GOWLI NAGAPPA Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS tax revision case arises out of an order of the Sales Tax Appellate Tribunal rejecting an appeal preferred by the petitioner.

(2.) THE petitioner (hereinafter referred to as "the assessee"), a manufacturer of groundnut oil, registered under rule 18 of the Madras General Sales Tax (Turnover and Assessment) Rules, was submitting his monthly returns and claiming rebates on sales, as provided under sub-rule (2) of that rule. For the financial year 1952-53, he submitted his returns to the assessing authority in Forms A-3 and A-9. Subsequently he was adjudged an insolvent and his estate vested in the Official Receiver who took possession of his assets along with his records. Against the order of assessment passed by the Original Authority, the assessee preferred an appeal to the Deputy Commissioner (Appeals), Kurnool. While disposing of the appeal, the Deputy Commissioner called upon the assessee to produce his accounts. The assessee referred the Appellate Authority to the Official Received. On the basis of the accounts produced by the Official Receiver, the assessee was allowed rebate by deduction of the purchase value of the groundnut and kernel calculated on the sale value of the groundnut oil for the period from 19th October, 1952, to 31st March, 1953. His claim for rebate from 1st April, 1952, to 18th October, 1952, was negatived. The appellate order was confirmed by the Sales Tax Appellate Tribunal. It is contended by Sri Kondapi, learned counsel for the assessee, that he was filing A-9 returns on the basis of which he was claiming deductions under rule 18, and that the fact that the accounts for the period from 1st April, 1952, to 18th October, 1952, had not been produced by him, should not be a ground for disallowing the rebate.

(3.) ANY dealer who manufactures groundnut oil and cake from groundnut to groundnut kernel purchased by him may register himself as a manufacturer of groundnut oil and cake. Such manufacturer is entitled to a deduction from his gross turnover of an amount equal to the value of the groundnut and (or) kernel purchased and converted by him into oil and cake, provided that the amount for which the oil is sold is included in his turnover and subject to the conditions specified in rule 18. Normally the manufacturer of groundnut oil and cake who sells them has to pay tax on the sales turnover. But if the gross turnover of oil is subject to tax manufacturer would be paying tax both on the groundnut and kernel purchased by him and also on the sale of oil manufactured therefrom. In order to obviate this hardship, a special privilege or exemption is conferred on a dealer in groundnut who registers himself as a manufacturer of groundnut oil and cake. The right to claim this exemption is, however, subject to certain conditions specified in rules 5(1)(k) and 18. Under rule 5(1)(k), all amounts which a registered manufacturer of groundnut oil and cake may be entitled to deduct from his gross turnover under rule 18 shall be subject to the conditions specified in that rule. Rule 18(1) required any dealer who manufactures groundnut oil and cake to be registered as a manufacturer. Rule 18(2) imposes two further conditions, viz., that the oil should have been manufactured and sold by the dealer who has registered himself as a manufacturer and that the amount for which the oil is sold should be included in his turnover. If these two conditions are fulfilled, then deduction equal to the value of the groundnut and kernel purchased by him and converted into oil and cake is permissible. There is a further obligation under rule 18(3), viz., that every such manufacturer shall submit so as to reach the registering authority not later that the 25th day of every month, a statement in Form A-9 in respect of the transactions relating to the previous month. This is to enable the assessing authority to allow deduction or to fix the amount thereof under rule 18(2).