Allowed

The State of Andhra Pradesh v. M/s.Daxin Forms

Telangana HC14 Nov 2012TREVC/9/2005

Case brief

AI extract

What is this about?

The Supreme Court and High Court precedents hold that items specifically listed by the Electronic Commission in government orders qualify as electronic goods eligible for concessional tax rates. The Tribunal must strictly verify inclusion in the list and cannot apply functional tests to listed items. Assessees dealing in cassettes and stationery allowed their appeals.

What did the court decide?

Special Appeals filed by assessees allowed; Tribunal/Circular references and Revenue appeals dismissed.

The State of Andhra Pradesh Vs M/s.Daxin Forms — Writ and Judicial Review | Telangana HC (2012)

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THE HON’BLE SRI JUSTICE GODA RAGHURAM &

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THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO

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SPECIAL APPEAL Nos.18 of 2002, 1 of 2003, 11 of 2003, TRC No.203 of 2003, TRC No.206 of 2003, TRC No.209 of 2003, TRC No.211 of 2003, TRC No.219 of

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2003, TRC No.226 of 2003, TREVC No.9 of 2005, TREVC No.12 of 2005, TREVC No.21 of 2005, TRC No.42 of 2005, TREVC No.54 of 2005, TREVC No.58 of 2005, TREVC No.62 of 2005, TREVC No.5 of 2006, TREVC No.6 of 2006, TREVC No.7 of 2006, TREVC No.8 of 2006.

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COMMON ORDER (per Honourable Sri Justice M.S. RAMACHANDRA RAO)

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In Special Appeals 18 of 2002, 1 of 2003 and 11 of 2003, the assesses are dealers of audio cassettes and in the T.R.Cs and T.R.E.V.Cs, the assesses are dealers in computer stationery. The relevant assessment years in each case are different and vary from 1993-94 to 2000-01 and assessment orders are passed by the assessing officers under A.P.General Sales Tax Act,1957 except in TRC.No.206/2003and in TRC.No.226/2003 where assessment orders were passed under the Central Sales Tax Act,1956.

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As a common question of law arises in all these cases, they are decided by this Common Order.

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In these cases, the question is “whether the Revenue can dispute that “audio cassettes” and “computer stationery” indicated at Sl.Nos.16.1 and 16.6 of the list of electronic items prepared by the Electronic Commission are not “electronic goods” and therefore ineligible for levy of concessional rate of tax as per G.O.Ms.No.520 dated 20.7.1988 ?”

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The facts in these cases are briefly set out below:

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The State Government, in exercise of its powers under Section 9 of the A.P.G.S.T. Act, 1957 issued G.O.Ms.No.520, Revenue (CT-II) dated 20.7.1988 providing for a concessional rate of tax @ 2% on electronic goods mentioned therein.

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On 1.6.1989, a Memo No.23718/CT.II.2/89 was issued by the Principal Secretary to the Government of Andhra Pradesh, Revenue (CT-II) Department, inviting the attention of the Commissioner of Commercial Taxes to the references cited in the said memo and informing him that the Government had decided that the list of electronic items prepared by the Electronic Commission should be followed for the purpose of concessional rate of tax on electronic goods ordered in G.O.Ms.No.520 dated 20.7.1988.

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Pursuant to the above Memo, a circular was issued by the Commissioner of Commercial Taxes on 13.7.1989 enclosing the above memo of the Principal Secretary and the list prepared by the Electronic Commission directing all the assessing authorities to act accordingly. In the said

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list Item 16.1 reads as “cassette audio (Blank and PreRecorded- please specify) and Item 16.6 reads as “computer stationery, paper tape, punching cards, printing (paper, ribbons etc.- please specify).

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Subsequently vide G.O.Ms.No.864 Revenue (CT-II) dated 7.9.1993, the rate of tax on electronic goods in respect of sales governed by the A.P.G.S.T Act, 1957 was increased to 4% from 2% fixed earlier in G.O.Ms.No.520, Revenue (CT-II) dated 20.7.1988. This was reiterated in G.O.Ms.No.252 Revenue (CT-II) dated 19.5.1995. Again subsequently vide G.O.Ms.No.653 Revenue (CT-II) dated 31.7.1997, the rate of tax payable under the A.P.G.S.T. Act on the sales of electronic goods was reduced to 3.5% upto 31.3.1998. Vide G.O.Ms.No.204 Revenue (CT-II) dated 28.03.1998, the rate of tax at 3.5% was continued from 1.4.1998 to 31.3.2000.

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In all these cases, while the assessee contended that audio cassettes/computer stationery should be subjected to concessional rate of tax applying the above G.Os., the Revenue contended that the said items are not electronic goods and therefore the audio cassettes should be subjected to tax @ 16% under entry 10 of Schedule-I to the Act and computer stationery should be taxed @ 12% at every point of sale under entry 19 of Schedule-VI to the Act.

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Heard Sri S. Dwaraknath, V. Srinivas Reddy, S. Krishna Murthy, A. K.Jaiswal for the Assessees and Sri P.

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Balaji Varma, Special Government Pleader for Commercial Tax for the Revenue.

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In our opinion, the contention of the Revenue is not acceptable in view of the decision of the Supreme Court of India i n State of Andhra Pradesh and another Vs. Concap Capacitors and others^[1] . In the said case, the Supreme Court referred to G.O.Ms.No.520 dated 20.7.1988, Memo dated 1.6.1989 of the Principal Secretary to the Government of Andhra Pradesh, Revenue (CT-II) Department and the Circular dated 13.7.1989 issued by the Commissioner of Commercial Taxes and held that the list prepared by the Electronic Commission has to be treated as part of the G.O issued by the Government providing for concessional rate of tax and once a particular item/goods is forming part of such list declared by the Electronic Commission, the concessional rate of tax as per the G.O should be levied on the said item/goods. It noted that similar view was expressed by the High Court of Andhra Pradesh in State

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of A.P Vs. Amara Raja Batteries^[2] which was confirmed in Civil Appeal No.723-25 of 1999 by the Supreme Court on 21.3.2001 and in India Extrusion Vs. Commissioner of Commercial Taxes, A.P., Hyderabad^[3] . If further held that only if a particular item of goods or component, part of material was not specified either in the list of the Government order or in the list of Electronic Items prepared by the Electronic Commission,

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the question would arise for consideration whether a particular item could be treated as electronic goods or component or material, depending upon its operating principle, and not otherwise. It also held that when the item had been specifically included in the list prepared by the Electronic Commission, the Tribunal could not have applied the functional test, operating principle or the user test. The Tribunal was required to make only a limited enquiry as to whether the item in question was included in the list prepared by the Electronic Commission. If any item was included in the list, it had to be treated as such and tax had to be levied on that basis. Only if the item was not included in the list prepared by the Electronic Commission, it was open to the Tribunal to consider its placement on the basis of the functional test. Therefore, the Revenue cannot dispute that “audio cassettes” and “computer stationery” indicated at Sl.Nos.16.1 and 16.6 of the list of electronic items prepared by the Electronic Commission respectively are not “electronic goods” and therefore ineligible for levy of concessional rate of tax as per G.O.Ms.No.520 dated 20.7.1988.

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Therefore, the Special Appeals filed by the assessees are allowed and TRCS and TREVCs filed by the Revenue are dismissed. No costs.

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_____________________ GODA RAGHURAM,J

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____________________________________ JUSTICE M.S.RAMACHANDRA RAO,J

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Date: 14-11-2012 Gk

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THE HON’BLE SRI JUSTICE GODA RAGHURAM &

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THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO

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SPECIAL APPEAL Nos.18 of 2002, 1 of 2003, 11 of 2003, TRC No.203 of 2003, TRC No.206 of 2003, TRC No.209 of 2003, TRC No.211 of 2003, TRC No.219 of

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2003, TRC No.226 of 2003, TREVC No.9 of 2005, TREVC No.12 of 2005, TREVC No.21 of 2005, TRC No.42 of 2005, TREVC No.54 of 2005, TREVC No.58 of

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2005, TREVC No.62 of 2005, TREVC No.5 of 2006,

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TREVC No.6 of 2006, TREVC No.7 of 2006, TREVC

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No.8 of 2006.

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(Common Judgment of the Bench prepared by Hon’ble Sri Justice M.S.Ramachandra Rao)

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14-11-2012