M/s.Sri Durga Industries v. The Commissioner of Industries, Office of Commissionerate of Industries, Hyderabad, A.P & Ors.

(Per Hon’ble Sri Justice V.V.S.Rao) The two tax revision cases, pertaining to the assessment years 1996-1997 and 1997-1998, and the writ petition give rise to a common issue for consideration. Therefore, this order shall dispose of the three matters. The factual matrix, with reference to the writ petition in a nutshell, is as follows. The petitioner is a dealer on the rolls of the fourth respondent under the Andhra Pradesh General Sales Tax Act, 1957 (APGST Act), and the Central Sales Tax Act, 1956. It is a small-scale unit engaged in the manufacture of caster oil and cake. In 1997, the petitioner applied seeking the benefits of sales tax exemption under the Government of India Incentive Scheme, Target 2000 vide G.O.Ms.No.108, dated 20.05.1996, and G.O.Ms.No.134 dated 01.07.1996. The first respondent issued final eligibility certificate, bearing File No.20/1/6/1590, dated 09.01.1997, whereunder the final eligibility at 135% of Rs.18,37,470/- was fixed for sales tax exemption to be availed during the period from 29.02.1996 to 28.02.2003.

The final eligibility is subject to the conditions in paragraph 11 thereof. As per paragraph 11(vi) the petitioner is not entitled to collect sales tax from consumers, and further they would be liable to remit the sales tax collected to the Government in case they collect sales tax during the availment period of sales tax exemption. For the assessment years 1996-1997 and 1997-1998, the territorial assessing officer passed orders on 25.03.1998 determining the tax due from the petitioner. Aggrieved, the petitioner approached the Appellate Deputy Commissioner who remanded the matters to the assessing authority with a direction to allow as well as set off tax payable on the raw material from the tax payable on caster oil as well as Tax Holiday on both oil and cake. Thereafter, the fourth respondent passed consequential orders on 05.05.2000 redetermining the net tax due. However, the order was revised by the Joint Commissioner under Section 20(1) of the APGST Act.

Aggrieved by the same, the petitioner filed two appeals, being T.A.Nos.122 and 123 of 2003. The appeals were partly allowed and partly dismissed. In so far as purchase tax for both the assessment years is concerned, relying on condition No.11(vi) of the eligibility certificate, tax exemption claimed was disallowed. Against these two orders, the two tax revision cases are filed. In the writ petition the petitioner seeks a writ of mandamus declaring clause 11(vi) of the eligibility certificate as illegal, arbitrary and unconstitutional being violative of Articles 14 and 19(1)(g) of the Constitution of India. In the tax revision cases a ground related to these is urged. At the time of hearing, the Special Government Pleader for Commercial Taxes has brought to our notice a decision of the Division Bench of this Court in Naga Krishna Filements (P) Limited v Government of Andhra Pradesh[1]. Division Bench was concerned with the constitutional validity of clause 10 of the Eligibility Certificate issued pursuant to a small-scale industry incentive scheme vide G.O.Ms.No.498, dated 16.10.1989.

The said condition also is couched in a similar language. The Division Bench upheld the said condition observing as follows. …The twin prohibitions contained in Section 30-B are: (i) the first is, every dealer is prohibited from collecting any sum by way of tax in respect of sales or purchases of goods which are not liable to tax under the Act or any tax in excess of the amount of tax already paid by him, if any, at the time of purchase by him and or payable by him on the sale by him under the Act; and (ii) the second is directed against persons in general, other than the dealers, who are prohibited from collecting any sum by way of tax from another person It is difficult for us to accept the contention that in the absence of these prohibitions, a dealer or an individual is entitled to collect sales tax from persons at his choice and will and at the rate he chooses. In our view, even in the absence of Section 30-B, no person including a dealer can arrogate to himself the power to collect tax on the sale or purchase of goods which the Government has exempted under Section 9 of the Act from others.

In other words, if no tax is payable under the Act, no individual or dealer can collect tax on such goods… Following the ratio in Naga Krishna Filements the writ petition as well as the tax revision cases are liable to be dismissed. They are, accordingly, dismissed. But, in the circumstances, without any order as to costs. ________________ (V.V.S. RAO, J _______________________________ (RAMESH RANGANATHAN, J

25.07.2011 [1] (1996) 23 APSTJ 112