STATE OF ANDHRA PRADESH Vs. BUSINESS FORMS LIMITED

JUDGEMENT

(1.) M/s. Business Forms Limited, Hyderabad, the respondent herein, during the assessment year 1978-79 supplied punching cards of the value of Rs. 5,11,364.52 to M/s. Hindustan Aeronautics. Before the assessing authority - the Commercial Tax Officer, III Circle, Hyderabad - the respondent raised the plea that the aforesaid turnover was liable to tax at the rate of 5 per cent under item 143 of the First Schedule. The assessing authority rejecting that contention subjected the turnover to tax at a higher rate treating the punching cards as accessories of electronic systems falling under clause (v) of entry 38 of the First Schedule. At the relevant time the rate of tax in respect of items falling under entry 38 was 8.25 per cent up to 22/11/1978 and subsequently the rate was 8.5 per cent. He accordingly subjected Rs. 3,48,809 at the rate of 8.25 per cent up to 22/11/1978 and the rest, Rs. 1,62,555 at the rate of 8.5 per cent for the remaining period of the assessment year.

(2.) The assessee carried the matter in appeal before the Assistant Commissioner, Commercial Tax (Appeals), Hyderabad-1 Division, who by his order dated 28/02/1980, confirmed the assessment. The matter was further carried in appeal to the Sales Tax Appellate in T.A. No. 263 of 1980. The Appellate tribunal remanded the matter to the assessing authority observing : "The samples contained in the assessment file show that the appellants supplied pay roll forms to Hindustan Aeronautics, blank paper with perforation on one side that can be used for any purpose and other stationery items. Merely because the papers contained special rules and printed matter as required by the customer, the assessing officer concluded that they are accessories to electronic equipment attracting tax at 8 per cent under sub-item (v) of entry 38 of the First Schedule. There is no finding that the entire turnover of Rs. 5,11,364.52 relates to punching cards intended for use as 'parts and accessories' of several gadgets enumerated in sub-item (v) of entry 38 of the First Schedule. This is necessary before classifying them as falling under item 38(v). The article manufactured to serve as a part of a particular kind of instrument or gadget would not cease to be covered by the intended entry simply because a purchaser makes some other use of it. This is the rationale of the judgment of the Supreme Court in Annapurna Carbon Industries Co. v. State of Andhra Pradesh [1976] 37 STC 378 .......... Viewing the matter thus, we set aside the impugned order of both the departmental authorities so far as they relate to the turnover and matter disputed before us in this appeal and restore the matter to the file of the assessing authority for fresh disposal according to law after giving a clear finding about the nature of each such classification of goods sold by the appellant keeping in view the judgment of the Supreme Court in [1976] 37 STC 378 (Annapurna Carbon Industries Co. v. State of Andhra Pradesh) and giving them an opportunity to produce whatever evidence they desire to be considered in support of their submission."

(3.) The department preferred the present revision case aggrieved by the aforesaid order of the Sales Tax Appellate Tribunal.