Dhanalakshmi Steel Re-rolled Mills vs Commercial Tax Officer (Fac), Mukthiargunj Circle, Hyderabad and Another

Ramanujulu Naidu, J.—This is a petition filed under Article 226 of the Constitution of India, for issue of a writ of certiorari quashing the order of assessment dated 19th February, 1987 passed by the first respondent for the assessment year 1984-85 to the extent of denying to the petitioner the benefit of set-off claimed after calling for records therein.

The petitioner is a re-rolling mill. It buys iron and steel scrap and manufactures from out of the said scrap re-rolled finished products, like M.S. rounds, angles, channels, etc., which are declared goods within the meaning of section 14(iv) of the Central Sales Tax Act.

Under notification contained in G.O.Ms. No. 498, Revenue (S), dated 20th March, 1984, the Governor of Andhra Pradesh, directed that where tax had been levied and collected under the Andhra Pradesh General Sales Tax Act, 1957 in respect of the sale or purchase inside the State, of iron and steel scrap referred to in item 2 of the Third Schedule to the said Act, the tax leviable u/s 6 of the said Act on the ingots or billets or re-rolled finished products manufactured from out of such scrap by the mini-steel plants and the mini-steel plants-cum-re-rollers situate within the State of Andhra Pradesh and sold inside the State shall be reduced by the amount of tax levied and collected on such scrap during the period from 4th of February, 1982 to the 31st of March, 1985.

However, G.O.Ms. No. 1194, Revenue (S), dated 17th July, 1984 of the Government of Andhra Pradesh superseded G.O.Ms. No. 498, Revenue (S), dated 20th March, 1984 and while superseding the earlier G.O., the sales of iron and steel scrap referred to in item 2 of the Third Schedule to the Act, made by the dealers to the mini-steel plants and the mini-steel plants-cum-re-rollers situate within the State of Andhra Pradesh for the purpose of manufacture of steel ingots or billets or re-rolled finished products within the State of Andhra Pradesh, are exempted from the tax payable under the Act with effect from 1st April, 1984 subject to the condition that the turnover claimed by the dealer on the sales of iron and steel scrap to the mini-steel plants and mini-steel plants-cum-re-rollers situate within the State of Andhra Pradesh, is covered by the declaration appended thereto issued to the effect that it had purchased the scrap for the purpose of manufacture of ingots/billets or re-rolled finished products within the State.

It is the case of the petitioner that it made purchases of iron and steel scrap during the year 1984-85, that it paid tax on the purchases of scrap, that by reason of G.O.Ms. No. 498, Revenue (S), dated 20th March, 1984, it is entitled to set-off or refund of the amount of tax paid by it on purchases of scrap by it between 1st April, 1984 and 20th July, 1984 on which date G.O.Ms. No. 1194 was published.

It is, however, submitted by the learned counsel appearing for the petitioner that the claim for such set-off was rejected by the assessing authority on the ground that all the purchases of scrap made by the petitioner were exempted from the tax and that it would not be entitled to set-off from 1st April, 1984. The grievance of the petitioner is that inasmuch as he paid tax to the sellers in respect of the purchases effected between 1st April, 1984 to 20th July, 1984 the petitioner should be entitled to set-off of the tax paid, from the tax payable on the sales of finished products. It is pointed out that the G.O.Ms. No. 1194 was published only on 20th July, 1984 exempting the sales of scrap with retrospective effect from 1st April, 1984. Nevertheless the petitioner paid tax on the purchases of scrap as the relevant notification was not within public knowledge till 20th July, 1984. From the order of the assessment, we notice that details of purchases of scrap effected by the petitioner during the relevant period were not referred to. However, it is evident that under G.O.Ms. No. 1194 dated 17th July, 1984 the sales of iron and steel scrap are totally exempted from tax with effect from 1st April, 1984. G.O.Ms. No. 1194 was, however, published on 20th July, 1984. It, therefore, follows that in case the petitioner purchased any iron and steel scrap between 1st April, 1984 and 20th July, 1984 and paid tax thereon to the sellers of the scrap in respect of such purchases, the petitioner would certainly be entitled to set-off of that amount of tax paid by the petitioner against the tax payable on sales of finished products. While declaring the legal position as above, the petitioner is permitted to furnish full details relating to his claim for set-off to the appellate authority before whom the appeal preferred against the assessment is pending. The petitioner has stated in the affidavit that a formal appeal was filed before the appellate authority which is still pending. We direct the appellate authority to scrutinise the claim of the petitioner with reference to the records and books of account maintained by the petitioner, and allow appropriate set-off of the tax, if paid, in respect of the purchases of scrap between 1st April, 1984 and 20th July, 1984. It is needless to observe that the tax paid in respect of purchases of scrap till 31st March, 1984 would be allowable under the first G.O.Ms. No. 498 dated 20th March, 1984.

The writ petition is accordingly ordered. No costs. Advocate''s fee Rs. 250.

Writ petition ordered accordingly.