G BALIAH SETTY Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS is a petition under Article 226 of the Constitution for the issue of a writ of certiorari or any other appropriate writ calling for the records pertaining to the Notification No. 112, G.O. Ms. No. 566, Revenue, dated 11th March, 1960, and quash the same, and pass such other order or orders as this Court may deem fit and proper in the circumstances of the case.

(2.) THE relevant facts may briefly be noticed. The petitioners are a registered partnership firm doing business under the name and style of G. Baliah Setty, B. Satyanarayana and Company. They export ghee on a large scale to States outside Andhra Pradesh. The course of business adopted by them was to purchase ghee from dealers who purchased butter and converted it into ghee. The petitioners are the last purchasers of ghee in the State, and it is the petitioners' case that their vendors had already paid sales tax on their purchase turnover relating to butter, and, therefore, the ghee purchased by them cannot be subject to sales tax as it amounts to double taxation of the same goods. In other words, the petitioners' case is that ghee is only butter clarified to resemble oil, and is prepared by a process of heating butter without altering or changing the butter in substance or quality.

(3.) THE said notification was made to come into force with effect from 1st April, 1960. It is contended that in and by means of this Notification both butter and ghee are subject to levy of purchase tax from the last purchaser of each of those goods, and that has the effect of double taxation, or taxing the same goods twice over, which is repugnant to the scheme of the Act, and opposed to law. The demand of tax from the petitioners on their purchase turnover under these circumstances is a threat by the State to realise it by using the coercive machinery of the Sales Tax Act and amounts to an infringement of their fundamental right guaranteed under Article 19(1)(g) of the Constitution. The State resisted the petition contending, infer alia, that the allegation that the petitioners purchased ghee only from dealers who purchased butter and converted it into ghee is not a fact which is admitted, and there might be several cases in which the petitioners purchased ghee from their vendors, who might themselves have purchased ghee, but not butter. The statement of the petitioners that they purchased ghee from dealers who paid tax on purchase of butter is incorrect, and they are put to strict proof of the same. The contention that ghee is only butter, and that if ghee and butter are taxed it would amount to double taxation is unsustainable, and is a wrong and unwarranted assumption. Butter, on conversion to ghee, undergoes both physical and chemical changes, and properties in both of them are different and the taxation of those commodities separately would not amount to double taxation. Even assuming that some of the petitioners' vendors paid tax on butter, that did not prevent the authorities from taxing the ghee at the point of last purchase. The notification in question is under the authority of law conferred by section 41 of the Act, and does not contravene any of the provisions of the Act, nor is opposed to any notions of public finance.