THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE R. KANTHA RAO TAX REVISION CASE Nos.82 and 83 of 2011 Dated:21.12.2011 Between: M/s.Vijaya Lakshmi Enterprises, Vijayawada. …Petitioner and State of Andhra Pradesh, Represented by the State Representative before the Sales Tax Appellate Tribunal, Additional Bench, Visakhapatnam. …Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE R. KANTHA RAO TAX REVISION CASE Nos.82 and 83 of 2011 COMMON ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) These two Tax Revision Cases under Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957 (the Act), are filed by the petitioner who is a registered dealer engaged in the business of purchase and sale of pulses, de-oiled cake and other products. Inter alia, he also supplies the goods to the Tirumala Tirupathi Devasthanam, Tirupathi (TTD), which is a statutory religious endowment, and M/s.Girijan Primary Corporation Marketing Society, Visakhapatnam (hereafter referred as, the Girijan Society). For the assessment years 1999-2000 and 2000- 2001 the Commercial Tax Officer, Nandigama (CTO), completed assessment. The petitioner claimed exemption of the turnover to the extent of sales made to TTD and Girijan Society. However, the Assessment Officer did not allow the exemption. Aggrieved thereby, the petitioner preferred appeals before the Appellate Deputy Commissioner, Vijayawada (ADC). The same were dismissed. The petitioner filed further appeals initially before the Sales Tax Appellate Tribunal, Hyderabad, which stood transferred to Sales Tax Appellate Tribunal, Visakhapatnam Bench. By the impugned common order dated 02.06.2011, the learned Tribunal affirmed the appellate order holding that the petitioner would not be entitled to claim exemption under the relevant statutory notifications issued by the Government under Section 9 of the Act. Aggrieved thereby, these two Tax Revision Cases are filed. Tax Revision Case No.82 of 2011 is filed against the order in T.A.No.993 of 2004, and Tax Revision Case No.83 of 2011 is filed against the order in T.A.No.625 of 2002, dated 02.06.2011. Counsel for the petitioner/dealer placed reliance on the two notifications issued by the Government. The first one was notified vide G.O.Ms.No.314, Revenue (CT-II) Department, dated 28.04.1988, and the second one was notified vide G.O.Ms.No.31, Revenue, dated 11.01.1991. The first Government Order reads as follows. G.O.Ms.No.314, Rev. (CT-ii) Dept. dt.28.4.1988 In exercise of powers conferred by sub-section (1) of Section 9 of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act VI of 1957), the Governor of Andhra Pradesh hereby, exempts with effect from 1st April 1976 from the tax payable under the said Act, on the sales and purchases of goods by the Tirumala Tirupathi Devasthanams. The second Government Order reads as follows. G.O.Ms.No.31, Rev. dt.11.1.1991. In exercise of the powers conferred by sub-section (1) of Section 9 of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act VI of 1957), the Governor of Andhra Pradesh hereby exempts the tax payable under the said Act, on the sales or purchases, as the case may be, of Minor Forest Produce, Agricultural Produce, Commodities and Daily Requirements made by Girijan Co-operative Corporation Ltd. Visakhapatnam. (Published in A.P.Gazette Part-I Extraordinary January 1991) A plain reading of the two Government Orders would reveal that TTD as well as Girijan Society are exempted from payment of tax under the Act on the sales and purchases of goods made by them. When they are exempted from paying the tax on the purchases of goods from the petitioner, whether or not the Government Orders explicitly exempt the petitioner from paying the tax? Impliedly, it follows that the Revenue cannot levy and collect the tax on the sales effected by the petitioner to a buyer who is exempted from payment of purchase tax. The interpretation by us is also supported by the judgment of the Supreme Court in Peekay Re-Rolling Mills (P) Ltd. v Assistant Commissioner[1]. Therein, the appellant was carrying on the business of steel re-rolling. They were purchasing steel ingots within the State of Kerala as well as from other States. The intrastate suppliers of steel ingots were exempt from payment of sales tax on the sale of steel ingots by reason of a notification issued under Section 10 of the Kerala General Sales Tax Act, 1963 (KGST Act). However, for the assessment years 1994-1995 and 1996-1997 to 1999-2000 the appellant’s view for exemption from the sales tax was not accepted by the Department. The learned single Judge and the Division Bench dismissed the plea relying on Section 5-A of the KGST Act, which levied purchase tax on every purchase, the sale of which is liable to tax under the charging section i.e., Section 5 of the KGST Act. Before the Supreme Court the dealer contended that when the goods purchased should not be subjected to purchase tax in the hands of the purchaser under Section 5-A of the KGST Act, the seller was exempted from payment of the tax. This submission found favour with the Supreme Court. The relevant observations are as follows. … it is evident that collection and levy are distinct and that collection is not an essential facet of levy. It is true that collection of a tax may some times be indicative of a lawful levy of tax, but in our opinion it does not logically follow that absence of collection means an absence of liability. We are also of the opinion that the reliance on the Town Municipal Committee v Ramchandra Vasudeo Chimote (AIR 1964 SC 1166 : (1964) 6 SCR 947) by the Division Bench which involved an interpretation of "continued to be levied" and "to be applied to the same purposes" in Article 277 of the Constitution was misplaced. While that case did hold that in the circumstances before them 'levy' was intended to include 'collection', in our opinion the logic or ratio of that case cannot be extended so far as to say that every 'levy' must include collection and without such collection no levy can be said to have been made... Thus, after an examination of the relevant case law, we find that the liability to tax or taxability under Section 5 of the State Act remains unaffected by an exemption under Section 10 of the State Act. Consequently, the respondent cannot validly shift the burden of tax to the purchaser under Section 5A of the State Act for the same would violate the condition of single-stage tax under Section 15 of the Central Act. There is no dispute that the TTD and Girijan Society are exempted from payment of sales tax as well as purchase tax. When the purchaser of the goods is exempted, the sales tax cannot be collected from the petitioner who is a selling dealer applying the ratio in Peekay Re-Rolling Mills (P) Ltd. In the result, we feel constrained to set aside the orders of the Sales Tax Appellate Tribunal holding that the question of law was erroneously decided by them. These Tax Revision Cases shall stand allowed, and they shall be remitted to the Assessing Officer to pass appropriate consequential orders and refund/adjust the excess tax, if any paid already. There shall be no order as to costs. _______________ (V.V.S.RAO, J) ____________________ (R.KANTHA RAO, J) 21.12.2011 vs [1] (2007) 4 SCC 30