ANDHRA AGENCIES Vs. STATE OF A P

JUDGEMENT

(1.) Leave granted.

(2.) Challenge in this appeal is to the judgment of the Division Bench of the Andhra Pradesh High Court dismissing the Revision Petitions and special appeals filed by several assessees under Section 22(1) (so far as the revisions are concerned) and Section 23(1) (so far as the appeals are concerned) of the Andhra Pradesh General Sales Tax, 1957 (in short the Rs. Act). The basic issues involved are the same. For different assessment years, orders were passed by exercising revisional power by the Commissioner of Sales Tax. In some cases Deputy Commissioner exercised revisional power. The issue involved was whether the value representing the credit notes issued by the manufacturers to the distributors were to be included in the taxable turnover. All the assessees involved were carrying business in liquor as distributors of the brand manufactured by M/s. Shaw Wallace & Co. Ltd. And M/s. Vinadale Distilleries (P) Ltd., Hyderabad. For the relevant assessment years, sales tax was leviable on the first and last sale of the total sales affected. At the same time as per the proviso to Schedule VI the intermediate dealers are taxable on the differential turnover i.e. the intermediate dealers are entitled for exclusion of the turnover which had already suffered tax. The assessees in question are intermediate dealers which are liable to tax only on the differential turnover i.e. after excluding the turnover which had already suffered tax. It is the case of the assessees that they used to purchase various brands of liquor from the two manufacturers who are the first sellers and who are liable to be taxed on the total turnover in so far as their sales are concerned. After the sales were affected by the dealers in question they have declared the differential turnover i.e. the difference between the purchase price and the sales price which was subjected to tax by the assessing officer. However, it came to light that the assessees had received periodical credit notes representing the discount i.e. either annual discount or quarterly discount from the manufacturers. It was the stand of the Revenue that they were not taken into account while making assessment though they were entered in the books of accounts. These facts came to light subsequently when the task force of the department verified the books of account of the above two manufacturers. Therefore, revisional proceedings were initiated to include the amounts in question in the taxable turnover in respect of the amounts representing the value covered by the Credit notes. In some cases the Commissioner passed revisional orders because according to him while revising the assessment, Deputy Commissioner had not taken the correct figures. Assessees stand before the Authorities as well as the High Court was that the first seller had collected tax on the total turnover representing the sale prices from the respective dealers and the first seller manufacturers claimed reduction/rebate in their turnover representing the credit notes and obtain reduction/rebate of the tax from the department. Therefore, such amounts should not have been treated as a part of the taxable turnover in the hands of the dealers who are the subsequent sellers. The stand of the Revenue was that when the manufacturer returned a part of the sale consideration under the credit notes, the returned amount under the credit notes includes a part of the tax that was already collected since the tax collected was an inseparable part of the sale consideration. The High Court was of the view that the basic question was whether value of the credit notes goes to reduce the purchase turnover of the dealers or not. The High Court found that the Revenues stand was correct.

(3.) In support of the appeal learned Counsel for the appellant submitted that the whole seller had paid tax on the whole amount before adjustment of the credit notes. Therefore the revenue was not justified in levying further demand.