J. Shyam Sundar Rao, Chairman -
(1.) THIS is an appeal filed against the Revisional orders of Additional Commissioner (CT), O/o The Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad in CCTs Ref. No. LIII/504/99 -2, dated 16 -11 -2002. The appellant is M/s. AMPOWER Equipment, A.C. Guards, Hyderabad. It is on the rolls of Commercial Tax Officer, Agapura Circle, Hyderabad. The business premises were inspected by the Commercial Tax Officer -VII, (Intt.), Enforcement Wing on 18 -9 -2006. It was observed by the inspecting authority that the assessee paid concessional rate of tax on sales of generator sets, chemical storage tanks, spares of machinery etc., at 3% on the plea that the consignee of the assessee is a registered dealer have furnished declarations as per G.O.Ms. No. 1272, dated 31 -12 -1994. The Commercial Tax Officer, Enforcement Wing observed the concessional rate of taxation is not applicable to the generators dealt by the appellant since the item generators has been specifically included in Item 1038 of the First Schedule to the APGST Act liable to tax at 16%. Apart from it, it was also found that the assessee paid 6% only on the turnover of supply, erection and commissioning of diesel generator sets to their customer, instead of making the payment ((THELAW)) 16%. Hence, after issuing show cause notice, provisional assessment order was passed on 12 -11 -1996 and after hearing the objections of the assessee, levied tax @ 16% on the sales of generators as well as on the turnover of supply, erection and commissioning of diesel generators of the customers of the appellant. Aggrieved by the same appeal had been preferred before the Appellate Deputy Commissioner, Secunderabad Division, Hyderabad. The Appellate Deputy Commissioner allowed the appeal and remanded the matter holding that the sale turnover of generator sets are exigible tax at 3% only and also observing that erection, commissioning and supply of generators would involve works contract, exigible to tax under Section 5Fof the APGST Act.
(2.) THE Additional Commissioner (CT) (Legal), O/o the Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad by -virtue of powers under Section 20(2) having observed that the order passed by the Appellate Deputy Commissioner and as well as final orders passed by the Commercial Tax Officer are prejudicial to the interests of revenue, issued show cause notice proposing to levy tax at 16% only on both these counts calling for the objections of the appellant. After receiving the objections and after hearing the Authorized Representative of the appellant, the Revisional Authority confirmed the proposal made in the revision show cause notice, holding that both these turnovers are exigible to tax at 16%. Aggrieved by the same, the present appeal has been preferred. In the appeal grounds, it has been contended by the appellant disputing the turnovers as follows:
Rs. 23,85,154/ - Sale of Generators: The Additional Commissioner erred in levying higher rate of tax on sales of generators. The Appellate Deputy Commissioner rightly held the GO is in general and is not confined to Item 38 of First Schedule. The reasoning of the Additional Commissioner that the specific entry for generator is Item 38 of First Schedule and the principle specific entry over -rides a general entry has no bearing on appellant's case. The features of the Notification -XXXVI of G.O.Ms. No. 252 would provide concessional rate of tax, is at 3% only. The Appellate Deputy Commissioner rightly found that generator is a machine that produces electricity and hence it is eligible for concessional rate in the absence of specific reference in the GO that rate is reduced with reference to Item 83. The appellant relies on the decision of M/s. BPL Limited reported in 121 STC 450. It also relies on the decision of this Tribunal in T.A. No. 1406/1988, dated 5 -12 -1990 in the case of M/s. Xerograph Agencies.
Rs. 22,26,542/ - Supply of Generators in execution of works contracts: The appellant executed contracts for certain customers which are indivisible works contract involving civil works, supply, installation and commissioning of generator. The Appellate Deputy Commissioner after elaborate discussion and extracting the terms of the agreement held that the transaction with these customers is by way of execution of works contracts, liable to tax at 6% under Section 5V of the Act. The finding of Additional Commissioner that it is post -sale and incidental to sale of standard goods, is incorrect. The Additional Commissioner ought to have seen Section 5F operates with a non -obstante clause. The appellant did not sell the generator as a chattel to the relevant customers. The transaction involved extensive consultancy and services before and after supply and erection, apart from the responsibility of executing civil works required for the generator such as construction of necessary civil works, laying of connecting cables, fixing of panel boards etc. It is highly skilled and specialized contract executed by the appellant on indivisible basis. Hence, the levy of tax on the value of generator involved in the transaction with NABARD and other contractees is rightly taxable under Section 5F of the Act.
(3.) AT the time of hearing of the appeal, the learned counsel for the appellant submitted that the Additional Commissioner erred in levying tax holding that the appellant sold the generators and the work executed is incidental to the pre -transaction sale of generators. It is stated that the agreements entered with NABARD and other agencies by the appellant clearly indicate that the appellant has to execute civil works for fixation of generators providing technical assistance, laying of cement concrete bed for safe fixation of engine and alternator, provision of earth pits (including earth work -excavation of earthing pits & refilling the same) connecting cables, fixing of panel boards etc., Exhaust outlet fixation inclusive of supply of suitable MS Pipe, Asbestos insulation and fixation of exhaust silencer; Grouting of fuel tank on suitable rigid MS stand and laying fuel lines between engine and fuel tank and return lines; Supply and fixing the engine and alternator on suitable anti -vibration/cushy months for absorption of vibration; supply and fixation of suitable charged battery along; with stand and interlinking cable; Electric power for welding jobs and water for curing the PCC Bed; and also furnish of guarantee for its commissioning and continue to furnish the guarantee for certain period. Hence, practically speaking, the agreements with the customers of the assessee by the appellant for execution of works contract in which supply of Engine Alternator or Generator is incidental to the works contract and therefore the said turnover is exigible to tax at 6% under Section 5F. It is also contended that the appellant had separately shown the sale turnover relating to other customers and the customers, with which the appellant entered into agreement contracts.;