The State A.P. Rep., by the State Representative Vs M/S. M.M.T.C.Limited, Visakhapatnam

This Tax Revision Case is filed by the State against the order, dated 17.05.2006 of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad in Tribunal Appeal No.699 of 1999 wherein it is held that the excise duty component cannot be included in the sale price for the purpose of Central Sales Tax Act and therefore cannot be brought to tax.

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Brief facts leading to file this revision case are herein under:

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(i) The respondent/assessee M/s.M.M.T.C. Limited, Visakhapatnam are

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engaged in the business in Sulphur, Salwood Sleepers, Special High Grade Zinc, Lead, Tin Ingots, E.C. Wire Bars, Mud Chemicals, etc. For the assessment year 1993-94 in the assessments made under the Central Sales Tax Act, the Commercial Tax Officer, Kurupam Market Circle, Visakhapatnam included the Central Excise Duty in the turnover of the assessee. According to the statements of turnover, etc., filed at the time of final check of accounts,

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the total turnover under C.S.T. Act is found to be Rs.28,50,51,720/- under different heads. Out of the said statements of turnover, in item No.2 exemption is claimed as relating to second Inter-State sales of Salwood Sleepers in

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transit by endorsing the documents of title to the goods. The claim of exemption is allowed on a turnover of Rs.37,15,019/- and the remaining

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turnover of Rs.14,31,97,146/- was disallowed on the ground that the said transactions are not covered by C/D forms from the S.E. Railway Authorities.

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(ii) Item No.4 relating to claiming exemption on the entire value of the stocks transferred to other States. The claim of exemption on this item was disallowed. In item No.9 exemption is claimed with regard to second InterState sales of Zebra conductors while to transit by endorsing the documents of title of the goods. Against this claim, exemption is allowed on turnover of Rs.88,15,624/-. In item No.10 exemption is claimed relating to second InterState sales of Aluminum conductors while in transit by endorsing the documents of title to the goods. The said claim is allowed. In item No.11 exemption is claimed as relating to second Inter-State sales of Mud Chemicals. The said claim also allowed. Item Nos.3 and 12 relating to C.S.T. collections of Visakhapatnam and Hyderabad Offices. For these, deduction is allowed.

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(iii) After considering the same, the Commercial Tax Officer passed assessment Order, dated 29.03.1997 and issued a demand notice in FormVIII to the assessee for tax due Rs.25,63,446/-. Aggrieved by the assessment order, the respondent filed an appeal in Appeal No.VSP 94/97-98 before the Deputy Commissioner (CT), Kakinada being the appellate authority. The said appeal was partly allowed by order, dated 30.01.1999, holding that the view taken by the assessing authority is not correct and hence the appellant therein is entitled to pay the tax at the concessional rate where the transaction is covered by „C‟ forms or not and the assessing authority is directed to adopt

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the correct rate of tax. Against the order of the Appellate Authority, the respondent filed an appeal in Tribunal Appeal No.699 of 1999 before the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad. After considering the facts and circumstances of the case, the Sales Tax Appellate Tribunal and following the judgment of the High Court of Andhra Pradesh in the case of State of Andhra Pradesh vs. M/s. Ranka Cables Private Limited reported in (1990) 78 STC 111, allowed the appeal in part. Against the order, dated 17.05.2006 passed by the Sales Tax Appellate Tribunal, the State filed the present Tax Revision Case before this Court.

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On perusal of the order of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad, it appears that the Tribunal had opined that since the assessee added the excise duty, but towards the end of the bills deducted the very same amount of excise duty in view of likely reimbursement promised by APSEB. The Tribunal further opined that the sale bills did not include the excise duty. In view of the case law considered by the Tribunal and the proof presented before the Tribunal in the form of purchase of APSEB, dated 31.12.1991 and invoices of M/s.Deepak Cables (India) Limited, the Tribunal allowed the appeal.

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With regard to transit sales of Mud Chemicals not covered by „C‟ forms is concerned, considering the fact that the respondent was able to produce “C‟ forms related to that transaction, the Sales Tax Appellate Tribunal agree and direct the authorities to give consequential relief on presentation of the relevant “C‟ forms before them by the respondent after examination of the

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same. So far as the Inter-State sales of Sunflower Expeller, Crude Oil are concerned, since those two matters have been remanded by the Appellate Authority to the original Assessing Authority, the Sales Tax Appellate Tribunal held that the appeal on those points does not lie with the Tribunal at that relevant point of time and accordingly those points are not examined on merits. So far as Inter-State sales of cotton seed hulls is concerned, since required „C‟ form was not presented before the Tribunal, the Sales Tax Appellate Tribunal held that no relief can be granted on that aspect. With regard to the transit sales not covered by „C‟ forms for Rs.41,47,620/-, the Tribunal has considered the point whether the excise duty component should be form a part of the total turnover or not. After perusing the documents produced by the appellant therein, the Tribunal noted that since APSEB in their purchase order, dated 31.12.1991 had promised reimbursement of central excise duty to the appellant, that excise duty was not actually charged. The invoices of M/s. Deepak Cables (India) Limited shows that the excise duty was first added for the sake of calculation and then deducted in the same invoice to arrive at a figure without excise duty. Considering those documents and by following the judgment of this Court in M/s.Ranka Cables Pvt. Ltd., ( stated supra), the Tribunal allowed the appeal in part.

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Having considered the facts and circumstances, in our considered view, the issue involved in the present Tax Revision Case is squarely covered by the judgment of the High Court of Andhra Pradesh in Ranka Cables Pvt.

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Ltd., (stated supra). The relevant portion of the said judgment is extracted herein under:

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“There is no dispute before us that if the excise duty had not been deducted from the sale price, i.e., if it had been collected from the purchaser, it should have been and would have been included in the turnover or the sale price, as the case may be. But in this case, it is not so included as explained above. Nor can it be said in this case that the reimbursement of excise duty by the Government under the Supplementary Cash Assistance Scheme was on behalf of or on account of the purchaser. The said scheme was evolved by the Central Government in the larger interests of the industry and commerce and not merely or exclusively with a view to help the purchaser, of electrical goods from the assessee herein. The Tribunal was, therefore, right in holding that in such a situation the excise duty component cannot be included in the turnover of the assessee. It cannot be said that the, sale price charged by the assessee-respondent herein included excise duty.”

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In the present case also since the assessee/respondent added excise duty but towards the end of the bills deducted the very same amount of excise duty in view of likely reimbursement promised by APSEB and invoices of M/s.Deepak Cables (India) Limited, in our view, the sale bills did not include the excise duty. As such, the Tribunal was right in holding that in such a situation, the excise duty component cannot be included in the turnover of the assessee.

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