Indian Extrusion Vs. Commissioner of Commercial Taxes, Hyd., A.P. - Court Judgment

Excerpt:
sales tax - tax assessment - sections 9, 22 and 23 (1) of andhra pradesh general sales tax act, 1957 and sections 8 (2a) and 14 (1) of central sales tax act, 1956 - state government treated cable joint kits as electronic goods in government order - commissioner of commercial tax bound to assess tax at concessional rate as per given in government order - assessing officer cannot take a different view from government in matter of application of concessional rate - held, appellant is entitled to get refund of excess tax charged. - - however, the appellants placed strong reliance before the commissioner of commercial taxes on the clarification issued by the director electronics test and development center, government of india, kusarguda, hyderabad in his letter 15-9-1993 clarifying that the telecom cable jointing goods should be treated as electronic goods for extending the benefits of tax at a lower rate as provided in g. if therefore, such an authority issued a notification including certain commodities under the head of 'oil-seeds',as defined under the central act, it cannot be said that the tribunal and the high court were not right in preferring such an opinion of the government as good evidence for its conclusion, to the opinions relied upon by the andhra pradesh court on which great reliance has been placed by the appellant'.8. further, the supreme court in state of tamil nadu v. considering that the above clarification was sought for at the earliest point of time when a doubt arose as to the scope of the expression used by the statute and given after considering the technicalities of the processes employed in the manufacture of finished leather by the department fully conversant with this branch of trade and in the context of the provisions of this very statute, the terms of the statute can well be construed by reference to such exposition, in the absence of anything in the statute to indicate the contrary. indeed 'such interpretation should be shown to be clearly wrong before it is overturned'.9. apart from the above settled position in law, when the state government which is the highest authority under the apgst act, itself has clarified that the telecom cable joint kits are electronic goods for the purpose of concessional rate of tax in terms of g. 520 and 521, dated 20-7-1988, the lower authority like the commissioner of commercial taxes cannot take a different view from the onetaken by the government in the matter of application of concessional rate in terms of g.orders.r. nayak, j.1. in all these special appeals the question that arises for decision is whether cable jointing kits are 'electronic goods' within the meaning of that term if g.o. ms. nos. 520 and 521 revenue (ct.ii) dated 20-7-1988 or 'general goods' for the purpose of applying differential rate of tax.2. heard sri n. jayasuriya, learned counsel for the appellants and the learned special government pleader for taxes.3. the concerned assessing officer for the assessment years 1989-90 and 1990-91 treated the cable jointing kits as 'electronic goods', and taxed at 2% on the turnovers as envisaged under g.o. ms. no.520 dated 20-7-1988. the concerned deputy commissioner of commercial taxes proposed revision of the assessments made by the commercial tax officer under section 22 of the andhra pradesh general sales tax act (for short 'the act') and accordingly, issued show-cause notices. the appellants submitted their replies. on consideration of the replies of the appellants, the concerned deputy commissioner of commercial taxes dropped the proceedings.4. when the matter stood thus, the commissioner of commercial taxes, a.p., hyderabad again sought to revise the orders of assessments and after issuing necessary show-cause notices to the appellants in that regard and on consideration of their replies, he came to the conclusion that the clarification issued by the director-general, technical development, the commissioner of industries, andhra pradesh, and the director, electronics test and development centre, government of india is not acceptable, in as much as the total classification is provided under g.o. ms. no.520 and 521 dated 20-7-1988 itself. the learned commissioner of commercial taxes also came to the conclusion that the cable jointing kits consists of 19 items and of those 19 items, only the connector formspart of the electronic goods as contemplated in g.o. ms. nos.520 and 521 dated 20-7-1988. in the light of this opinion arrived at by him, the commissioner of commercial taxes by his order dated 18-9-1993, set aside the orders of the concerned assessing officers in the case of the appellants-assessees for the assessment years 1989-90 and 1990-91 and directed that the turnovers in question representing the sales of cable jointing kits shout not be treated as electronic goods and sales tax shall be levied as per schedule vii. hence these special appeals under section 23(1) of the apgst act 5. the order of the commissioner of commercial taxes is dated 18-9-1993. at that point of time, the clarification issued by the government of a.p, vide memo no.10961/ct-ii(2)/94/3 dated 23-4-1994 clarifying the position as to whether the telecom cable jointing kits should be treated as electronic goods or not was not available and consequently the learned commissioner had no advantage of the said clarification issued by the government of a.p. however, the appellants placed strong reliance before the commissioner of commercial taxes on the clarification issued by the director electronics test and development center, government of india, kusarguda, hyderabad in his letter 15-9-1993 clarifying that the telecom cable jointing goods should be treated as electronic goods for extending the benefits of tax at a lower rate as provided in g.o. ms. nos.520 and 521 dated 20-7-1988.6. the threshold question that arise for our consideration is whether the view taken by the commissioner of commercial taxes that he is not bound by the clarification issued by the director, electronics test and development center, government of a.p., hyderabad and 15-9-1993 could be sustained in view of the clarification issued by the government of a.p., itself vide its memo no.10961/ct-ii(2)94/3 dated 23-4-1994.7. the supreme court in state of orissa v. deenabandhu sahu and sons, 37 stc 583 dealing with a contention that the notification no. 4(8)-s/57 dated 31-1-1958 of the ministry of finance, department of economic affairs, government of india, by which certain commodities under the head 'oil-seeds' were included and which notification was officially communicated to the state governments, has no statutory force, and, as such, is not binding on the sales tax officer was pleased to observe:'it cannot however, be denied that the ministry of finance, department of economic affairs, is intimately conversant not only with the policy of legislation for the purpose of implementation of the provisions of the central act but is also familiar with the nature and quality of the commodities as also their use from time to time. if therefore, such an authority issued a notification including certain commodities under the head of 'oil-seeds', as defined under the central act, it cannot be said that the tribunal and the high court were not right in preferring such an opinion of the government as good evidence for its conclusion, to the opinions relied upon by the andhra pradesh court on which great reliance has been placed by the appellant'.8. further, the supreme court in state of tamil nadu v. mahi traders and others, 8 apstj 139, held that a contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions used in statute. if that is so, the same analogy has to be applied in interpreting the provisions of the government orders in g.o. ms. no.520 and 521 dated 20-7-1988. in the above case decided by the supreme court, the question that arose for consideration was whether the leather splits and coloured leather fall under the list of declared goodscovered by the entry in 14(1)(iii) of the central sales tax act, 1956 (for short 'the cst act'). the tribunal relying on the information of the leather development wing of the ministry of commerce and industry held that the coloured leather is declared as goods covered by entry (iii) of sub-section (1) of section 14 of the cst act. the supreme court while reviewing the correctness of the opinion of the tribunal has to observe as under;'it has been pointed out by this court in desk bandhu gupta and others v. delhi stock exchange : [1979]3scr373 and varghese v. ito, : [1981]131itr597(sc) that a contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions used in a statute. considering that the above clarification was sought for at the earliest point of time when a doubt arose as to the scope of the expression used by the statute and given after considering the technicalities of the processes employed in the manufacture of finished leather by the department fully conversant with this branch of trade and in the context of the provisions of this very statute, the terms of the statute can well be construed by reference to such exposition, in the absence of anything in the statute to indicate the contrary. indeed 'such interpretation should be shown to be clearly wrong before it is overturned'.9. apart from the above settled position in law, when the state government which is the highest authority under the apgst act, itself has clarified that the telecom cable joint kits are electronic goods for the purpose of concessional rate of tax in terms of g.o. ms. no.520 and 521, dated 20-7-1988, the lower authority like the commissioner of commercial taxes cannot take a different view from the onetaken by the government in the matter of application of concessional rate in terms of g.o. ms. nos.520 and 521 dated 20-7-1988.10. the clarification issued by the government of andhra pradesh in memo no.10961/ct-11(2)94/3 dated 23-4-1994 is equally applicable as regards the central sales tax to be calculated under the provisions of the cst act by virtue of the provisions of section 8(2a) of the cst act, section 8(2a) reads-section 8(2a):--notwithstanding anything contained in sub-section (1-a) of section 6 of sub-section (1) or clause (b) of sub-section (2) of this section, the tax payable under this act by a dealer on his turnover of so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be the purchase of which is, under the sales tax law of the appropriate state, exempt from tax generally or subject to tax generally at a rate which is lower than (four per cent ) (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate'.11. by virtue of the above provisions in the cst act the confessional rate of tax applicable under the provisions of apgst act in terms of the above two a.p. government orders is applicable under the provisions of the cst act also.12. in the result, and for the foregoing reasons, we allow these appeals and set aside the orders under appeal and restore the orders of the concerned assessing officers with no order as to costs.13. it is stated that during the pendency of these appeals, as per the interim directions of this court in cmp no.17132 of 1993 dated 4-11-1993 in special no.1 of 1993 and in cmp no.17286 of 1993 dated 6-11-1993 in special appeal no.2of 1993, the appellants in the above two appeals have paid 50% the differential tax. by virtue of this order, the appellants in the above two appeals are entitled to seek refund of adjustment in accordance with the law.

Judgment:
ORDER

S.R. NAYAK, J.

1. In all these special appeals the question that arises for decision is whether Cable Jointing Kits are 'Electronic Goods' within the meaning of that term if G.O. Ms. Nos. 520 and 521 revenue (CT.II) dated 20-7-1988 or 'General Goods' for the purpose of applying differential rate of tax.

2. Heard Sri N. Jayasuriya, learned Counsel for the appellants and the learned Special Government Pleader for Taxes.

3. The Concerned Assessing Officer for the assessment years 1989-90 and 1990-91 treated the cable Jointing Kits as 'Electronic Goods', and taxed at 2% on the turnovers as envisaged under G.O. Ms. No.520 dated 20-7-1988. The concerned Deputy Commissioner of Commercial Taxes proposed revision of the assessments made by the Commercial Tax Officer under Section 22 of the Andhra Pradesh General Sales Tax Act (for short 'the Act') and accordingly, issued show-cause notices. The appellants submitted their replies. On consideration of the replies of the appellants, the concerned Deputy Commissioner of Commercial Taxes dropped the proceedings.

4. When the matter stood thus, the Commissioner of Commercial Taxes, A.P., Hyderabad again sought to revise the orders of assessments and after issuing necessary show-cause notices to the appellants in that regard and on consideration of their replies, he came to the conclusion that the clarification issued by the Director-General, Technical Development, the Commissioner of Industries, Andhra Pradesh, and the Director, Electronics Test and Development Centre, Government of India is not acceptable, in as much as the total classification is provided under G.O. Ms. No.520 and 521 dated 20-7-1988 itself. The learned Commissioner of Commercial Taxes also came to the conclusion that the cable jointing kits consists of 19 items and of those 19 items, only the Connector formspart of the Electronic goods as contemplated in G.O. Ms. Nos.520 and 521 dated 20-7-1988. In the light of this opinion arrived at by him, the Commissioner of Commercial Taxes by his order dated 18-9-1993, set aside the orders of the concerned assessing officers in the case of the appellants-assessees for the assessment years 1989-90 and 1990-91 and directed that the turnovers in question representing the sales of cable jointing kits shout not be treated as electronic goods and sales tax shall be levied as per Schedule VII. Hence these special appeals under Section 23(1) of the APGST Act

5. The order of the Commissioner of Commercial Taxes is dated 18-9-1993. At that point of time, the clarification issued by the Government of A.P, vide Memo No.10961/CT-II(2)/94/3 dated 23-4-1994 clarifying the position as to whether the Telecom cable jointing kits should be treated as Electronic goods or not was not available and consequently the learned Commissioner had no advantage of the said clarification issued by the Government of A.P. However, the appellants placed strong reliance before the Commissioner of Commercial Taxes on the clarification issued by the Director Electronics Test and Development Center, Government of India, Kusarguda, Hyderabad in his letter 15-9-1993 clarifying that the Telecom cable jointing goods should be treated as Electronic goods for extending the benefits of tax at a lower rate as provided in G.O. Ms. Nos.520 and 521 dated 20-7-1988.

6. The threshold question that arise for our consideration is whether the view taken by the Commissioner of Commercial Taxes that he is not bound by the clarification issued by the Director, Electronics Test and Development Center, Government of A.P., Hyderabad and 15-9-1993 could be sustained in view of the clarification issued by the Government of A.P., itself vide its Memo No.10961/CT-II(2)94/3 dated 23-4-1994.

7. The Supreme Court in State of Orissa v. Deenabandhu Sahu and Sons, 37 STC 583 dealing with a contention that the notification No. 4(8)-S/57 dated 31-1-1958 of the Ministry of Finance, Department of Economic Affairs, Government of India, by which certain commodities under the head 'Oil-Seeds' were included and which notification was officially communicated to the State Governments, has no statutory force, and, as such, is not binding on the Sales Tax Officer was pleased to observe:

'It cannot however, be denied that the Ministry of Finance, Department of Economic Affairs, is intimately conversant not only with the policy of legislation for the purpose of implementation of the provisions of the Central Act but is also familiar with the nature and quality of the commodities as also their use from time to time. If therefore, such an authority issued a notification including certain commodities under the head of 'Oil-seeds', as defined under the Central Act, it cannot be said that the Tribunal and the High Court were not right in preferring such an Opinion of the Government as good evidence for its conclusion, to the opinions relied upon by the Andhra Pradesh Court on which great reliance has been placed by the appellant'.

8. Further, the Supreme Court in State of Tamil Nadu v. Mahi Traders and others, 8 APSTJ 139, held that a contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions used in statute. If that is so, the same analogy has to be applied in interpreting the provisions of the Government Orders in G.O. Ms. No.520 and 521 dated 20-7-1988. In the above case decided by the Supreme Court, the question that arose for consideration was whether the leather splits and coloured leather fall under the list of declared goodscovered by the Entry in 14(1)(iii) of the Central Sales Tax Act, 1956 (for short 'the CST Act'). The Tribunal relying on the information of the Leather Development Wing of the Ministry of Commerce and Industry held that the coloured leather is declared as goods covered by entry (iii) of sub-section (1) of Section 14 of the CST Act. The Supreme Court while reviewing the correctness of the opinion of the Tribunal has to observe as under;

'It has been pointed out by this Court in Desk Bandhu Gupta and others v. Delhi Stock Exchange : [1979]3SCR373 and Varghese v. ITO, : [1981]131ITR597(SC) that a contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions used in a statute. Considering that the above clarification was sought for at the earliest point of time when a doubt arose as to the scope of the expression used by the statute and given after considering the technicalities of the processes employed in the manufacture of finished leather by the department fully conversant with this branch of trade and in the context of the provisions of this very statute, the terms of the statute can well be construed by reference to such exposition, in the absence of anything in the statute to indicate the contrary. Indeed 'such interpretation should be shown to be clearly wrong before it is overturned'.

9. Apart from the above settled position in law, when the State Government which is the highest authority under the APGST Act, itself has clarified that the Telecom Cable Joint kits are electronic goods for the purpose of concessional rate of tax in terms of G.O. Ms. No.520 and 521, dated 20-7-1988, the lower authority like the Commissioner of Commercial Taxes cannot take a different view from the onetaken by the Government in the matter of application of concessional rate in terms of G.O. Ms. Nos.520 and 521 dated 20-7-1988.

10. The clarification issued by the Government of Andhra Pradesh in Memo No.10961/CT-11(2)94/3 dated 23-4-1994 is equally applicable as regards the Central Sales Tax to be calculated under the provisions of the CST Act by virtue of the provisions of Section 8(2A) of the CST Act, Section 8(2A) reads-

Section 8(2A):--Notwithstanding anything contained in sub-section (1-A) of Section 6 of sub-section (1) or clause (b) of sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover of so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be the purchase of which is, under the Sales Tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than (four per cent ) (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate'.

11. By virtue of the above provisions in the CST Act the confessional rate of tax applicable under the provisions of APGST Act in terms of the above two A.P. Government orders is applicable under the provisions of the CST Act also.

12. In the result, and for the foregoing reasons, we allow these appeals and set aside the orders under appeal and restore the orders of the concerned Assessing Officers with no order as to costs.

13. It is stated that during the pendency of these appeals, as per the interim directions of this Court in CMP No.17132 of 1993 dated 4-11-1993 in Special No.1 of 1993 and in CMP No.17286 of 1993 dated 6-11-1993 in Special Appeal No.2of 1993, the appellants in the above two appeals have paid 50% the differential tax. By virtue of this order, the appellants in the above two appeals are entitled to seek refund of adjustment in accordance with the law.