Venkateswara Agencies vs Commissioner of Commercial Taxes, Andhra Pradesh, Hyderabad and Another

P. Venkatarama Reddi, J.—In these two appeals filed u/s 23(1) of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred as "the Act"), which relate to the assessment years 1984-85 and 1985-86, the legality of the orders passed by the Commissioner of Commercial Taxes in exercise of revisional power vested in him u/s 20(1) of the Act is questioned. The Commissioner revised the order of the Appellate Deputy Commissioner, who having set aside the assessment order in so far as the disputed turnover is concerned and remanded the case to the assessing authority. This is what the appellate authority has said :

"The whole argument of the learned authorised representative is that ''cem powder'' is nothing but pigment powder. There is nothing on record to show how the assessing authority came to the conclusion that ''cem powder'' is not a ''distemper''. If the chemical composition of ''cem powder'' covered by the disputed turnover is the same as that of pigment powder, the appellant is entitled to the relief prayed for. Upon the appellant adducing proof that the chemical composition of ''cem powder'' is the same as that of pigment powder, the Commercial Tax Officer shall grant relief prayed for. In the end I set aside the assessment on the disputed turnover and remand the matter for fresh assessment in the light of the above observations."

The appellate authority as well as the revisional authority were concerned with the question whether "cem powder" falls under general goods or they are single point goods under entry 45 of the First Schedule to the Act. The appellants claimed exemption on the sales of "cem powder" effected by them on the ground that such sales are second sales and it is not liable to be taxed again in the hands of the appellants, as it comes under entry 45. Entry 45 seems to cover the entire range of paints, colours, varnishes, etc. Dry distemper and cement-based water paints are also included in this entry. It appears that before the appellate authority, the appellants claimed that "cem powder" is nothing but a dry distemper which can be simply mixed with water and used for painting the walls. It was also contended before the appellate authority that the manufacturers charged sales tax treating the commodity as cement-based water paint falling under entry 45 of the First Schedule. It appears that in the course of hearing, it was also pointed out to the appellate authority that the chemical composition of "cem powder" is the see as that of pigment powder. These are the various grounds on which the claim was made to treat the goods in question as falling within the purview of entry 45. The appellate authority having observed that there was nothing on record to show how the assessing officer came to the conclusion that the cem powder is not distemper, surprisingly remanded the matter to the assessing authority to find out whether cem powder is a kind of pigment powder, though the word "pigment powder" is not contained in entry 45 to Schedule I of the Act. To the extent that the Appellate Deputy Commissioner misdirected himself in ordering an enquiry into the question whether cem powder is a pigment powder, we must say that the appellate authority committed an illegality and the action of the Commissioner in setting aside that order cannot be faulted. But the question still remains whether the assessee''s claim to bring the cem powder within entry 45, i.e., as dry distemper or cement-based water paint still remains for consideration. The Commissioner, no doubt, addressed himself to these questions. But we see that the findings of the Commissioner are quite unsatisfactory. The Commissioner was obviously handicapped by the non-representation of the appellant on the date of posting of the case. The Commissioner referred to process of manufacture and dictionary meaning of "distemper" which were adverted to by the appellate authority also and concluded as follows :

"On a comparison of the chemical composition of cem powder with that of distemper and also looking into the actual meaning of the word distemper, I feel that the two commodities cannot be considered strictly to be one and the same."

Apart from drawing this inference, no reasons are spelt out in the order of the Commissioner as to what is the material difference in the nature or chemical composition of the two commodities. It is well-settled that there must be adequate material before the revisional authority to undertake the revision. On a comparison of the process of manufacture as given out in the revisional order with the dictionary meanings cited by the Commissioner, an inevitable inference does not follow Bat the chemical composition in the meaning differs. The Commissioner should have given definite findings in this regard instead of coming to a bald conclusion. Moreover the Commissioner had not applied one of the relevant tests to determine whether the commodity falls within one or the other of the taxation entries. The trade usage or the commercial parlance is one of the tests that could have been adopted to reach the conclusion. In this context, it is pertinent to point out that the assessees claimed that the original manufacturers treated cem powder as cement-based water paint. This was noted by the Commissioner and there is some ambiguity in the order of the Commissioner as to whether he accents the claim or not. This is another reason why we feel that the Commissioner''s order cannot be sustained. That apart, the Commissioner has not considered the aspect whether cem powder can be treated as paints/colours according to commercial or popular parlance. Learned counsel for the appellant has endeavoured to substantiate his point by placing before us some literature concerning cement paints and dry distempers. We are not inclined to look into this material, which is sought to be produced for the first time before us. Considering the lacunae in the impugned order of the Commissioner as pointed above, we consider it a fit case to set aside the order and remit the case back to the Commissioner for fresh disposal after giving an opportunity of hearing to the appellants. The appellant''s counsel submits that he would file objections within four weeks from today.

The appeals are allowed to the extent indicated above. We make no order as to costs.

Appeals allowed.