. QUESTIONS OF LAW: 13. The following questions of law are framed in the memo of revision on which learned Government Pleader advanced the submiss....
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....ase for interference is made out under Section 22 of the A.P.G.S.T. Act, 1957. SUBMISSION OF LEARNED COUNSEL FOR RESPONDENT: 18. Ms. Jyoti Ratna Anumolu, submitted that the 'H.D.P.E. Woven Fabrics' is a man-made fabric. The appellate Tribunal while recording such a finding also had the advantage of seeing the sample of the fabric, before it. It found that the commodity was in the form of a cloth, woven from monofilament of plastic and came to the conclusion that the commodity was covered by 'man-made fabric' in item No. 5 of IV Schedule. She submitted that, such is a finding of fact, not open to interference in the exercise of revision jurisdiction; particularly when there is no challenge to such finding nor any question of law on such aspect has been framed by the revisionists. 19. Ms. Jyothi Ratna Anumolu further submitted that the 'man-made fabric' is included in the relevant head and sub heads of the I schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and 'nil rate' is also a rate of additional duty. Thus, both the conditions under the Explanation to item No. 5 in IV Schedule are satisfied. The order of the Appellate Tribunal granting ....
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....pecified in the Schedules. 24. Item No. 187 of the 1st Schedule of APGST Act, 1957 provides as under: "Articles of plastic (excluding HDPE Woven Sacks and laminated sheets) and including. 1. Monofilament rods, sticks and profile shapes of plastics 2. Tubes, pipes and hoses, fittings therefor (for eg., joints, elbows, Flanges) of plastics. 3. Floor coverings of plastics, whether or not self-adhesive in rolls or in the form of titles; wall or ceiling covering of plastics; 4. Plates, blocks, (sheets excluding laminated sheets), film foil, tape, strip and other flat shapes." 25. Section 8 of APGST Act, 1957 reads as under: "8. Exemption from tax in respect of certain goods Subject to such restrictions and conditions as may be prescribed including conditions as to licences and licence fees, a dealer who deals in the goods specified in the 1 (Fourth Schedule) shall be 2(exempt from tax under this Act in respect of such goods." 26. Item No. 5 of the IV Schedule of APGST Act, 1957 with explanation provides as under: "5. Cotton fabrics, man-made fabrics and woolen fabrics" 6 to 12..........................
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.... Substituted for the words "in respect of the following goods, namely, sugar, tobacco, cotton fabrics, silk fabrics, man-made fabrics and woollen fabrics" by the Additional Duties of Excise (Goods of Special Importance) Second Amendment Act, 1986(7 of 1986), Section 3 (w.e.f. 28-2-1986). b. Substituted for the words "specified in the First Schedule to this Act by Act 7 of 1986, Section 3 (w.e.f. 28-2-1986). C. Substituted by The Finance Act (32 of 1994), Section 63(a)." 30. Section 3 of the Act No. 58 of 1957 provides for Levy and collection of additional duties. As per Section 3(1), there shall be levied and collected in respect of the goods described in column (3) of the First Schedule produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto, duties of excise at the rate or rates specified in column (4) of the said Schedule. Sub Section (2) provides that the duties of excise referred to in sub-section (1) in respect of the goods specified therein shall be in addition to the duties of ....
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....the word "appropriate" in the context means is the correct or the specified rate of excise duty. 8. An exemption notification that uses the said phrase applies to goods which have been made from duty paid material. In the said phrase, due emphasis must be given to the words "has already been paid". For the purposes of getting the benefit of the exemption under the notification, the goods must be made from raw material on which excise duty has, as a matter of fact, been paid, and has been paid at the "appropriate" or correct rate. Unless the manufacturer has paid, the correct amount of excise duty, he is not entitled to the benefit of the exemption notification. 9. Where the raw material is not liable to excise duty or such duty is nil, no excise duty is, as a matter of fact, paid upon it. To goods made out of such material the notification will not apply. 10. The notification is intended to give relief against the cascading of excise duty - on the raw material and again on the goods made therefrom. There is no cascading effect when no excise duty is payable upon the raw material and the hardship that the notification seeks to alleviate does not arise." ....
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...., i.e., fifteen per cent. Para 4 clearly brings out the ratio of the said decision. The relevant portion reads: (SCC pp. 594-95, para 4) "Excise is a duty on manufacture or production. But the realization of the duty may be postponed for administrative convenience to the date of removal of goods from the factory. Rule 9-A of the said rules merely does that. That is the scheme of the Act. It does not, in our opinion, make removal the taxable event. The taxable event is the manufacture. But the liability to pay the duty is postponed till the time of removal under Rule 9-A of the said Rules. In this connection, reference may be made to the decision of the Karnataka High Court in Karnataka Cement Pipe Factory Industrial Estate v. Superintendent of Central Excise [(1986) 23 ELT 313 (Kant)] where it was decided that the words 'as being subject to a duty of excise' appearing in Section 2(d) of the Act are only descriptive of the goods and not to the actual levy. 'Excisable goods', it was held, do not become non-excisable goods merely by the reason of the exemption given under a notification. This view was also taken by the Madras High Court in Tamil Nadu (Madras State) H....
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....was as follows: "2. (d) 'excisable goods' means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt." "80. Under the Customs Act, there are two definitions which are relevant. Section 2(22) defines "goods" as follows: "2. (22) 'goods' includes- (a) vessels, aircraft and vehicles; (b) stores; (c) baggage; (d) currency and negotiable instruments; and (e) any other kind of moveable property;" In addition thereto, Section 2(14) defines "dutiable goods" as follows: "2. (14) 'dutiable goods' means any goods which are chargeable to duty and on which duty has not been paid;" 81. Under the Central Excise Act, 1944 in the definition of the words "excisable goods" under Section 2(d), the very specification or inclusion of goods in the First and Second Schedules of the Central Excise Tariff Act would make them excisable goods subject to duty. Under the Customs Act, the provisions seem to be somewhat different. While by virtue of Section 2(22) all kinds of moveable property would be ....
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....uties of excise are levied under that schedule. 41. The Explanation, therefore, reads in two parts (i). The first part: it includes the goods which are included in the relevant heads and sub heads of the I schedule to the Act No. 58 of 1957 and (ii). The second part it does not include the goods where no additional duties of excise are levied under I Schedule to the Act No. 58 of 1957. In order to attract exemption, under item 5, 'man-made fabrics' both the conditions of the explanation are to be satisfied. It must be shown that such good i) is included in the I Schedule to the Act No. 58 1957, and ii) once it so shown, it has to be further established that on such good additional duties of excise are levied. If the additional duties of excise are not levied then that good would not be covered in Entry 5. Meaning thereby that such good, which though included in the I Schedule of the Act 58 of 1957, but if the duty has not been levied under the Act 58 of 1957, such good, would be outside the purview of entry 5. On such good, the exemption from tax would not be available under Section 8 of the APGST Act. 42. In our view, nil rate of duty means that no additional duties are levi....
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....ght with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same." 45. In Rajasthan State Electricity Board Jaipur vs. Deputy Commissioner of Income Tax (Assessment) and another 2021 (14) SCC 557, the Hon'ble Apex Court held that while interpreting a Tax Legislature, the consequences and hardship are not looked into but the purpose and object by which taxing statutes have been enacted cannot be lost sight. 46. In AMD Industries Limited vs. Commissioner of Trade Tax, Lucknow and another (2023) 4 SCC 231, the Hon'ble Apex Court held that the exemption/deduction provision should be considered and given a literal meaning. The settled position of law, is that in case of an exemption notification/exemption provision, the same is required to be construed literally and the person claiming the exemption must satisfy all the conditions of exemption provision. Paras 9 and 12 of AMD Industries Limited (supra) are as follows: "9. In the case of "expansion or modernisation", the exemption shall be available, if there is an additional production as a result of such modernisation or expansion....
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....equirements renders the writ petition filed by the respondent liable to be dismissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule. 26. Whenever the statute prescribes that a particular Act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance with the same must result in cancelling the concession made in favour of the grantee, the respondent herein." This was also reaffirmed in a number of judgments, such as CIT v. Ace Multi Axes Systems Ltd. [CIT v. Ace Multi Axes Systems Ltd., (2018) 2 SCC 158] 57. The Constitution Bench, in Commr. of Customs v. Dil....
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....e letter of the law fails to catch him on account of the legislature's failure to express itself clearly.'" 48. We are of the considered view that HDPE Woven Fabrics even if included in the I Schedule under the head and sub head, entry No. 59.03 with 'nil rate', may be subject to or liable for the additional duties to be levied under that Act No. 58 of 1957, but, unless and until the additional duty is levied i.e actual levy, with some percentage, and not 'nil rate', it would be excluded from the category of goods mentioned in entry 5 of IV Schedule of the APGST Act. It would be liable to tax under APGST Act, and would not be exempted from tax under Section 8 of the APGST Act. 49. The submission of the learned counsel for the respondent that nil rate is also a rate of duty, may be correct for the purposes of the Additional Duties of Excise Act, 1958, as once such good is included in the I Schedule thereto, it may be subject to levy of additional duty i.e., the duty may be levied at same time, at an affective rate, but, when it comes to the APGST Act, 1957, for the purpose of Section 8 read with entry 5 in the IV Schedule and the Explanation, mere inclusion of the good in ....
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....g the petition within that period. 54. In Baby (supra), the scope of revision under Section 103 of the Kerala Land Reforms Act was considered which used the expression "has either decided erroneously or failed to decide any Question of Law" as in Section 22(1) of the APGST Act. Section 103 of the Kerala Act is as under: "103. Revision by High Court.-(1) Any person aggrieved by- (i) any final order passed in an appeal against the order of the Land Tribunal; or (ii) any final order passed by the Land Board under this Act; or (iii) any final order of the Taluk Land Board under this Act, may within such time as may be prescribed, prefer a petition to the High Court against the order on the ground that the appellate authority or the Land Board, or the Taluk Land Board, as the case may be, has either decided erroneously, or failed to decide, any question of law." 55. In Baby (supra), finding was recorded on the question of existence of tenancy. That was a question of fact. The Hon'ble Apex Court held that mere non consideration of relevant documents including the relevance of certain judicial proceedings would not strictly fall within Section 103....
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....n of Law. 58 'Erroneous' has been defined in Black Law Dictionary as under: "Incorrect; inconsistent with the law or the facts." 'Erroneous judgment' is defined as under: "A judgment issued by a court with jurisdiction to issue it, but containing an improper application of law. This type of judgment is not void, but can be corrected by a trial court while the court retains plenary jurisdiction, or in a direct appeal." 59. It is clear that an order can be termed as erroneous if it is not in accordance with law. An order which suffers from an error of law or even on facts would be erroneous. The order which decides a question of law, not as per law or contrary to law, ignoring the legal provisions or wrongly interpreting the legal provisions would be an erroneous order. A revision under Section 22(1) would lie if the question of law has been decided erroneously. It may not be on erroneous question of fact. Present is a case of erroneously deciding a question of law. It cannot be said that the question of law has been decided according to law. The decision of the Appellate Tribunal on a question of law is erroneous. Such an order would be open to inter....