The main legal point established in the judgment is the interpretation of the Andhra Pradesh General Sales Tax Act and the Additional Duties of Excise Act to determine the tax liability of specific goods. The court's decision relied on the interpretation of relevant entries and precedents to establish the exemption of emery cloth and tarpaulins from tax under the APGST Act.

JUDGMENT

Ravi Nath Tilhari, J. - Heard Sri S. A. V. Sai Kumar, representing the learned Government Pleader for Commercial Tax for the petitioner and Sri A. Sarveswara Rao, learned counsel for the respondent.

2. This Tax Revision Case under Section 22 (1) of Andhra Pradesh General Sales Tax Act has been filed by the State-Petitioner challenging the Order dated 18.06.2001, passed by the Sales Tax Appellate Tribunal (in short 'Appellate Tribunal') Andhra Pradesh, Hyderabad in T.A.No.81 of 1997.

3. M/s. Mohsin Brothers, Harbour Road, Visakhapatnam, the respondent, is an assessee on the rolls of the Commercial Tax Officer, Kurupam Market, Visakhapatnam and did business in hardware, electrical goods, pipes etc. The Commercial Tax Officer, Kurupam Market, Visakhapatnam finally assessed the assessee for the years 1994-95 under Andhra Pradesh General Sales Tax Act (in short 'APGST Act') in Assessment No.881/94-95. The Assessing Authority assessed the turnover relating to the sale of emery cloth as unclassified item and levied tax accordingly under Seventh Schedule to the APGST Act. It also assessed the turnover relating to the sales of tarpaulins and levied tax at the rate of 9% treating it as covered by item-174 of First Schedule to APGST Act.

4. The assessee filed Appeal No.VSP 84/96-97. The appeal was partly dismissed and partly remanded and partly allowed by Order dated 30.07.1996 by the Appellate Deputy Commissioner, Kakinada. With respect to emery cloth, the contention of the assesse was not accepted. It was held that the said commodity should not be treated as cotton fabric. The appeal with respect to this item was dismissed. With respect to other item - tarpaulins, the claim of the assessee was partly accepted by reducing the rate of tax to 4%. With respect to other items in the appellate Order, there is no lis in the present petition.

5. The assessee filed T.A.No.81 of 1997 to the extent of rejection of the claim on emery cloth and tarpaulins. The Appellate Tribunal has allowed the appeal by the impugned Order dated 18.06.2001.

6. The Appellate Tribunal formulated the point for consideration; whether the first sales of emery cloth and tarpaulins are not excisable to the tax under APGST Act. The Appellate Tribunal held that the emery cloth is covered in Item-59.03 of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (in short 'Additional Duties Act') and therefore is exempted under Fourth Schedule to the APGST Act, as the same is liable for additional duties of excise under the Additional Duties Act. It held that emery cloth is cotton coated fabric and therefore liable to be exempted from tax. Regarding the levy of tax on tarpaulins, the Appellate Tribunal held that tarpaulin which is waterproof with the base as cloth falls under cotton fabrics in item-5 of the Fourth Schedule to the APGST Act. It further observed that inclusion of item-174 of the First Schedule would make no difference, and accordingly, it held that no tax was to be levied on tarpaulin. The Appellate Tribunal for its judgment placed reliance in the case of State of A.P. v. Binny Limited, (1992) 14 APSTJ 182 wherein the Andhra Pradesh High Court held that the tarpaulin falls under cotton fabric in item-5 of Fourth Schedule to the APGST Act. It also placed reliance on the decision of the Hon'ble Apex Court in the case of State of A.P. v. Feno Plast Pvt. Ltd., 97 STC 316 in which it was held that the through rexine as in that case was covered by item-174 of First Schedule, but was a cotton coated fabric and was exempted from levy of tax as per item-5 of Fourth Schedule and Section 8 of APGST Act. Its inclusion in item-174 of the First Schedule would make no difference. The Appellate Tribunal held that like rexine cloth, tarpaulin is also included in item-174 and stands in the same position as rexine cloth which was held to be completely exempt from tax by the Hon'ble Apex Court, consequently applying the said judgment, Tarpau