BHARAT DYNAMICS LIMITED Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS appeal is filed by M/s. Bharat Dynamics Limited, Hyderabad, aggrieved by the order of Appellate Deputy Commissioner (CT), Punjagutta Division, Hyderabad, dated 1.12.97 in Appeal No. C/122/96 -97 partly dismissing the appeal and partly remanding it to the assessing authority. The appellant is a Public Sector Undertaking and is a registered dealer on the rolls of Commercial Tax Officer, Malakpet Circle, Hyderabad. Its assessment for the year 1993 -94 under APGST Act was finalised by the Commercial Tax Officer levying tax on the disputed turnover of Rs. 1,78,83,014/ - @ 10% under Entry 8 of Ist Schedule to APGST Act and on the second disputed turnover of Rs. 11,52,277/ - @ 4%. The first disputed turnover is stated to be relating to sale of Prithvi Missiles to D.R.D.L., and the second turnover related to the sales of Electronic Goods by the appellant. Regarding the first turnover, it was pleaded before the Commercial Tax Officer that the disputed turnover related to the sales of Prithvi Missiles assembles short of propellent and it is only a semi -finished missile and part of a missile and not finished and complete missile ready for use and therefore it does not fall under Entry 8 of Ist Schedule to APGST Act dealing with "All arms including rifles, revolvers and pistols and ammunition for the same". Thus, the dealer contended that what it sold to D.R.D.L., is not an arm but only a part of it and Entry 8 does not cover the spare parts, parts or accessories of such arms and therefore does not cover the assembly part of Prithvi Missiles sold by the appellant which is short of a propellent. Thus, it was pleaded that what they sold to D.R.D.L., is not covered by Entry 8 and therefore not liable to tax at 10% as per Entry 8 and therefore not liable to tax at 10% as per the said Entry and consequently the same is to be treated as unclassified goods falling under VIIth Schedule of APGST Act liable to tax only @ 6% during the relevant assessment year 1993 -94. But, the C.T.O., rejected the contention holding that a harmonious reading of entries relating to arms under both the Revenue Acts of the land i.e., Entry 8 of Ist Schedule to APGST Act and Chapter 93 in Sec. XIX of CETA 1986 reveals that missiles and parts are duly covered under the heading within "arms and ammunition, parts and accessories thereof" as expressed under CETA and also under the expression "all arms;" under APGST Act. He held that the 'assembly of the missile' as described in the B.D.L's Invoice i.e., 'the Prithvi -P -17, P -18, P -16, missile assembly integration and checkout of Prithvi Missile', sold to D.R.D.O., and just short of the propellent i.e., added by the D.R.D.O. and then test -fired, does not cease to be an Arm. He observed that this 99% assembly of the missile just short of the propellent cannot be called an unclassified or general goods of merchandise of ordinary sense in commercial parlance. He ultimately held that the missile assembly just short of the propellent, therefore, deserves to be treated and referred as an Arm, but not as unclassified goods of general nature and unidentifiable with the entries referred under the APGST Act or the CETA.

(2.) AGGRIEVED by the order of Commercial Tax Officer levying tax on the first disputed turnover at 10% under Entry 8 of Ist Schedule to APGST Act and on the second disputed turnover relating to sale of electronic goods @ 4%, the dealer preferred appeal before A.D.C. Regarding the first disputed turnover they raised the same contentions which were raised before the C.T.O., and pleading that the assessing authority failed to note that they sold semi -finished goods and these missiles were classified as 'ammunition materials' in Tariff No. 93.06 and not as 'arms and fire -arms'. Regarding the rate of tax on the second disputed turnover the appellant pleaded that the C.T.O. adopted enhanced rate of 4% on this turnover relating to electronic goods as per G.O.Ms. No. 864, Rev. dt. 7.9.93 which is enforceable w.e.f. 10.9.93 only as held by the High Court of Andhra Pradesh in the case of BPL limited Vs. State of Andhra Pradesh, (1993) 19 APSTJ 78 and the C.T.O., erred in levying tax at 4% on the disputed turnover relatable to sales of Electronic Goods from 1.4.93 to 9.9.93. The Appellate Deputy Commissioner dismissed the appeal in respect of the first turnover holding that 'Missiles' falls under the ambit of expression 'Arms and ammunition' in as much as these missiles are meant and used as ammunition by the Military Forces. Regarding the second turnover he observed that the appellant questioned the levy of turnover tax as well as basic rate of tax at 4% on this turnover relatable to sales of Electronic Goods from 1.4.93 to 9.9.93 and the assessing authority levied tax at 4% on the whole, instead of bifurcating the turnover towards sales of Electronic Goods upto 9.9.93 and after 9.9.93. Therefore, he set -aside the assessment order in this respect and remanded the proceedings to the assessing authority with direction to quantify the turnovers correctly and assess them at the rates applicable thereto.

(3.) HEARD arguments of both sides and perused the entire material on record including the written submissions filed by the appellant.