APHC010583512004 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3526] TUESDAY, THE EIGHTEENTH DAY OF MARCH TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE NINALA JAYASURYA THE HONOURABLE SRI JUSTICE TARLADA RAJASEKHAR RAO TAX REVISION CASE No: 61/2004 Between: State of Ap Rep.by Sr Before Stat, Hyd ...PETITIONER AND M/s Ambuja Paints Ltd Vsp ...RESPONDENT Counsel for the Petitioner: 1. GP FOR COMMERCIAL TAX Counsel for the Respondent: 1. B SRINIVAS The Court made the following: 2 ORDER: (Per Hon’ble Sri Justice Ninala Jayasurya) The present Tax Revision Case has been preferred against the orders of the Sales Tax Appellate Tribunal, Andhra Pradesh, in T.A.No.730 of 2001 dated 26.09.2003. The State is the revision petitioner. 2. For the sake of convenience, the parties are referred to as the ‘State’ and the ‘Assessee’. 3. Heard Smt. Disha Chowdary, learned Assistant Government Pleader representing the State and Mr. B.Srinivas, learned counsel for the Assessee, who appeared through online. Perused the material on record. 4. The relevant facts for the purpose of adjudicating the matter on hand may be stated in brief as follows: The Assessee – M/s. Ambuja Paints Limited, Gajuwaka, is a dealer in paints and the assessment under the Central Sales Tax Act (CST Act) for the year 1997-98 was finalised by the Commercial Tax Officer (CTO), Gajuwaka Circle, determining the taxable turnover as Rs.1,79,420/- and levied tax on a turnover of Rs.88,000/- @ 15% as not covered by C/D Forms. Before the Assessing Authority, the Assessee contended that the disputed turnover is relating to inter-State sales of paints and, as such, entitled for concessional rate of tax @ 7% applicable in respect of Small Scale Industrial (SSI) units, in terms of G.O.Ms.No.252 dated 19.05.1995, and a higher rate of tax @ 10% is applicable on the said turnover under the CST Act. The Commercial Tax Officer rejected the said contentions vide Assessment Order dated 3 02.09.2000 and determined the tax payable at Rs.16,857/-. Feeling aggrieved by the said order, the Assessee carried the matter by way of an appeal to the Appellate Deputy Commissioner (CT), Kakinada, and the same was dismissed on 25.01.2001. Challenging the said order, the Assessee carried the matter to the Sales Tax Appellate Tribunal vide T.A.No.730 of 2001 and the same was allowed by the Appellate Tribunal. The State, challenging the said order, filed the present Tax Revision Case. 5. Learned Assistant Government Pleader made detailed submissions, inter alia, that the learned Appellate Tribunal went wrong in interfering with the well-considered order passed by the Appellate Authority, confirming the order of the CTO. She submits that, in the present case, there is no dispute that the turnover of Rs.88,000/- is not covered by C/D Forms and the sales are in the course of inter-State trade. Referring to Section 8(2)(b) of the CST Act, learned counsel submits that the rate of tax applicable in respect of the goods in question, i.e., paints, shall be chargeable tax @ 10% or at the rate applicable to sale or purchase of the goods inside the appropriate State whichever the higher. Drawing the attention of this Court to the Sixth Schedule of the APGST Act, learned counsel would contend that the rate of tax payable in respect of the paints is 15 paise in the Rupee and, therefore, 15% tax is leviable in respect of the turnover which is not covered under the C/D Forms. Insofar as the application of G.O.Ms.No.252 dated 19.05.1995, to the case of the Assessee by the learned Appellate Tribunal, she submits that the G.O. is applicable only in respect of specialised category of units, which are mentioned in the 4 said G.O. and, as such, the Tribunal’s conclusions with reference to the said G.O. are not correct. She further submits that as the inter-State sales are chargeable to tax @ 15 paise in the Rupee as per Sixth Schedule, and as the reduction of tax, i.e., 7 paise in the Rupee, vide G.O.Ms.No.252, is applicable only to those categories mentioned therein, the question of law may be decided in favour of the State by setting aside order under challenge. 6. Whereas, learned counsel for the Assessee made submissions to sustain the order passed by the learned Appellate Tribunal. He submits that it is not the case of the State that the Assessee is not an SSI unit and, in such circumstances, the only issue that needs to be examined is, whether the Appellate Tribunal was right in applying G.O.Ms.No.252 dated 19.05.1995 to the facts of the present case. Referring to the said G.O., learned counsel would submit that the Government in exercise of its powers conferred under Section 9(1) of the A.P.General Sales Tax Act, in supersession of the earlier Notifications, issued directions that the tax leviable under the Sixth Schedule of the APGST Act shall, in respect of sales of paints manufactured by cottage and small scale industries situated in the State, be @ 7 paise in the Rupee with effect from 01.04.1995. By virtue of the said G.O., though in Sixth Schedule, the rate of tax insofar as paints (Sl.No.8) was prescribed @ 15 paise in the Rupee, the same is no longer applicable to the turnover of the Assessee, which is not covered by C/D Forms. He further submits that as per Section 8(2)(b) of the CST Act, the rate of tax whichever is higher is applicable and, therefore, the learned Appellate Tribunal was right in levying the tax on the disputed turnover @ 10%. He submits that there 5 is no illegality in the order passed by the learned Appellate Tribunal and, therefore, the appeal is liable to be dismissed. 7. On an appreciation of the rival contentions, the only point/question of law, which is required to be determined, is, whether the inter-State sale of paints is liable for tax @ 10% or @ 15% as contended on behalf of the State. 8. It is not in dispute that Section 8 of the Central Sales Tax Act referred to hereunder provides for rates of tax on sales in the course of inter-State trade or commerce: "8. Rates of tax on sales in the course of inter-State trade or commerce.–– (1) Every dealer, who in the course of inter-State trade or commerce–– (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3); shall be liable to pay tax under this Act, which shall be [four per cent] of his turnover. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub- section (1)–– (a) in the case of declared goods, shall be calculated [at twice the rate] applicable to the sale or purchase of such goods inside the appropriate State; and 6 (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law." 9. Section 5 of the APGST Act deals with levy of tax on sales or purchase of the goods and Section 5A of the APGST Act deals with levy of tax on turnover. Serial No.8 of Sixth Schedule of the APGST Act deals with paints and other goods and the rate of tax in respect of the sales of the said goods is 15 paise in the Rupee i.e., 15%. So far as the said rate of tax is concerned, admittedly, the Government issued G.O.Ms.No.252 dated 19.05.1995, directing the tax leviable under the Sixth Schedule, more particularly, in respect of sales of paints manufactured by cottage and small scale industries, @ 7 paise in the Rupee with effect from 01.04.1995. The assessment is in respect of the turnovers for the year 1997 and 1998, i.e., after issuance of the said G.O.Ms.No.252 dated 19.05.1995. Further, nothing is placed on record in the case on hand by the Department that the Assessee is not a Small Scale Industry unit. In such an event, the contention raised on behalf of the State that the said G.O. has no application to the Assessee merits no acceptance. That apart, a reading of Section 8(2)(b) of the CST Act, referred to supra, makes it clear that the tax payable on the Assessee in the case of the goods other than the declared goods shall be calculated 7 @ 10% or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever higher. 10. Thus, in the present case, by virtue of G.O.Ms.No.252 dated 19.05.1995, the disputed rate of tax on turnover insofar as the State is concerned, is 7%. In the light of Section 8(2)(b), which provides for higher rate of tax than the rate applicable in terms of the rate of tax under Sixth Schedule, the tax @ 10% on the turnover on paints is liable to be paid. The learned Appellate Tribunal, after considering these aspects in the proper perspective, in the considered opinion of this Court, has rightly allowed the appeal by fixing the tax leviable on the disputed turnover @ 10%. In such view of the matter, the question of law is answered in favour of the Assessee and against the State. 11. In the result, the Tax Revision Case is dismissed. There shall be no order as to costs. Per Hon’ble Sri Justice Tarlada Rajasekhar Rao: 12. I have gone through the order and I fully concur with the view and findings given by my learned brother Sri Justice Ninala Jayasurya. However, looking to the importance of the matter, I would like to add my reasoning in this behalf. As the facts are set out by my learned brother, I do not intend to deal with the facts in detail. In the circumstances of the case, I am of the view that the following discussion is also necessary. 13. The Assessee is carrying on business of manufacturing of paints. The Assessing Authority under the Central Sales Tax Act, for the year 1997-1998, determined net tax turnover as Rs.1,79,420/-. Out of this 8 turnover, the Assessing Officer levied the tax on a turnover of Rs.88,000/- @ 15% as not covered by C/D Forms. Accordingly, a show-cause notice was issued to the Assessee. The Assessee has disputed imposing of tax @ 15% on the turnover relating to inter-State sales of paints on the premise that the Assessee is entitled at concessional rate of 7% that is applicable to small scale industrial units as per G.O.Ms.No.252 dated 19.05.1995, utmost higher rate of 10% is applicable to this turnover under the CST Act. However, the C.T.O. has rejected the said contention. Appeal filed by the Assessee was confirmed by the Appellate Deputy Commissioner (CT), Kakinada, vide order dated 25.01.2001 and directed to pay tax @ 15% relying on the clause 8 of Sixth Schedule appended/annexed to the Andhra Pradesh General Sales Tax Act, 1957, which is extracted hereunder: Sl. No. Description of Goods Point of Levy Rate of Tax 8. Paints, colours, dry distempers, varnishes and blanks, cellulose, lacquers, polish pigments, indigo enamels, cement-based water paints, oil bound distemper, water pigments, finishes for leather or plastic emulsion paints, turpentine oil, bale oil, white oil and thinners. At every point of sale in the State 15 paise in the Rupee 14. Against the order dated 25.01.2001 of the Appellate Deputy Commissioner, the Assessee has preferred appeal before the Sales Tax Appellate Tribunal (for short STAT), vide Appeal No.730 of 2001. The Assessee has reiterated the same grounds as raised before the Appellate Deputy Commissioner (CT). The Assessing Officer, however, resisted the appeal contending that the G.O.Ms.No.252 is not applicable, which was relied by the Assessee, on the ground that the G.O. cannot have a general application, since the concession is granted 9 to specified dealers and the G.O. is not applicable to inter-State sales. However, the Assessing Officer has admitted that the Assessee’s unit is SSI. 15. The STAT has allowed the appeal observing that the Appellate Deputy Commissioner does not refer at all rate of tax to be reduced under G.O.Ms.No.252, which is applicable in the State and that, has straight away applied scheduled rate of 15%, though the same is reduced to 7% by G.O.Ms.No.252, under the A.P.G.S.T. Act. Accordingly, the STAT has set aside the orders of the Assessing Officer which was confirmed by the Appellate Deputy Commissioner by allowing the Appeal and directed the Assessing Authority to levy tax on the disputed turnover @ 10%. 16. Aggrieved by the orders of the STAT in Appeal No.730 of 2001 dated 10.09.2003, the present Tax Revision Case No.61 of 2004 was preferred on the substantial grounds raised by the Assessing Officer i.e. whether the disputed turnover relating to inter-State sales of paints is entitled concessional rate of tax @ 10% when the schedule rate of tax on paints is 15%, though the same is reduced to 7% by the G.O. in a specific situation, and the STAT is right in holding that the correct rate of tax is10% in view of Sixth Schedule appended to the APGST Act. 17. 17. When the matter was taken for consideration, learned counsel appearing for the State Ms. Disha Chowdary, has reiterated the substantial grounds framed by this Court and additionally argued that the G.O. is not applicable as it is only applicable to the small scale and cottage industries. Hence, prayed to set aside the order in Appeal No.730 of 2001 of the Sales Tax Appellate Tribunal. 10 18. Learned counsel appearing for the Assessee would submit that the Appellate Tribunal has rightly delivered the order/judgment by relying on the G.O.Ms.No.252 dated 19.05.1995 and the said G.O. is applicable to all types of paints. Hence, prayed to dismiss the Tax Revision Case No.61 of 2004. As per Section 8(2)(b) of the CST Act, the Assessing Officer can levy tax @ 10%. 19. The Sales Tax Appellate Tribunal has allowed the appeal basing on the G.O.Ms.No.252. As per the G.O., the Assessing Officer can levy the tax only @ 7%. The said G.O., was issued superseding the G.O.Ms.No.381, dated 09.04.1986. Under the said G.O., the Assessing Officer can levy tax on the paints @ 4%. 20. On careful perusal of the G.O., it is applicable to any type of paints including cement based water paints manufactured by small scale and cottage industries. 21. For facility and ease of reference, the relevant provision is hereby extracted: Section 8(2)(b) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub- section (1) -- (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. 22. Section 8(2)(b) of the Central Sales Tax Act states that the tax may be imposed at a rate of 10% or the rate that would apply if the goods were sold or purchased inside the relevant State, whichever is 11 higher. As a result, the STAT has allowed the appeal and directed the authority to apply 10% tax. Though the G.O.Ms.No.252 indicates that the State may impose 7% tax on paints, albeit the STAT has directed 10% tax rate based on G.O.Ms.No. 252. Section 8(2)(b) of CST Act states that 10% of the Tax can be levied for the goods. In accordance with Section 8(2)(b) of CST Act, the State may, under suitable circumstances, impose the higher rate. It is trite law that the provisions contained in the Central Act prevails over the provisions of the State Act. It should be understood that the STAT has granted the relief to the Assessee’s appeal, pursuant to Section 8(2)(b) of CST Act. The STAT correctly concluded that the Assessee is required to pay tax at the rate of 10% in light of the aforementioned provision. 23. For the aforesaid reasoning given by me, I am concurring with the findings of my learned brother Sri Justice Ninala Jayasurya. 24. Accordingly, the Tax Revision Case stands dismissed. As a sequel, interlocutory applications pending, if any, in this case shall stand closed. __________________________ JUSTICE NINALA JAYASURYA __________________________________ JUSTICE TARLADA RAJASEKHAR RAO Date: 18.03.2025 Siva/Harin 12 THE HON’BLE SRI JUSTICE NINALA JAYASURYA AND THE HON’BLE SRI JUSTICE TARLADA RAJASEKHAR RAO TAX REVISION CASE No.61 OF 2004 Date: 18.03.2025 siva