WALCHANDNAGAR INDUSTRIES LTD. Vs. STATE OF ANDHRA PRADESH
LAWS(ST)-1993-10-10
SALES TAX TRIBUNAL
Decided on October 28,1993

Appellant
VERSUS
Respondents

JUDGEMENT

R. Bayapu Reddy, Chairman - (1.) THIS appeal is filed questioning the orders of the Appellate Dy. Commissioner, Secunderabad in Appeal No. 58/88 -89 d/4 -5 -89 by which the orders of the assessing authority (Commrl. Tax Officer, R.P. Road Circle, Secunderabad) in assessment No. 25283/84 -85 d/16 -4 -88 subjecting the disputed turnover to tax were confirmed. The appellant is a registered dealer on the rolls of Commrl. Tax Officer, R.P. Road Circle, Secunderabad. During the assessment year 84 -85 the assessing authority subjected the disputed turnover of Rs. 35,12,964/ - relating to sale of some machinery parts to Raasi Cements to tax under the APGST Act negativing the claim of second sale exemption made by the appellant. The appellant preferred appeal before the Appellate Dy. Commissioner who however dismissed the appeal agreeing with view of the assessing authority. The present appeal is therefore filed before this Tribunal.
(2.) THE point for consideration is whether the appellant is eligible for exemption on the disputed turnover on the ground of second sales? The appellant had entered into an agreement with Raasi Cements for supply of cement machinery. In pursuance of such agreement the appellant purchased some parts of such machinery from outside the State and some other parts locally from M/s. R.G. Foundry Forge Ltd., Hyderabad. The disputed turnover relates to such machinery parts which were purchased by the appellant from M/s. R.G. Foundry Forge Ltd., Hyderabad and which were supplied to Raasi Cements. The appellant claimed exemption on such turnover on the ground that he purchased such machinery parts from a registered dealer viz., M/s. R.G. Foundry Forge Ltd., and supplied the same machinery parts to Raasi Cements in pursuance of the agreement and that he is therefore eligible for exemption on the ground of second sales. It is seen from a perusal of the orders of the assessing authority as well as the orders of the Appellate Dy. Commissioner that such second sale exemption was denied to the appellant by observing that the goods purchased by the appellant from M/s. R.G. Foundry Forge Ltd., are different from the goods sold to Raasi Cements. But such view expressed by the lower authorities regarding the identification of the goods and the consequent denial of exemption on the ground of second sales cannot be sustained. The appellant had purchased lining plates made out of high alloyed manganese steel from M/s. R.G. Foundry Forge, Hyderabad which was directed by the appellant to despatch such machinery parts directly to Raasi Cements with whom the appellant had entered into an agreement for supply of cement machinery. M/s. R.G. Foundry Ltd., had accordingly despatched such goods to Raasi Cements in pursuance of the directions given by the appellant. The appellant has also filed before this Tribunal Xerox Copy of the agreement entered into by him with Raasi Cements and copies of purchase invoices issued in favour of the appellant by M/s. R.G. Foundry Forge Ltd. and sale invoices issued by the appellant in favour of Raasi Cements. It is clear from these documents, which are not disputed, that M/s. R.G. Foundry Forge Ltd., from whom the appellant had purchased the lining plates, had directly despatched the goods to Raasi Cements and tax was also paid in respect of such first sales effected by M/s. R.G. Foundry Forge Ltd., in favour of the appellant. The appellant did not effect any change in the nature of such lining plates purchased from M/s. R.G. Foundry Forge by subjecting them to any manufacturing process as to change the nature of the goods before supplying the same to Raasi Cements for being used as parts of the cement machinery which the appellant had agreed to supply. The lower authorities however misinterpreted the nature of the goods by stating that what was purchased were lining plates made out of high alloyed manganese steel and what was agreed to be supplied by the appellant to Raasi Cements was cement machinery which is a different commodity from such lining plates. It is to be seen that lining plates purchased by the appellant from R.G. Foundry Forge Ltd., and supplied to the Raasi Cements were only some parts of the cement machinery which was agreed to be supplied by the appellant and for which the appellant had also purchased some other parts from outside the State. The lower authorities therefore went wrong in treating the goods purchased by the appellant as different from the goods supplied by him to Raasi Cements. As a matter of fact, it is to be seen that the disputed turnover relates only to the value of the lining plates purchased by the appellant from M/s. R.G. Foundry Forge Ltd., and supplied to Raasi Cements and not to the value of the "cement machinery" which was agreed to be supplied by the appellant to Raasi Cements. If the lower authorities felt that lining plates purchased by the appellant are different from cement machinery supplied by him to Raasi Cements, they ought to have assessed the entire value of such cement machinery to tax in the hands of the appellant. But that was not done by the lower authorities evidently on account of the fact that number of other parts of machinery were brought from outside the State by the appellant to enable himself to prepare cement machinery and supplied the same to Raasi Cements. Therefore the lower authorities were not justified in treating the lining plates purchased by the appellant as a commercial different commodity from the cement machinery agreed to be supplied by the appellant to Raasi Cements and subjecting the turnover relating to the value of such lining plates purchased by him locally and supplied to Raasi Cements. Inasmuch as the appellant had purchased such goods from a local registered dealer and supplied the same goods to Raasi Cements, the appellant is clearly eligible for exemption on such sales on the ground of second sales. In the result the appeal is allowed and the orders of the lower authorities are set aside and it is held that the disputed turnover of Rs. 35,12,964/ - is eligible for exemption on the ground of second sales. Dictated to the Stenographer, transcribed by him and pronounced in the Open Court on this the 28th day of October, 1993.;


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