TREVC/91/2011 of M/S Plywood Traders, Vs State of A.P. on 30 December 2011

(1) Save as otherwise provided in this Act, every dealer shall pay a tax under this Act for each year on every rupee of his turnover ofsales or purchases of goods in each year irrespective of thequantum of his turnover at the rates of tax and at the points of levyspecified in this Schedules.

(3) For the purpose of this section and the other provisions of thisAct, the turnover which a dealer shall be liable to pay tax shall bedetermined after making such deductions from his total turnover,and in such manner as may be prescribed.

(4) The taxes under this section shall be assessed, levied andcollected in such manner, as may be prescribed.Provided that-

(i) in respect of the same transaction, the buyer or the seller but notboth, as determined by such rules as may be prescribed, shall betaxed;

(ii) where a dealer has been taxed in respect of the purchase ofany goods, in accordance with the rules referred to in clause (i) ofthis proviso, he shall not be taxed again in respect of any sale ofsuch goods effected by him.

SIXTH SCHEDULE

(As substituted by Act No.22 of 1995 w.e.f.1.4.1995 with amendments upto1.9.2003)

First proviso omitted.

Provided further in respect of goods other than liquor mentioned inthis Schedule, tax to be paid at any point of sale other than FirstPoint of Sale, shall be determined after deducting the tax levied onthe turnover of such goods at the immediately preceding point ofsale by a registered dealer from the tax leviable on the turnover ofthe same goods at the point of sale by selling dealer.

Explanation I: omitted.

EXPLANATION II: Provided also that the turnover of a retail dealerin respect of commodities other than liquor for the relevantassessment year shall be exempt from payment of tax in respect ofsales other than first sale within the State the goods specified in theSchedule. If in the sale bill issued at the preceding point of sale taxlevied is not shown separately, but tax is collected by seller at thepreceding point of sale from the buying dealer, for determining theamount of tax levied at the preceding point of sale, for the purposeof this proviso the following formula shall be applied.

Rate of tax X Sale price at the preceding point of sale ____________________________________________________

Where the turnover of a dealer is taxable at different taxes, theaforesaid formula shall be applied separately in respect of theturnover of each goods liable to tax.

Provided further that the turnover of a retail dealer in respect of saleof goods other than liquor mentioned in this Schedule, to personsother than dealers at any point of sale other than first point of sale,shall be exempt from payment of tax and that part of turnover of aretail dealer which relates to second and subsequent sales of thegoods referred to above to other dealers for effectingaccommodation sales by the latter shall also be exempt from tax, ifsuch turnover does not exceed five percent of the total turnover ofthat dealer in a year, and a Certificate is produced in such mannerand form as may be prescribed.

Rule 5. (1) Save as provided in sub-rules (2) to 8) the turnover of adealer for the purposes of these rules shall be the total amountreceived by the dealer as the consideration for the sale of thegoods.

(2) omitted

(3) In the case of goods liable to tax under Section 6-A, the amountpaid by the dealer for the purchase of such goods shall be theturnover of the dealer in such goods.

(5) to (8) omitted.

On a plain reading of the above provisions, what emerges is asfollows. As per the charging Section, every dealer shall pay tax on histurnover of sales and purchases of goods at the rates and at the pointsof levy specified in the Schedules. As per Section 5(3) whiledetermining the tax, deductions shall be allowed from the total turnoverof the dealer in the manner prescribed. Section 5(4) proviso (i) prohibitsdouble taxation and lays down that in respect of the same transaction,the buyer or seller, but not both, shall be taxed. The Act has sevenSchedules. Plywood is an item of goods dealt with by the VI Schedule.Plywood is exigible to tax at every point of sale at 15% in the rupee.The second proviso thereto, however, allows the deduction of tax paidat any point of sale other than first point of sale, and all the goodsexcept the liquor. It means that wherever it is proved by the dealer thattax is paid at the previous point of sale by offering the proof, to thatextent the second proviso would be attracted. In case where the dealer is not able to produce the proof or if the sale bill at the preceding pointof sale does not show the sales tax having been levied separately,Explanation II is attracted. As per Rule 5(1), the total turnover of adealer shall be the total amount received by the dealer as considerationfor the sale of goods. A dealer who claims rebate under Section 5(3)read with the second proviso to VI Schedule has to necessarily producethe proof of the total sale consideration received and the sales taxlevied and paid at the previous point of sale. If the same is not shown,Explanation II would be attracted which contains the formula fordetermining the amount of tax levied at the preceding point of sale.

The CTO allowed the tax rebate under VI Schedule for both theyears based on cash book, ledger, purchases and sales bills. It was tothe tune of Rs.5,66,166/-. The revisional Deputy Commissioner,however, on verification found that allowing rebate on the entire localpurchase of plywood without considering the opening and closing stockis not permissible. Therefore, a show cause notice was issued. Inresponse thereto, the petitioner submitted explanation. Insofar as therebate is concerned, the dealer relied on the Circular issued by theCommissioner for Commercial Taxes, dated 04.11.1994 in support ofthe contention that whatever the tax was paid at the preceding pointmust be given rebate, irrespective of the fact that whether the purchasedealer paid excess tax at the preceding point of the sale. This did notfind favour with the revisional authority because as observed in theorder, dated 28.02.2004, the explanation of the dealer was silent as tothe opening and closing stock. For the purpose of allowing rebate insuch a case, the burden is certainly on the dealer to satisfy therevisional authority as well as the second appellate authority. Theyfailed to do so. The Tribunal observed that the appellate authority foundthat the petitioner did not produce any credible evidence for dischargingthe burden. Having not produced any evidence before the revisionalauthority as well as Tribunal, we are afraid the petitioner cannot sustain these revisions under Section 22(1) of the Act. The order of theTribunal does not suffer from any error of law.

Conclusion

One cannot ignore the fact that VI Schedule was substituted witheffect from 01.04.1995 by reason of A.P.Act No.22 of 1995. Therefore,unless and until the opening stock on which the tax was paid at the firstpoint of sale is available and the closing stock is entered correctly, it isnot possible to allow the rebate under the second proviso to VISchedule. In so far as adding of the impugned turnover of Rs.5,57,623/-it was found that even according to the dealer, the disclosed salesstood at Rs.67,56,133/- as against the assessed turnover ofRs.61,98,510/-. Hence, when the revisional authority added back theturnover which was not subjected to tax, we do not find any errortherein.

In the result, for the above reasons, these revisions must failand they are accordingly dismissed without any order as to costs.

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(V.V.S.RAO, J)

30.12.2011Pln

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(B.N.RAO NALLA,J)

Note: LR copy be marked. (By order) pln