JAGADGURU COTTON INDUSTRIES Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS is an appeal filed against the revision order of the Deputy Commissioner(CT), Warangal Division, dated 22.9.2001 in R.R. No. A8/29/2001. The relevant facts in brief are as follows. The appellant M/s. Jagadguru Cotton Industries, Warangal is a registered dealer on the rolls of Commercial Tax Officer, Warangal Division, both under APGST and CST Acts. For the assessment year 1996 -97, the C.T.O., passed the final assessment order on 3.9.98 determining the turnovers as follows:

(2.) THEREAFTER , during the year 2001, the Deputy Commissioner (CT), Warangal Division, perused the assessment record and found that though the appellant effected inter -state sales of 9270.11 Quintals of cotton lint worth only Rs. 4,38,15,530/ - U/s. 3 of the CST Act, 1956, the C.T.O., granted exemption under G.O.Ms. No. 537, dated 24.3.84, the purchase tax payable on the purchases of raw cotton worth Rs. 4,92,47,460/ - and thus the C.T.O., granted exemption on the excess turnover of Rs. 54,31,930/ - and hence the appellant is liable to pay further tax of Rs. 2,17,277/ - @ 4% on Rs. 54,31,930/ - U/s. 6 of the APGST Act. A show cause notice was issued to the appellant/assessee proposing to revise the assessment order in that fashion. The appellant/assessee filed reply stating that in respect of the raw cotton the dealers are eligible for exemption in respect of sales of either raw cotton or lint sold in the course of inter -state trade and also in respect of the sales of raw cotton or lint sold to the registered dealers within the State. The dealer further contended in the objections filed that the question of restricting the purchase value of declared goods sold in the course of inter -state trade to its sale value does not arise as it is not a case of allowing rebate or set -off, so that it could be restricted to the sale value like in the case of paddy and rice. The appellant contended that this Tribunal in the case of M/s. Kallam Agro Products & Oils Pvt. Ltd., v. State of Andhra Pradesh reported in, (1995) 20 APSTJ 93 held that the raw cotton can not be estimated corresponding to consignment sales of cotton seeds for levy of tax U/s. 6A of APGST Act. The dealer contended that he is entitled to claim exemption on the entire purchase value of raw cotton relating to interstate sales of cotton lint and the purchase value cannot be restricted to the inter -state sale value of cotton lint. The learned Deputy Commissioner did not accept the contentions of the appellant/assessee. The learned Deputy Commissioner in his impugned revision orders observed that ginned cotton purchase value was regarded as equivalent to unginned cotton purchase value since unginned cotton and ginned cotton are to be regarded as single commodity as per Entry 8 of the III Schedule to the APGST Act, 1957 and the same was affirmed by Allahabad High Court in case of M/s. Kailash Chand Ramesh v. Commissioner of Sales Tax reported in, (1985) 58 STC 87 and that the Allahabad High Court upheld the action of the assessing authority in levying the tax on the differential turnover between the sale value of cotton lint and corresponding value of cotton kapas. The learned Deputy Commissioner further observed that the instructions under G.O.Ms. No. 537 were meant to avoid inevitable delays in arranging refunds under rule 27 and thereby to reduce the administrative work load involved in issuing the refunds and that the government never intended to forego the purchase tax on cotton or cotton lint by allowing the dealer to claim the sales tax exemption on the sale or purchase of any declared goods inside the State on mere ground that such goods are sold in the course of inter -state trade or commerce and that in the instant case the tax levied in respect of the sale of cotton lint in the course of inter -state or commerce is less than the tax payable on the corresponding purchase value of cotton kapas relating to lint sold in the course of inter -state trade which was allowed by the assessing authority is erroneous. With the said observations, the learned Deputy Commissioner confirmed the revision.

(3.) DURING the course of hearing, the learned counsel reiterated the contentions raised in the grounds of appeal. The counsel submitted that the C.T.O. rightly allowed exemption as cotton purchased was ginned and the lint was sold in the inter -state trade and commerce and further the raw cotton was sold to the registered dealers within the State and that as the appellant paid tax on the inter -state sales under CST Act the appellant is entitled for exemption of purchase tax and that the learned Deputy Commissioner erred in restricting the exemption to the value of the lint sold in the inter -state trade and commerce. The learned counsel relied upon the decision of Hon'ble Supreme Court in State of Punjab & Others v. Sethganapathram Cotton Ginning and Processing Factory reported in, (1989) 9 APSTJ 23 wherein the Supreme Court held that the entire purchase price of the cotton can be claimed as deduction because no part of the cotton after ginning was retained by the assessee and that the entire ginned cotton was sold by the respondents to the registered dealers and the retention of the cotton seeds can make no difference.