RAYALASEEMA STEEL RE-ROLLING MILLS Vs. THE STATE OF ANDHRA PRADESH
SALES TAX TRIBUNAL
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R. Bayapu Reddy, Chairman -
(1.) THIS appeal is filed questioning the orders of the revisional authority (Joint Commissioner of Commercial Taxes, Legal (FAC), Hyderabad) in CCT's Ref. L. III (1)/488/88, dated 12 -12 -1989, by which the orders of the Appellate Deputy Commissioner (CT) Hyderabad I. Divn, Hyderabad in Appeal No. 31/87 -88 dated 4 -5 -1987 were revised thereby restoring the orders of the assessing authority (Commercial Tax Officer, Lad Bazar, Hyderabad) in Asst. No. 524/83 -84 dated 21 -9 -1986 regarding the set off of tax claimed by the appellant. The appellant is having a steel re -rolling mill and is a dealer in re -rolling mill products. He is engaged in purchasing ingots and billets from registered dealers and manufacturing finished goods out of the same. While manufacturing finished goods some goods become defective on account of power failure and other reasons in the process of such manufacture. Such products are called as 'mis -rolls'. The appellant purchased such misrolls and made use of the same for manufacturing finished products which were sold by him. The appellant claimed set off of the tax paid on the misrolls purchased by him from out of the tax payable on the sale of the finished products like M.S. rounds, flats etc., which he had obtained by making use of the misrolls under the G.Os. issued by the Government. The assessing authority refused to grant such exemption on the ground that G.O.Ms. No. 498, Revenue dated 20 -3 -1984 is not applicable. The appellant thereupon preferred appeal before the Appellate Deputy Commissioner who allowed the appeal relating to such claim and observed that the misrolls are the same as ingots and billets and that he is entitled to claim set off of the tax paid on such misrolls from out of the tax payable on the finished products under the G.O. The Joint Commissioner however revised the said orders of the Appellate Deputy Commissioner and withdrew the set off of tax observing that the commodities known as "misrolls" are not enumerated in item 2 of Third Schedule, that the appellant is not able to prove that misrolls can be considered as re -rollable scrap and that therefore he is not entitled to claim the set off of tax. The present appeal is filed by the appellant questioning the said orders of the Joint Commissioner.
(2.) THE point for consideration is whether the appellant is entitled to claim set off of tax paid on the misrolls from out of the tax payable on the sale of the finished products covering the disputed turnover? The appellant is admittedly owning steel re -rolling mill and is engaged in purchasing ingots and billets and manufacturing finished products like M.S. rounds, flats etc. out of such raw material. At the time of manufacturing finished products from out of ingots and billets, some products will come out with some defects on account of power failure, tow voltage etc, and such products are known as 'misrolls'. The appellant purchased such misrolls and tax was admittedly paid on such misrolls at the time of purchase. He made use of such misrolls to manufacture finished products. The contention of the appellant is that such misrolls, which are produced out of ingots, are to be considered the same as ingots as they are made use of once again for manufacturing finished products and that therefore the tax paid on such misrolls is to be reduced from the tax payable on the sale of the finished products in view of G.O.Ms. No. 498 dated 20 -3 -1984. Notification -II issued under G.O.Ms. No. 498 dated 20 -3 -1984 states that where a tax has been levied and collected in respect of a sale or purchase of steel ingots or billets referred to in item 2 of Third Schedule, the tax leviable under Sec. 6 of the Act on the Act on the re -rolled finished products shall be reduced by the amount of tax levied and collected on such ingots and billets during the period from 4 -2 -1982 to 31 -3 -1985. The present assessment year falls in that period. The Joint Commissioner has referred to G.O.Ms. No. 774 dated 9 -7 -1985 in her orders. But the G.O. that actually applies to the present case is only G.O.Ms. No. 498 dated 20 -3 -1984 and not G.O.Ms. No. 774 dated 9 -7 -1985 which is subsequent to the present assessment year. The reasoning given by the Joint Commissioner to refuse set off of the tax is that misrolls are not enumerated in item 2 of Third Schedule and as such, the set off cannot be granted. Even under Notification -II issued under G.O.Ms. No. 498 dated 20 -3 -1984 it is necessary that the goods shall fall in the category of steel ingots or billets referred to in item 2 of Third Schedule in order to claim set off tax paid on such goods out of the tax payable on the finished products. But, as already stated above, misrolls are obtained while subjecting ingots to certain manufacturing process with a view to obtain finished products, and such products are called as 'misrolls' only on account of some defect due to power supply, low voltage etc. Such misrolls are once again used like ingots to manufacture finished products. Under such circumstances the misrolls can be equated to ingots which are referred to in entry 2 of Third Schedule. Therefore the tax paid on the purchase of such misrolls by the appellant will have to be reduced from out of the tax payable on the sale of the finished products and such set off is clearly granted under Notification -II issued under G.O.Ms. No. 498 dated 20 -3 -1984. Therefore the orders of the Joint Commissioner are not valid and legal and are liable to be set aside. In the result the appeal is allowed and the orders of the Joint Commissioner (CT) (Legal) are set aside.
Dictated to the Stenographer, transcribed by him and pronounced in the Open Court on this the 6th day of December, 1993.;
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