R. Bayapu Reddy, Chairman -
(1.) THIS appeal is filed questioning the orders of the revisional authority (Deputy Commissioner Commercial Taxes, Charminar Division Hyderabad) in Rc. No. R1/2428/91 dt. 13 -11 -1992 by which the orders of the assessing authority (Commercial Tax Officer, Charminar Circle, Hyderabad) in Assessment No. 12298/87 -88 dated 10 -11 -1988 were revised subjecting the disputed turnover of Rs. 30,93,950/ - relating to sales of 'Action Shoes' to tax at the higher rate of 7%. The appellant is a dealer in footwear and the disputed turnover of Rs. 30,93,950/ - relates to sales of Action Shoes. The assessing authority treated Action Shoes as 'Sports Shoes' falling under entry 90 -A of First Schedule and assessed the disputed turnover to tax at 6%. The Deputy Commissioner, however, revised the orders under Section 20(2) of the APGST Act and subjected the disputed turnover to tax at 7% by treating the Action Shoes as 'footwear' costing more than Rs. 50/ - and falling under entry 105 of First Schedule. The present appeal is filed questioning the said revisional orders of the Deputy Commissioner.
(2.) THE point for consideration is whether the 'Action Shoes' sold by the appellant have to be considered as 'Sports Shoes' falling under entry 90 -A or as 'footwear' falling entry 105 and whether there are valid reasons for interfering with orders of the revisional authority? There is no dispute that the disputed turnover of Rs. 30,93,950/ - relates to safe of 'Action Shoes'. The assessing authority treated the 'Action Shoes' falling under entry 90 -A. The Deputy Commissioner, however, came to the opinion that the Action Shoes cannot be considered as 'Sports Shoes' and that they are to be treated as 'footwear' falling under entry 105 of First Schedule. It is seen from a perusal of the orders of the Deputy Commissioner that he came to such conclusion on the ground that such 'Action Shoes' sold by the appellant are not exclusively used by sportsmen and athletics and they are used as footwear even by others. But such reasoning sought to be given by the Deputy Commissioner for revising the orders of the assessing authority cannot be said to be justifiable in view of the nature of the shoes and the facts and circumstances of the case as revealed from the material already filed on record. The appellant is the wholesale distributor for 'Action Shoes' which are manufactured by the companies viz., (i) M/s. A.P.I. Polymers (India) Ltd., Delhi and (ii) Nikil Udyog, Delhi. The appellant sells such Action shoes to retail dealers who in their turn sell them to consumers. The appellant has filed xerox copies of the invoices issued by the above said two manufacturers in his favour for supply of Action Shoes. In the said invoices, it is categorically mentioned that those two dealers are engaged in manufacturing D.I.P. Sports shoes which are 'Action Shoes' in the present case. A.P.I. Polymers (India) Private Limited is also certified to be a member of the Sports Goods Exports Promotion Council, New Delhi and a xerox copy of the certificate issued by the Sports Goods Export Promotion Council is also filed by the appellant along with the appeal to prove such fact. The appellant has also filed xerox copies of certificates issued by various authorities like Amateur Athletic Federation of India, Inspector of Police who is a Coach for A.P. Police Hockey Team, Hyderabad, Deputy Director, Sports of Andhra Pradesh, Andhra Pradesh Olympic Association, Sports Officer, Army Ordinance Corps (AOC) Centre, Secunderabad, Volleyball Federation of India, Andhra Pradesh Amateur Boxing Association and Andhra Pradesh Volleyball Association before this Tribunal to show that the D.I.P. Shoes marketed under the brand name of "Action shoes" by the appellant are used by the sportsmen in all kinds of outdoor and indoor sports. The appellant has also filed xerox copies of advertisements made in the newspapers relating to 'Action' shoot wherein the 'Action' shoes are advertised as shoes having the required grip and quality for use in games like Cricket etc. All the above said documents were filed by the appellant as additional evidence before this Tribunal along with T.M.P. 229/93 in the present appeal and the said petition was allowed and those documents are received as additional evidence. As a matter of fact such documents were also available before the Deputy Commissioner when the revision proceedings were conducted. It is clear from all the said documents that "Action Shoes" sold by the appellant are not ordinary footwear and that they were manufactured with special qualities and contents, intended to be used as sports shoes and they were supplied to the appellant who is a wholesale dealer by the manufacturers as such 'sports shoes' and the appellant also supplied them in his turn to the retail dealers considering them as 'sports shoes'. During the hearing of the appeal the appellant also produced the container (box) of such 'Action shoes' before this Tribunal and it was found specifically noted on the container also that 'Action shoes' are 'Sports shoes'. As a matter of fact in all the above said documents as well as in the advertisements the fifth letter 'O' in the word 'action' is indicated by showing a Cricket ball thereby indicating that the "Action shoes" were intended to be 'sports shoes'. Therefore the manufacturer as well as the wholesaler who is the appellant are considering the "Action shoes" only as 'sports' shoes. The appellant has also produced a sample copy of the sale invoice issued by him to Artillery Centre, Canteen relating to sale of 'Action' shoes end even in the said invoice, it is specifically mentioned that such shoes are 'sports' shoes. It is clear from all these circumstances and the material on record that "Action shoes" are not ordinary footwear and that they are considered as 'sports' shoes. If such Action Shoes, which are considered as sports shoes, are purchased in retail shops by some common man also and used by him, the nature of the goods will not change from 'sports shoes' to ordinary 'footwear'. Therefore, on account of such ordinary use to which some persons happen to put 'Action shoes', the Deputy Commissioner is not justified in treating such 'Action shoes' as ordinary footwear falling under entry 105 of First Schedule by putting forth the reason that the 'Action shoes' are not exclusively used by the sportsmen. When once the appellant distributes the 'Action shoes' to the retailers, he will not have any control over the sale of such shoes by the retailer to the consumers and the retailer cannot be prevented from selling such "Action shoes" to persons other than sportsmen. The 'Action Shoes' which are considered as sports shoes having special qualities and ingredients in them will not cease to be such 'sports shoes' an the mere ground that some ordinary common people are also purchasing such shoes and using them for purposes other than sports and games. Therefore the revisional authority has erred in treating the 'Action Shoes' as falling under entry 105 by putting forth the reason that some common people are also using such shoes and such shoes are not being exclusively used by sportsmen.
(3.) THE learned State Representative appearing for the Department has also tried to support the orders of the Deputy Commissioner contending that entry 90 -A of First Schedule refers to goods which are exclusively used as sports goods and that therefore 'sports' shoes mentioned in entry 90 -A will be considered as falling under the entry only when they are exclusively used for as such sports shoes. But this contention also is without substance as seen from the nature of the goods mentioned in entry 90 -A which is as follows:
"90 -A Sports goods including goods used for indoor or outdoor games or athletic including stopwatches, sports shoes, rings bladders, ball covers, carrom stickers, kit bags, medals, cups, trophies and parts and accessories thereof whatever be the material they are made of".
There is nothing in entry 90 -A which shows that the goods mentioned therein can be treated as falling under the said entry only when they are exclusively used for the purpose of sports and not when they are used by some others for some other purposes also. Sports goods mentioned in entry 90 -A are said to include such goods like stop watches, medals, cups and trophies. Such goods are not exclusively used in sports and games. Medals, cups and trophies can be awarded to meritorious persons in various other fields like, literary field, fine arts, academic excellence in school and collegiate education, debates etc. On account of the user of such goods in other fields such goods will not cease to befalling under entry 90 -A so long as such goods will be used in sports also and therefore to be treated as sports goods. Therefore such contention of the learned State Representative cannot be accepted.
The Dy. Commissioner has also chosen to mention in his orders that the appellant failed to provide any material to show that the 'Action shoes' sold by him were designed as per the standards laid down by the I.S.I. or any other competent authority and certified by them. But I.S.I. specification is not a requisite for holding the 'Action shoes' as sports shoes. The appellant has also produced the copy of the reply received by him from the Bureau of Indian Standards enclosing list of Indian Standard specifications relating to shoes. It is seen from the said list that synthetic spats shoes like 'Action Shoes' are not mentioned in the said list and as such there is no necessity to have I.S.I. specification for such 'Action shoes' sold by the appellant. The Dy. Commissioner has also mentioned in his revisional orders that the appellant failed to produce evidence to show that he sold the 'Action shoes' only to educational institutions or colleges of physical education or to dealers dealing exclusively in sports shoes and that the absence of such material goes to indicate the 'Action shoes' are not sports shoes. Such observations are based only on the presumed ground that unless 'Action shoes' are sold exclusively to persons engaged in sports and games, they cannot be considered as sports shoes. Such reasoning is fallacious as already discussed above as the appellant will not have any control over the final use to which such 'Action shoes' which are sports shoes are not to. Therefore the 'Action shoes' sold by the appellant can be considered only as 'sports shoes' falling under entry 90 -A as rightly held by the assessing authority. The orders of the Deputy Commissioner are therefore liable to be set aside.
In the result the appeal is allowed and the orders of the Deputy Commissioner are set aside.
Dictated to the Stenographer, transcribed by him and pronounced in the Open Court on this the 4th day of November, 1993.;