Aluminium Co. Ltd Vs. The State of A.P.
& Ors  Insc 213 (19 February 2008)
Arijit Pasayat & P. Sathasivam
APPEAL No. OF 2008 (Arising out of SLP (C) No. 20028 of 2006) with Civil Appeal
No. /2008 (Arising out of SLP (C) No. 20030 of 2006), Civil Appeal No. /2008
(Arising out of SLP(C) No.20031/2006, Civil Appeal No. /2008 (Arising out of
SLP (C) No. 20032/2006) Dr. ARIJIT PASAYAT, J
Challenge in these appeals is to certain conclusions recorded in the order passed
by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (in short the
'Tribunal') in TMP Nos.125 of 2005, 259/2005,260/2005 and 261/2005.
Background facts in a nutshell are as follows:
Aluminium Co. Ltd. is a Government of India enterprise under the administrative
control of the Ministry of Mines. The registered and corporate office of the
appellant is situated at Bhubaneswar in Orissa State, while it has mercantile offices in
a few cities including Visakhapatnam.
substantial part of the commercial operations of the appellant are carried out
only in the State of Orissa. For the purpose of causing export
to foreign countries, Visakhapatnam port is being used by the
appellant. It is the case of the appellant that there is no sale or purchase of
goods carried out by it in the State of Andhra Pradesh.
also the case of the appellant that they would earn Credit Duty Entitlement
Pass Book (DEPB) licence as contemplated under Exim Policy as a result of their
the period from 1.4.1997 to 31.3.2001, the Duty Entitlement Pass Book scheme
was there. The object of the scheme was neutralization of incidence of customs
duty on the import content of the export product. Such neutralization was
provided by way of grant of duty credit against export product. The export unit
has also been conferred with the right to utilize the said credit for its own
purpose or to transfer of the same to third parties for availment of the
benefit of the said credit.
the exports made by the appellant from Visakhapatnam Port, the petitioner
submits an application for issue of DEPB to DGF`I', Cuttack, Orissa along with
customs endorsed copy of shipping bill. The customs authorities check the
details of exports mentioned in the DEPB with their records, register the
license and return the original license to the appellant. It is also the case
of the appellant that since the exports of the appellant are effected at Visakhapatnam Port, an account of DEPB licenses is maintained by the customs
authority at Visakhapatnam.
appellant either uses DEPB licence for payment of customs duty for their own
import or sells the surplus DEPB license by inviting advertisement. As per the
terms, the DEPB license entitles the holder of such license to import through
any port in the country. Accordingly, the appellant had been exporting aluminium
through Visakhapatnam Port in Andhra Pradesh. Against these exports, the petitioner
got some import duty entitlement under the DEPB scheme. It held open auctions
of these entitlements from the Head Quarters at Bhubaneswar in Orissa State. In those auctions the bidders from West Bengal and Maharashtra emerged as the highest bidders. Accordingly, the appellant
sold the import duty entitlement under the DEPB Licenses to the highest bidders
and treating the same as inter-state sale, collected and paid CST to the
Government of the exporting State i.e., Orissa.
Assessing Authorities in Andhra Pradesh issued show cause notice proposing to
levy tax under the Andhra Pradesh General Sales Tax Act, 1956 on the
transactions relating to transfer of the DEPB Licenses on the ground that such
licenses were registered with Visakhapatnam Port through which the export took place. The authorities
considered it to be local sales within Andhra Pradesh and accordingly levied
appellant filed appeals before this Court. A three- judge judge Bench by order
dated 1st February,
2005 in Civil Appeal
Nos. 1649-1654 of 2001 directed the matter to be considered by the Tribunal for
determining the issues involved. That is how the Tribunal took up the matter
for consideration. By the impugned common judgment, the Tribunal decided the
matter in favour of the appellant holding that the sale did not take place
within the State of Andhra
Pradesh. But held
that it took place inside the State of Orissa as per Section 4(2) of the Central Sales Tax Act, 1956 (in short the
'CST Act'). The ultimate conclusion which is the subject matter of challenge in
these appeals reads as follows:
the light of the discussions, we hold that the sales took place within the
State of Orissa and not within the State of Andhra Pradesh and as such it should be treated as
intra-state sale within the State of Orissa and not intra- state sale within Andhra Pradesh."
is the stand of the appellant in these appeals that the Tribunal could not have
recorded a finding that there was an intra-state sale within the State of Orissa. That was not the subject matter of
dispute before the Tribunal. Strictly speaking there was no sale involved to
attract levy of any sale tax. But without any material to hold that there was
any sale involved and that too an intra state sale within the State of Orissa, the Tribunal could not have come
to the impugned conclusion. It is contended that Central Sales tax has been
deposited in the State of Orissa in respect of the transaction, though legally
no tax was payable.
Learned counsel for the State of Andhra Pradesh submitted that the Tribunal has decided the basic issues
that there was no sale within the State of Andhra Pradesh. But on the facts came to a tentative conclusion about this
intra-state sale in the State of Orissa.
Learned counsel for the State of Orissa submitted that the Tribunal's conclusions do not suffer from any
to him, there may be a typographical error i.e. intra- state sale in place of
is clear that the scope of consideration before the Tribunal was very limited
as to whether any sale took place within the State of Andhra Pradesh. Having decided that issue,
Tribunal was not required to go into any other question particularly when the
relevant factors were not before it. As rightly contended by the appellants
there was no material whatsoever to show that the sales could be treated as
intra state sale within the State of Orissa. The assessing authorities proceeded to levy tax on erroneous premises.
In the ultimate analysis the Tribunal held that the sales did not take place
within the State of Andhra
conclusions to the effect that they are intra-state sales in Orissa are
unsustainable. It was rightly decided that there was no intra- state sale
within Andhra Pradesh. But for further conclusion that there was an intra state
sale within the State of Orissa, materials were required to be
examined. That has not been done. There was no material before the Tribunal to
come to a definite finding, as done, that the transaction should be treated as
intra state sale within the State of Orissa. The observations, therefore, have no relevance and need to be set
aside, which we direct.
appeals are allowed to the aforesaid extent.