Tax exemption for HDPE woven fabrics requires actual levy of additional duty; nil rate does not equate to exemption under sales tax law.

JUDGMENT :

RAVI NATH TILHARI, J.

1. Heard Sri T.C.D. Sekhar, learned Government Pleader for Commercial Tax appearing for the petitioner-State and M/s. Jyothi Ratna Anumolu, representing Sri B. Srinivas, learned counsel for the respondent in all the revisions.

Facts of the Case - T.R.C. No. 210 of 2012:

2. The Tax Revision Case No. 210 of 2002 has been filed by the State of Andhra Pradesh challenging the order of the Andhra Pradesh State Tax Appellate Tribunal (for short “the Appellate Tribunal”) in T.A. No. 1456 of 1999, dated 25.07.2002.

3. M/s. Jai Shree Enterprises, Vijayawada are dealers in H.D.P.E. Woven Fabrics. For the Assessment year 1997-98 (CST), the Commercial Tax Officer (for short “the CTO”) exempted the disputed turnover of Rs.52,860/- of inter-State Sales of HDPE Fabrics from the sales tax under Central Sales Tax Act (CST). The CTO granted such exemption observing that the commodity was generally exempted under the Andhra Pradesh General Sales Tax Act, 1957 (for short “the APGST Act”). The CTO passed the order in Assessment No. 527/1997-98 (CST) dated 05.10.1998.

4. The Deputy Commissioner (CT) No. I Division, Vijayawada, In R.P. No. 2/1999-2000, vide order dated 11.08.1999 revised the assessment and subjected the disputed turnovers to tax at 10%, withdrawing the exemption granted by CTO taking the view that the HDPE Woven Fabrics should be treated as articles of plastics falling under Item No. 187 of the I Schedule, and do not fall under item No. 5 of the IV Schedule. They are classified under 3923.90 of Central Excise Tariff Act, 1985. The HDPE Woven Fabrics cannot be treated as generally exempted as they are wholly made up of plastics and cannot be treated as cloth, hence, levy or exemption of excise duty would not matter.

5. The Appellate Tribunal allowed T.A. No. 1456 of 1999 of the dealer vide order dated 23.07.2002. It held that the “H.D.P.E. Woven Fabrics” is covered by “man-made fabrics” in Item No. 5 of the IV Schedule and is not an article of plastic under Entry 187 of the 1st Schedule. It held that the “nil rate” is also a rate of additional duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (for short “the Act No. 58 of 1957”). It observed that the second part of the Explanation to Item No. 5, excludes only those goods which are not at all subject to levy of tax, but does not exclude those goods which are subjected to levy of additional duty of excise at nil rate. In other words, the Appellate Tribunal held that “H.D.P.E. Woven Fabrics” even if there was nil duty rate, will be covered under Item No. 5 of IV Schedule and exempted from tax.

T.R.C. No. 211 of 2012:

6. The Tax Revision Case No. 211 of 2002 has been filed by the State of Andhra Pradesh challenging the order of the Andhra Pradesh State Tax Appellate Tribunal (for short “the Appellate Tribunal”) in T.A. No. 634 of 1999, dated 25.07.2002.

7. M/s. Jai Shree Enterprises, Vijayawada are dealers in H.D.P.E. Woven Fabrics. For the Assessment year 1997-98 (APGST), the Commercial Tax Officer (for short, “the CTO”) exempted the disputed turnover of Rs.11,02,230/- of inter-State Sales of HDPE Fabrics from the sales tax under Central Sales Tax Act (CST). The CTO granted such exemption observing that the commodity was generally exempted under the APGST Act. The CTO passed the order in Assessment No. 527/1997-98 dated 05.10.1998. The Deputy Commissioner (CT) No. I Division, Vijayawada, In R.P. No. 46/1998-99, dated 22.03.1999, revised the assessment and subjected the disputed turnovers to tax withdrawing the exemption granted by CTO.

8. The Appellate Tribunal allowed T.A. No. 634 of 1999 of the