STATE OF ANDHRA PRADESH Vs. HINDUSTAN SHIPYARD LIMITED

JUDGEMENT

(1.) THESE two revisions preferred by the petitioners, the State of Andhra Pradesh, arise out of the order of the Sales Tax Appellate Tribunal allowing the two appeals, T. A. Nos. 94 and 95 of 1975, preferred by the respondent, the Hindustan Shipyard Ltd. , Visakhapatnam, against the orders of the Commercial Tax Officer, Visakhapatnam, confirming the order of the Assistant Commercial Tax Officer, Visakhapatnam, levying a total penalty of Rs. 62,27,073. 27 for the two assessment years 1972-73 and 1973-74. The facts leading to the filing of these two revisions are these : The respondent, the Hindustan Shipyard Ltd. , is a registered dealer under the Andhra Pradesh General Sales Tax Act and the Central Sales Tax Act. It obtained C forms and issued them to the sellers from whom it purchased the goods required for ship-building activity. The turnover relating to the purchase of goods is exempted from tax under the Central Act between the period 1st July, 1957, to 31st March, 1967. The Commercial Tax Officer issued notice proposing to assess the respondent on the amounts received towards ship construction work. Then the respondent filed a writ petition challenging the said notice contending that the terms of the contract entered into by it with the ship-owners would show that the transactions are not sales of ships but are only works contracts, which are not liable to be taxed. That contention was upheld by this court having regard to the definition of "works contract" in section 2 (1) (t) of the Andhra Pradesh General Sales Tax Act.

(2.) THE case of the petitioner (State of Andhra Pradesh) is that, even after the said decision, the respondent, taking advantage of its registration under the Central Sales Tax Act, is issuing C forms for its inter-State purchases. C forms cannot be issued for purposes not specified in section 8 (3) (b) of the Central Sales Tax Act or in the C form itself. The respondent issued C forms representing that the goods were purchased for use by it in the manufacture or processing of goods for sale with the knowledge that the goods manufactured by it were not sold, that there was no element of sale in the ship-building activity, and that the respondent was only executing works contracts. It is, therefore, the case of the petitioner that, when the respondent had failed, without reasonable excuse, to make use of the goods for any of the purposes referred to in section 8 (3) (b) or in the C form itself, the penal provision in section 10 (d) is attracted.

(3.) SECTION 10 (d), which is relevant in this case, reads :