PRABHUDAYAL RAMANAND Vs. STATE OF A P

JUDGEMENT

(1.) THIS batch of writ petitions is filed by several roller flour mills in the State seeking declaration that the collection of sales tax on sale or purchase of wheat or its products like maida, atta, ravva is unconstitutional and illegal.

(2.) IT is not disputed that a number of roller flour mills which convert wheat into its various products like ravva and maida are located in our State and also this State has a large number of bakeries manufacturing biscuits, bread, etc. , which use wheat products as raw material. It is asserted that the number of bakeries in this State is the highest in our country. Our State does not produce wheat in significant quantities and, therefore, it has to be brought from outside the State for the roller flour mills. Wheat is one of the declared goods under section 14 of the Central Sales Tax Act and, therefore, the maximum rate at which a State can levy sales tax on its sale is four per cent. Till about 1987, wheat, which is an essential commodity was being distributed and sold to roller flour mills through the Food Corporation of India throughout the country at fixed rates because of orders under the Essential Commodities Act. However, from the middle of 1987, the Government of India discontinued the policy of distribution of wheat by Food Corporation of India to the roller flour mills at fixed rates and introduced a system of sale by tenders by the Food Corporation of India. At the same time, the roller flour mills were given freedom to purchase wheat from the open market anywhere in the country. Thus, the raw material needed by the roller flour mills has to be procured, either in the open market or by submitting tenders offering appropriate rates to the Food Corporation of India. This introduced an element of play of market forces on the price of this raw material of the petitioners. According to the petitioners, because of the high rate of sales tax under the Andhra Pradesh General Sales Tax Act, 1987, on wheat and its products in comparison with the other States the bakeries in our State are finding it cheaper to buy the wheat products from the roller flour mills outside the State.

(3.) FURTHER , section 5-A provides for the levy of additional tax and reads as follows :