Lease rentals relating to immovable property are not subject to tax under Section 5 E of the Andhra Pradesh General Sales Tax Act, 1957, and factual findings of the Tribunal regarding turnover classification are not disturbed unless they are arbitrary or unreasonable.

(Special Original Jurisdiction)

to take the TRC on file and grant stay of operation of the impugned orders of the Hon'ble STAT, A.P., Hyderabad in TA.No. 67/2007, dated 15.02.2008

The Court made the following Order:

(per Hon’ble Sri Justice R. Raghunandan Rao)

The assessment of the respondent, under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as ‘the Act’), for the assessment year, 2003-2004, had been completed by the Commercial Tax Officer, Vuyyuru, by way of an order of assessment, dated 23.06.2005. This order of assessment was revised by the Deputy Commissioner (CT) No.II Division, Vijayawada, under Section 20 of the Act, by an order, dated 18.07.2006.

The Deputy Commissioner in the order of revision, had held that, certain sales made by the respondent were sales of broken glass, which should have been brought to tax and secondly, that the lease rentals obtained, on the lease of the plant and machinery of the petitioner, would attract tax under Section 5 E of the Act.

Aggrieved by this order of revision, the respondent has approached the Sales Tax Appellate Tribunal, Visakhapatnam Bench, by way of T.A.No.67 of 2007, which came to be allowed, on 15.02.2008. The State has filed the present Appeal against the said order of the Sales Tax Appellate Tribunal.

Heard Smt. Disha Chowdary, the learned Assistant Government Pleader for Commercial Taxes appearing for the State – petitioner.

The Deputy Commissioner, had held that, a turnover of Rs.38,79,366/-, was treated as sale consideration, received on sale of broken waste, as per the schedule in the profit & loss account of the petitioner. In reply to this view, the respondent had submitted that the said turnover, relates to sale of seconds bottles, which had already suffered tax. The Deputy Commissioner, rejected this contention, on the ground that, the profit & loss account of the respondent, clearly showed the said turnover, under the heading, sale of bottle waste. The Tribunal, however, noticed that the heading for this turnover, was actually seconds empty bottles, as per the copy of the profit & loss account of the petitioner certified by its Chartered Accountant. On that basis, the Tribunal, set aside the order of revision, relating to this turnover. Apart from this, the Tribunal also took into account the fact that, the respondent had purchased bottles worth of Rs.1,46,13,124/- and could not have sold broken bottles to an extent of Rs.38,79,366/- in as much as a larger number of bottles, purchased by the respondent, would have to be broken, for resulting in a turnover of Rs.38,79,366/-. These are findings of fact by the Tribunal and we do not find any reason to interfere with such findings as we do not deem these findings to be so arbitrary or unreasonable that this Court is required to intervene in the matter.

On the question of lease rentals obtained from the list of plant and machinery of the petitioner, the Tribunal took the view that, the said plant and machinery is immovable property and the provisions of Section 5 E of the Act, would not be applicable. Apart from this, the Tribunal also went into the question of how the said turnover arisen, and had held that, the said turnover was not actually, in relation to lease rentals and was a differential amount obtained from one M/s. Alcobev, for whom the respondent had been moved liquor (IMFL).

We do not propose to go into the second reason advanced, by the Tribunal in as much as we are satisfied that Section 5 E of the Act, would not be attracted to lease rentals, relating to immovable property.

For the aforesaid reasons, this Tax Revision Case is dismissed. There shall be no order as to costs.

As a sequel, pending miscellaneous applications, if any, shall stand closed.