AVINASH MEDICALS Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS is an appeal filed against the order dated 1.8.1998 in appeal No. 140/97 -98(CTR) on the file of the Appellate Deputy Commissioner (CT), Kurnool, relating to the assessment order dated 30.6.1997 in assessment No. 6431/96 -97 on the file of Commercial Tax Officer -I, Chittoor -I. The turnover disputed in the present appeal relating to rate of tax is Rs. 14,59,818/ -. The appellant filed A -l returns for the assessment year 1996 -97. He showed gross turnover of Rs. 20,00,012 -00ps and claimed the entire turnover as exempted turnover. The assessing authority allowed the entire exemption as they relate to second sales. However on a turnover of Rs. 14,59,812/ - levied turnover tax. Before the assessing authority, assessee claimed exemption from the turnover tax relying upon G.O. Ms. No. 746 Revenue (CT -II) Department, dated 10.9.1996. The assessing authority did not allow that exemption. Aggrieved by that order, appellant preferred an appeal before the Appellate Deputy Commissioner (CT), who dismissed the appeal on merits. Aggrieved by the order of the Appellate Deputy Commissioner (CT), appellant preferred the present appeal.

(2.) THE point for consideration is, whether the order of the Appellate Deputy Commissioner (CT) in appeal is liable to be set -aside?.

(3.) THE appellant is seeking exemption from turnover tax under notification issued in G.O. Ms. No. 746 Revenue (CT -II) Department, dated 10.9.1996. Under that notification, the Governor of Andhra Pradesh exempted -second and subsequent sales of drugs and medicines whether patent or proprietary as defined in Section 3 of the Drugs and Cosmetics Act 1940 mentioned in entry against Sl. No. 37 of the First Schedule to the Act, from turnover tax payable under Section 5 -A of the said Act. Entry 80A covers feed supplements, nutrients, mineral mixture, vitamins, medicines and any other category of feed supplements which are used in poultry feed, fish feed, prawn feed and feed for livestock. It is the plea of the appellant that he is selling medicines to be used for cattle etc., those medicines are manufactured under a licence duly issued under the provisions of Section 3 of the Drugs and Cosmetics Act and thus the turnovers relating to those medicines are also entitled for exemption from turnover tax. The Commissioner of Commercial Taxes in CCT's Ref. AI(1)/2356/97, dated 28.8.1997 clarified that entry 37 of the First Schedule to the Act covers all medicines for human and animal use which are manufactured and sold under drugs licence. Just because the medicines are exclusively used for diagnosis and mitigation of diseases in animals, they do not fall under entry 80 A of the First Schedule to the APGST Act, A careful reading of the entry 80 -A indicates that such of those medicines which are used in poultry feed, fish feed, prawn feed and feed for livestock alone are covered by entry 80 -A. Other medicines even though those medicines are used for animals only, if those medicines have been manufactured or produced under licence duly issued under the provisions of the Drugs and Cosmetics Act, 1940 are to be treated as medicines falling under entry 37 and those turnovers relating to second sales and subsequent sales are liable for exemption from turnover tax under the G.O. Ms. No. 746. The records produced before us at the time of hearing do not clearly indicate how much of the turnover taxed under Section 5 -A of the APGST Act relates to medicines manufactured and produced under a licence duly issued under the provisions of Drugs and Cosmetics Act, 1940. Without having actual figures relating to such turnover, it is not possible to decide how much of the turnover is exempt from turnover tax as per the notification under G.O. Ms. No. 746, dated 10.9.1995. The Authorised Representative as well as the State Representative wanted proceedings to be remitted back to the assessing authority to ascertain the relevant figures and grant exemption from the turnover tax. For all the reasons stated above, we hold this point in favour of the appellant and against the Revenue.