VIPUL TRADERS Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THE appellant M/s. Vipul Traders, Secunderabad, has filed this appeal against the revision orders of the Deputy Commissioner (CT), Punjagutta Division, Hyderabad, dated 26.09.2000. The appellant is a dealer in Electrical, Automobile, Electronic and PVC Articles. The appellant held in stock certain electrical items as on 31.03.95. With effect from 01.04.1995, the items held in stock by the appellant were included in the VI Schedule to the APGST Act, 1957 and appear at Serial No. 6 of the said Schedule. On the goods included in this Schedule tax is leviable at every point of sale in the State. However, tax to be paid at any point of sale other than the first point of sale has to be determined after deducting the tax levied on the turnover of such goods at the immediately preceding point of sale by the registered dealer from the tax leviable on the turnover of the same goods at the point of sale by the dealer. For goods held in stock as on 31.03.95 also, it was ordered that set off of tax paid on those goods would be given to the dealer. It was laid down that, even if they were not in a position to produce invoices showing the tax collected from them at the immediately preceding point separately, set off would be given according to a formula laid down. The formula for arriving at the tax collected on the preceding point of sale equivalent to which a set off would be given was as under.

(2.) THE Deputy Commissioner, however, revised the above assessment of the C.T.O., stating that the C.T.O., has erroneously calculated the set off by considering the rate of tax on the goods held in stock by the dealer as 16%, because, prior to 01.04.1995 the rate of tax on the goods held in stock by the dealer was only 10% and not 16%. Therefore, the dealer can only be given a set off of tax at the rate at which he has paid tax. He proceeded to recalculate the set off due to the dealer by substituting 10% as the rate of tax in place of 16% applied by the C.T.O. As a result of such calculation he arrived at the conclusion that there had been a short levy of Rs. 12,724/ - on the dealer. Accordingly, a show cause notice was given to the appellant who filed their objections. After considering their objections, the Deputy Commissioner confirmed the revision proposals directing the C.T.O., to collect the consequential dues from the appellant. The appellant has come before us against this order of revision of the Deputy Commissioner. It is the contention of the appellant that the C.T.O., had rightly made the calculations and that the tax paid on Electrical Goods held in stock with them as on 31.03.1995 was @ 16% at the hands of the suppliers which includes rate of tax, tax on tax and turnover  tax (surcharge) and   hence there is no under levy of tax on the opening stock and there was no need for revising the assessment made by the C.T.O., In support of their contention, the appellant has also produced before us two letters given by two dealers from whom they have purchased these electrical goods which were held in stock by them as on 31.03.1995. The said two dealers are M/s. Andavar Electrical Distributors,. Secunderabad and M/s. K. Dhandapani & Co. Ltd., Secunderabad. These letters have been obtained by the appellant in June, 2001. Both the letters list out some bill/invoice numbers with date and amount and in identical language state that these invoices were billed on "second sales". At the end they also state that these materials were purchased locally and suffered tax @ 16%. When asked to produce these invoices for our perusal, the appellant stated that they are not readily available with them. When further questioned as to whether the rate of tax paid by them to their sellers have been indicated separately on these invoices/bills, the representative for the appellant has very clearly stated that the rate or amount of tax had not been separately written on these invoices/bills and that their sellers told them that the amount indicated on these invoices/bills was inclusive of tax. They, therefore argued, that since they had paid an amount inclusive of tax at the preceding point they were liable to receive set off as per the scheme of VAT introduced from 01.04.1995, since their case falls under Sl. No. 6 of the VI of Schedule to APGST Act, 1957.

(3.) THE point that arises for consideration before us is whether on the electrical goods held in stock by the appellant as on 31.03.1995 set off of tax is due under the VAT Scheme as introduced from 01.04.1995 and if so at what rate. Having heard both sides and having gone through the material placed on record before us, we have observed that the two letters submitted for our perusal by the appellant have been obtained in June, 2001. One of the letters is from M/s. Andavar Electrical Distributors and the other from M/s. K. Dhandapani & Co. Ltd., both having address of R.P. Road, Secunderabad. Both the letters are in identical language, both give the numbers, dates and amounts of bills/invoices through which electrical goods were sold by these dealers to the appellant. Both state "the following invoices are billed on second sales" and also "the above materials are purchased locally and suffered tax at 16%. There are two significant facts which strike us on reading these letters. Firstly, the dealers have made it clear that the sales to the appellant were on second sales basis and secondly that the materials were purchased locally and suffered tax at 16%. It is very apparent that these letters have been obtained and given without considerable thought as to what has been stated in them. When the rate of tax on electrical goods as rightly pointed out by the Deputy Commissioner was 10% till 31.03.95 how could the goods sold during the month of March, 1995 have suffered tax @ 16%? We have further perused I Schedule of APGST Act. 1957 as it existed during the relevant period. We find that at that time these goods were exigible to tax only at the first point of sale in the State upto 31.03.95. It is therefore, clear that these goods which were sold on second sales basis to the appellant could not have suffered any tax at all during the month of March, 1995. All the invoices/bills are dated from 23.03.95 to 31.03.95. Second proviso in the VI Schedule of APGST Act, 1957 as introduced from 01.04.95 states as follows: