VIJAYA KUMAR & CO. Vs. CONTROLLER OF STORES

JUDGEMENT

(1.) THE petitioner is said to be engaged in the business of purchase and sale of second hand vehicles. Pursuant to the tender cum auction sale of old vehicles (omni buses) notified by the Controller of Stores, A.P. State Road Transport Corporation (hereinafter referred to as 'APSRTC'), Vizianagaram, the petitioner's offer which was the highest, was accepted and by a letter dt. 1.2.2000, the petitioner was directed to remit the value of the vehicle and in addition thereto, the sales tax at 12% as per the specified installments. In case of nonpayment, it is indicated that the E.M.D. will be forfeited. Aggrieved by the action of the first respondent in seeking to collect the sales tax at 12% applicable to the sales of motor vehicles, the present writ petition is filed. It is the contention of the learned counsel for the petitioner that in the paper notification for tender cum auction sale, it was only mentioned that the tax at applicable rate would be collected and therefore the petitioner did not challenge the notification at that stage. It is the case of the petitioner that APSRTC is not liable to pay the tax on the sales of these vehicles excepting one per cent turnover tax and therefore, the demand for payment of 12% on the footing that APSRTC is the first selling dealer of vehicles, is illegal. Inter alia, reliance is placed on the circular of the Commissioner of Commercial Taxes dt. 2.2.2000 in which it was clarified that if the vehicles are sold by APSRTC as motor vehicles and if they are second sales, they are exempted from sales tax; however, they are liable to pay the turnover tax at one per cent. At the same time, it is clarified that if it is first sale in the State, APSRTC is liable to pay the tax at 12% under item (1) to first schedule. The petitioner therefore prays for a writ to declare that the letter of acceptance insofar as 12% sales tax is demanded from the petitioner, is without authority of law. The petitioner also questions clause (g) of the Explanation -IV that the definition of 'dealer' in Section 2(1)(e) as being contrary to the judgment of the Supreme Court in ( : 1999 (4) SCC 630) and beyond the competence of the State Legislature.

(2.) AS far as second part of the prayer is concerned, the learned counsel has not advanced any argument as regards the validity of amended definition of business. There is nothing in the decision of the Supreme Court touching on the Constitutional validity of the provision similar to Explanation IV to Section 2(1)(e). Explanation IV has introduced a deeming provision that APSRTC and other bodies like Port Trust insofar as they sell unserviceable or surplus goods or old, discarded material etc., shall be deemed to be dealers. The judgment of Supreme Court did not consider the question of tax liability in the light of the definition of 'dealer' now found in APGST Act. However, it is still possible to contend that the activity of APSRTC in selling old buses as buses does not make it a dealer. Be that as it may, we are of the view that the petitioner has no locus standi to challenge the deeming definition of 'dealer' in the A.P. General Sales Tax Act, nor to contend that APSRTC can never be a dealer. If at all, it is for APSRTC to challenge the amended provision or to contend that it is not a dealer even according to the amended definition.

(3.) ON the other hand, the learned Government Pleader for Taxes submits that there is no proof to the effect that the vehicles sold were purchased within the State and tax was paid thereon at the point of first sale by the dealer who sold the vehicles to APSRTC. Even assuming that in some cases, the chassis suffered tax within the State, that does not amount to payment of tax on the vehicle (bus). The learned Government Pleader further submits that though apparently, the vehicles were sold as vehicles, the vehicles not being in road worthy condition, cannot be put to use as buses, and the vehicle has only a scrap value. That is why, it is pointed out that the parties who purchased these vehicles are only scrap dealers as seen from page 21 of the material papers filed by the petitioner. It is therefore submitted that the goods sold though termed as motor vehicles come under the category of unclassified goods i.e., the goods falling under 7th Schedule and therefore liable to tax at 12% irrespective of whether they suffered tax in the form of motor vehicles.