Back
2015 Supreme(AP) 346
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
Ramesh Ranganathan and S. Ravi Kumar, JJ.
Dinakar Process – Appellant
Vs.
Commissioner of Commercial Taxes – Respondent
Special Appeal Nos. 49 to 73 of 2003
Decided On: 22.07.2015
Advocate Appeared:
For Appellant/Petitioner/Plaintiff: V. Bhaskar Reddy, B.V. Ramamohan Rao and P. Chakravarthy
For Respondents/Defendant: Shaik Jeelani Basha, Spl. Standing Counsel and Special Government Pleader
Headnote:
Taxation – Andhra Pradesh General Sales Tax Act, 1957 – Sections 23(1) and 33-BB – Central Sales Tax Act, 1956 – Assessment – Appeal against order passed by Commissioner of Commercial Taxes, setting aside orders of Appellate Deputy Commissioner and restoring orders of assessing authority – Appellants manufacturers of cine-wall posters, were finally assessed to tax, both under APGST Act and CST Act, from assessment year 1985-1986 upto the year 1990-91, on turnover relating to cine wall posters treating them as sales exigible to tax under APGST and CST Acts – Aggrieved thereby appellants carried matter in appeal, before Appellate Deputy Commissioner, contending that their business related purely to skill and labour, and not to sale of goods or material; entire process of litho-printing involved high skill, at several stages, before the cinema wall posters came into existence – Whether Commissioner (Commercial Taxes) could have revised order of Appellate Deputy Commissioner on ground that appeal should not have been entertained as it was filed belatedly, when no such ground was raised in earlier show cause notice proposing to revise order of Appellate Deputy Commissioner – Whether printing and supply of cine-wall posters was in the nature of works contract and, if so, could it be subjected to tax as deemed sale of goods under Act, 1957 and Act, 1956 for assessment years ending – Whether Commissioner (Commercial Taxes) could have directed appellants to pay tax under Act, 1957, and Act, 1956, on such transactions when order of Appellate Deputy Commissioner, setting aside order of assessing authority withholding refund under Section 33-BB of the Andhra Pradesh General Sales Tax Act, 1957, had attained finality – Are the appellants entitled to retain the tax collected by them under the Andhra Pradesh Act, 1957 and Act, 1956 – Is revenue entitled to recover said amount from appellants on ground of unjust enrichment – Held, the doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect tax/duty from both ends. In other words, he cannot collect tax/duty from his purchaser at one end and also collect the same tax/duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person – The assessing authority shall, after giving the appellants an opportunity of being heard, consider whether the appellants have collected tax on these transactions from their customers and, if so, recover the amount refunded to them earlier. The onus is on the appellants to show that they have not collected tax from their customers to whom they supplied the cine wall-posters manufactured and printed by them – Entire exercise, culminating in an order being passed afresh, shall be completed by the assessing authorities within four months from the date of receipt of a copy of this order – Directions issued – Special Appeals are disposed of. (Paras 57 to 60)
Ramesh Ranganathan, J.
1. These appeals are preferred, under Section 23(1) of the APGST Act against the order passed by the Commissioner of Commercial Taxes dated 23.07.2003, setting aside the orders of the Appellate Deputy Commissioner, Guntur and Vijayawada, and restoring the orders of the assessing authority.
2. It would suffice, for the purpose of adjudicating this batch of special appeals, if the facts in Special Appeal No. 49 of 2003 are noted. The appellants herein, manufacturers of cine-wall posters, were finally assessed to tax, both under the APGST Act and the CST Act, from the assessment year 1985-1986 upto the year 1990-91, on the turnover relating to cine wall posters treating them as sales exigible to tax under the APGST and the CST Acts. Aggrieved thereby, the appellants carried the matter in appeal, before the Appellate Deputy Commissioner, contending that their business related purely to skill and labour, and not to sale of goods or material; the entire process of litho-printing involved high skill, at several stages, before the cinema wall posters came into existence; the following steps were involved in the process of manufacture of cine wall posters (1) preparing the design; (2) taking photographs of the design; (3) developing negatives, of the design, of the required size; (4) taking as many negatives as there were colours i.e., one negative for each colour; (5) giving touches to each negative; (6) exposing the negative on zinc or aluminium sheets; (7) attaching the zinc or aluminium sheets to the printing machines; and (8) printing on paper as many times as there were plates; when a customer approached them, they prepared 3 to 4 designs keeping in view the size of the picture, the colour scheme, and placement of the pictures; emphasis was placed on the central idea in consultation with the customer and a final design, to the satisfaction of the customer, was set apart for further processing; if the approved design had four colours, then four negatives were taken; each negative absorbed a particular colour content of the design; in taking the negatives, a high degree of skill was exercised by blacking out the unnecessary colour, and absorbing only the desired colours by the use of filters; maximum care was taken, in fixing the timing of taking the photographs, as it involved different types of work, such as line work, solid work, figure work, screen work etc; any mis-adjustment of timing would have lead to loss of the costly negative; depending upon the size of the poster, required by the customer, the developed negative was enlarged by adjusting the camera with utmost skill; the same process was repeated for each and every negative; necessary touch-ups were given to achieve the desired results; these enlarged negatives were then exposed on zinc or aluminium sheets by an elaborate process, and thereafter the colour posters were prepared; the work was executed only after the customer approached them, and placed an order; the order was placed by the customer on the basis of the skill of the manufacturer; and these transactions would not come under the purview of sale of goods, or sale of any material, as it involved a high degree of skill and labour.
3. The Appellate Deputy Commissioner, following the judgment of the Sales Tax Appellate Tribunal, (STAT for short) in T.A. No. 310 of 1991 in the case of M/s. Foto Colours, upheld the appellants contention, and allowed the appeals. Subsequently, the Appellate Deputy Commissioner passed another order setting aside the order of the Commercial Tax Officer withholding refund under the APGST Act and the CST Act, and directed that the amounts withheld, under the APGST and the CST Acts, be refunded to the appellants. Consequent thereto, the assessing authority revised the assessment order, and refunded the tax paid by the appellants.
4. The Commissioner, Commercial Taxes issued notice dated 10.01.1996, calling upon the appellants to show cause why the order of the
