A//S. P riyadarsh ini Cement Limited v. State of Andhra Pradesh

Counsel for the Respondents: Sri Swaroop Oorilla, Special Govt Pleader for State Tax. The Court made the following: ORDER THE HONOT]RABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLB SRI JUSTICE NARSING RAO NANDIKONDA TREVC No.29 OF 2008 JUDGMENT: (Per Hon'ble Sri Justice P.Som Koshy) Heard Mr. Karthik Ramana Puttamreddy, leamed counsel for the petitioner and Mr. Swaroop Oorilla, Ieamed Special Govemment Pleader for the State Tax for the respondent. perused the record

2. The present is a tax revision case preferred by thr: assessee under Section 22(1) of the Andhra Pradesh General ljales Tax Act, 1957 (for short 'the Act'). The challenge is to the order dated 05.10.2007 passed by the Sales Tax Appellate'lribunal, Andhra Pradesh, Hyderabad (foi short'the Tribunal') in Tribunal Appeal No.169 of2005.

3. Vide the impugned order, the leamed Tribunal has rejected the appeal of the petitioner affirming the order d,ated, 2l)-.04.2004 passed by the revisional authority i.e., Deputy Comrnissioner z ..i (CT), Nalgonda District in R.R.No.7/2001-02 for the assessment year 1996-97 (CST).

4. The product involved in the instant case is clinker. I\4/s Priyadarshini Cement Limited is in the business of purchase and sale of clinkers. In the process of carrying on their business, the petitioner had purchased clinkers from M/s Sagar Cements Limited under the GST law. Since clinker has not been a product which is reflected in any of the Schedules under the Act, the same has been made taxabl'e under the residuary Schedule VII of the said Act. The said product or the items which have been brought under the residuary Schedule VII are to be taxed at the first point of sale onlv.

5. The stand of the petitioner all along was that the petitioner was the subsequent purchaser and as such is the second purchaser and second seller and, therefore, they would be exempted fiom payment of tax under the GST regime and the tax is leviable at the first point of sale i.e., sale made by M/s Sagar Cements Limited. The contention of the petitioner was accepted by the Commercial 3 Tax Officer allowing exemption to the same' However' the grant of exemPtton was scrutinized by the revisional authority i'e'' Deputy Commissioner and the Deputy Commissioner revised the oider of the Commercial Tax Officer vide order datedl\2'04'2004'

6. It was the order of the revisional authority which was tn Tribunal APPeal subjected to challenge by the petitioner No.169 of 2005 which stands decided vide the impugned order under challenge in the preserft tax revisron case' There were two questions of law scrutini zed an'l considered 7 . by the Tribunal, first being the fact that the petitionr:r had failed to produce cogent relevant documents before the revisional authority during the revisional proceedings to substantiate their contentionsofarasclaimingexemptionfrompaymentofGSTis concemed. The second aspect of non-payment of sale tax as the seller from whom the petitioner had purchased i'e ' \l'ls Sagar Cements Limited having not paid the sale tax lor the sales made to the petitioner' So far as the first ground is concemed' the Tribunal has accepted the factual matrix of the case' so also the 4 admitted legal position so far as the sale and purchase of clinker is concemed. The Tribunal categorically reaches to the conclusion that the petitioner is the second purchaser and second seller' The Tribunal also accepts the fact that the product is taxable only at the first point of sale i.e., at the hands of lWs Sagar Cements Limited. However, the Tiibunal only disallowed the contention of the petitioner on the ground that the petitioner has failed at the first instance to produce cogent relevant materials before the revisional authority and secondly the petitioner having failed to show any justifiable and bona -fide grounds available with them for not producing these documents before the revisional authority during the revisional proceedings and disallowed the appeal of the petitioner on this ground alone. On the aspect of payment of sale tax also, the Tribunal though had recorded the contention of the petitionetr but has not given any finding so far as whether ./ the petitioner is liable to pay sale tax for the purchase they have made from l\zlls Sagar Cements Limited is concemed' The contention of the petitioner specifically as would be reflected from the impugned order itself is that M/s Sagar Cements Limited 5 itself is a registered dealer with the Commercial Tax Depattment' Under the said circumstances, if lWs Sagar Cements Limited defaults in making payment of sale tax for the sale made by them to the petitioner herein, the petitioner cannot be held t'r be liable for payment of sale tax for and on behalf of IWs Sagar Cements Limited. We do not find the Tribunal having dealt with the said issue in spite of recording contentions of the petitioner in this regard. So far as the first issug is concemed, we are compelled to take note of the fact that the Tribunat in its findings has categorically accepted the fact that the Tribunal is a {act finding body and that they can by itself decide the questions of law upon perusal of the relevant documents which have beerl produced before the Tribunal, even it is for the first time' The relevant portion of the findings of the Tribunal in that regard is as under: "No doubt, it is settled law that statutory forms/certificates and other proof in the form of documentary evidence which supports the clalm of the appellant for exemptions/lower rate of duty should be admitted by even the appellate authorittes, provided sufficient reason is shown for the same". 6

8. It is also relevant to take note ofyet another finding of fact by the Tribunal where it is held as under: "These documents show very clearly the payment of duty of central excise on the clinker delivered to M/s Priyadarshini Cements Limited by M/s Sagar Cements Limited. All the documents show that the material dispatched by M/s Sagar Cements Limited was received by M/s Priyadarshini Cements Limited on the same date on which it was dispatched. The documents however do not give any indication as to whether sales tax was Pad on this clinker". These two facts recorded by the Tribunal give a clear indication of all relevant materials being available before the Tribunal to substantiate the contention that the petitioner has raised. There also does not seem to be any dispute so far as levy of GST on the product clinker at the first point of sale and that the petitioner being the second seller. If all these materials were available with the Tribunal, we do not see any good reason why the Tribunal since it was also a fact finding appellate body to have not entertained these documents and tested its veracity and given a finding on merits, rather the Tribunal has only rejected the appeal on the sole ground of the petitioner not filing these documents ,^' 7 before the revisional authority when they were granted an opportunity for the same and also has not given any justillable and bona fide reasons which prevented them from fumishing the same before the revisional authority. This in the opinion of the Bench seems to be too harsh a decision taken by the Tribunal when in itself it was competent to appreciate the merits of the case considering the documentary evidence which the appellant produced beflore the Tribunal.' It would be relevant at this juncture to take note of a decision of the High Court of Andhra Pradesh (unified High Court ofAndhra pradesh) reporred in 19g3 SCC Onl-ine AP 321 in rhe case of State of Andhra pradesh vs. Thungabhadra lndustries Limited wherein in its judgrnent, the High Court in a similar set of facts has held as under: "The assessee in this case claims to be the second seller of groundnut oil in the State of Andhra pradesh. He is a registered dealer. Groundnut oil is exigible to tax under the A.P. General Sales Tax Act on first sale within the State. The petitioner claimed exemption of a large amount of turnover on the ground that he is the second seller, and mentioned the names of the registered dealers from whom he had purchased". 8 \ "The Tribunal applying the two tests laid down in T.A. No. 401/75 confirmed in T.R.C. No 17 of 1978 (8. Rajendra Oil Mills Refinery v State of Andhra Pradesh; printed infra) disposed of the matter which now forms the subject-matter of the present T R.C. The two tests applied to determine whether the assessee is entitled to the exemption of turnover from tax were (1) that the first seller should be a real and identifiable dealer within the State and (2) that mere non-payment of tax by first seller within the State does not shift the liability to pay tax on the second seller. ln disposing of the matter, the Tribunal has, in our opinion, rightly applied the said tests and on the facts and circumstances of the case after verifying the records granted relief in respFct of the purchases made by the assessee from real and identifiable sellers within the State whose registration number was mentioned in the bills"' g. Though the counsel for the respondent tried to oppose the petition on the ground that the Tribunal's finding cannot be found lault with as the petitioner had faited to avail the opportunity granted to them at the revisional stage in substantiating their contentions and the Tribunal could not have gone into veracity of the revisional authority's order relying upon materials which were not produced before the revisional authority and, therefore' the finding given by the Tribunal cannot be found fault with and prays for rejection of the tax revision case, we do not find much force in the said argument for the simple reason that the fi$ding of .---_:.-.--:---< . ----t 9 the Tribunal, a portion of which has already been reproduced in the preceding paragraph, clearly reflects that the Tribunal has the power to go into the merits of the case scrutinizing the documents which have been produced before the Tribunal. Undisputedly, in the instant case, the petitioner has, in fact, produced all relevant documentary proofs and it has also been accepted by ttLe Tribunal as having been produced before them, yet the Tribunal rejected the appeal only on hyper tech4icality of the documents having not been brought before the revisional authority at the first instance. The findings given by the Tribunal and the arguments advanced by leamed counsel for the department both would not be sustainable and the same deserves to be and are, accordingly, set aside. The matter stands remitted back to the .fribunal deciding the matter on its own merits both on the .tspect of exemption of payment of GST as also so far as the payment of sale tax is concemed.

10. . Considering the fact that the matter is of the assessment year 1996-97 and the impugned order is one which is dated 05.10.2007, considering the seniority of the matter, the Tribunal is 10 ( expected to dispose of the matter as expeditiously as possible, preferably within a period of three months from the date of receipt ofthe copy ofthis order ll. The tax revision case stands allowed and disposed of. There shall be no order as to costs Consequently, miscellaneous petitions pending, if any, shall stand closed To, //TRUE COPY// Sd/-K.SRINIVASA RAO JOINT REGISTRAR +SECTION OFFICER

1. The Sales Tax Appellate Tribunal, Hyderabad 2 The Deputy Commissioner (CT) Nalgonda divisron' Nalgonda 3OneCCtoSRIKARTHIKRArMANAPUTTANIREDDYAdvocaIeIOPUCI 4-TwoCCstoSpecialGovt-PleaderforStateTax,HighCourtfortheStateof Telangana at HYderabad [OPUC]

5. Two CD CoPies HIGH COURT DATED:1710312025 ORDER TREVC.No.29 of 2008 / I :" c :,/ (}, o 05 ruE ilE -:;;,,\1CH gO t- ALLOWING THE TREVC WITHOUT COSTS g *d"a W q6-&"