State of Andhra Pradesh vs Industrial Finance Corporation of India (P) Ltd.

S.V. Maruthi, J.—This T.R.C. arises by the Revenue against the order of the Sales Tax Appellate Tribunal, Hyderabad in T.A. No. 527 of 1994.

The assessee is Industrial Finance Corporation of India. It is engaged in industrial financing and leasing and the disputed turnover relates to issue of rental brought to tax u/s 5-E of the Andhra Pradesh General Sales Tax Act, 1957, by the Commercial Tax Officer. The Appellate Deputy Commissioner while upholding the orders of the Commercial Tax Officer held that the turnover to the extent disputed relates to hire charges received by the appellant for delivery of machinery legally effected. The hire charges so received under hire purchase system were brought to tax by the Commercial Tax Officer as part of sales turnover under the Andhra Pradesh General Sales Tax Act. He held that the contention of the assessee that the turnover relating to lease rentals received from the customers constitute deemed sales and further the deemed sales were made in the course of import of machinery was rejected. The Tribunal accepted the contention of the assessee and held that they are deemed sales. The Tribunal also held that they are inter-State sale and therefore, no tax is leviable under the Andhra Pradesh General Sales Tax Act. Aggrieved by the order of Tribunal, the Revenue filed the present revision.

The issue involved in this case is, covered by a judgment of this Court in Media Communications Vs. Government of Andhra Pradesh, . A Bench consisting of Justice M.N. Rao as he then was and Justice T.N.C. Rangarajan one of us, relying on the judgment of the Supreme Court in Sahney Steel and Press Works Limited and Another Vs. Commercial Tax Officer and Others, observed that :

"In case where a contractor had purchased certain goods in another State and transfers it to the State of Andhra Pradesh for executing a contract, there will be two taxable events, one with reference to his purchase outside the State and the second with reference to the deemed sale under Section3 5F inside the State.

In view of this exposition of the law by the Supreme Court, such transactions cannot be excluded from the protection given by Section 38, Therefore, to the extent that the last portion of this proviso is in contradiction to the principle laid down by the Supreme Court, we have to construe the words ''but does not include the goods either obtained or purchased from other States and used in the execution of works contract'' as not applicable to such transactions which are assessed to the Central Sales Tax Act in the other States and in respect of which ''C'' forms have been issued by the contractee."

The finding of the Tribunal is that the deemed sales are inter-State sales. In view of the finding of the Tribunal, the principle laid down by the Supreme Court in Sahney Steel and Press Works Limited and Another Vs. Commercial Tax Officer and Others, , applies and the Tribunal is right in holding that the turnover is not taxable.

The T.R.C. is accordingly dismissed.