DUGGIRALA RAMAKOTAIAH Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) The petitioner in all these cases is M/s. Duggirala Ramakotaiah, a firm which is engaged in civil contract works. It is registered as a dealer on the rolls of the Commercial Tax Officer, Seetharamapuram Circle, Vijayawada (for short, "the CTO"). The petitioner commenced business with effect from June 1, 1998. It entered into an agreement with M/s. A. P. State Police Housing Corporation Limited (a State Government Undertaking) on January 16, 1998 for construction of part of external compound wall, administrative building, court buildings, Special Cells, Watch towers, etc., for a rehabilitation centre for social offenders at Moula-Ali, in Ranga Reddy District. For execution of this contract, the Department of Jails under the control of the Home Department of the State Government allegedly supplied gravel free of cost to the petitioner. The petitioner transported the gravel from the place where it was found to the place where it was required in the execution of the aforesaid works.

(2.) For the assessment year 1998-99, the petitioner filed monthly returns (APGST) before the CTO/assessing officer. In the said returns, it included a sum of Rs. 40,30,754 under the category "earth filling charges" and claimed it as an exemption. It contended that this portion of the turnover represents the charges for lifting and transporting of gravel to the worksite and that this amount is exempted from levy of sales tax under section 5F of the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the Act") read with rule 6(2) of the Rules framed under the Act.

(3.) The assessing officer/CTO, by proceedings dated May 5, 2000 completed final assessment and held that under section 5F of the Act, the Government levies tax on transfer of property in the goods involved in the execution of works contract, that the goods enumerated in the Schedules to the Act are subject to tax, that under rule 6(2) of the Rules framed under the Act, certain deductions are permissible in determining the taxable turnover of the contractor, that the petitioner's claim for exemption of Rs. 40,30,754 representing the value of gravel used in the above works contract from levy of sales tax is valid as per G.O. Ms. No. 1091 Revenue, dated June 10, 1957 (wherein "earth work and gravel quarrying contracts" are exempted from levy of sales tax vide item No. 11 of the said G.O.) and therefore the petitioner is entitled to deduct the said amount from his taxable turnover. He therefore excluded the said amount from the taxable turnover of the petitioner, arrived at the net turnover and calculated tax at the rate of six per cent thereon.