NILGIRI TEA EMPORIUM Vs. GOVERNMENT OF A.P.

JUDGEMENT

(1.) THIS writ petition is filed by ten companies trading in tea challenging the validity of sec. 5 -A of the Andhra Pradesh Ordinance No. IV of 1993 as being ultra vires of the powers of the State Legislature and being violative of Articles 14, 19(1)(g) and 301 to 304 of the Constitution. The learned counsel for the petitioners argued that the impugned Ordinance lacks the legislative competence of the first respondent in the absence of a legislative entry under List II of the Seventh Schedule to the Constitution. The learned Government Pleader has taken a preliminary objection as to the maintainability of the writ petition stating that a Bill in replacement of the Ordinance has been passed and, therefore, this writ petition has become infructuous. But the learned counsel for the petitioners submitted that till the Governor assents to the Bill and the Bill is validly published in the Gazette the Ordinance will have its force and, therefore, the writ petition cannot be dismissed on the strength of the objection raised by the learned Government Pleader. Therefore, we do not propose to dismiss the writ petition on the technical ground of the Bill having been passed.

(2.) HOWEVER , the tax which the impugned Ordinance imposes is in nature of indirect taxation, the burden of which ultimately falls on the consumer and not on the petitioners who are dealers. The learned counsel for the petitioners tried to submit that the dealers whose turnover is less than rupees ten lakhs, they being not liable to pay the turnover tax, can afford to sell the goods at a lesser rate whereas the dealers whose turnover exceeds rupees ten lakhs like the petitioners, being liable to pay the turnover tax, will have to increase the rate of goods and thereby it affects the petitioners' business and as such the impugned Ordinance violates Article 14 of the Constitution. A Division Bench of the Karnataka High Court in B.P. Automobiles vs. State of Karnataka : (1984) 55 STC 93, while dealing with a similar legislation imposing turnover tax by virtue of the Karnataka Sales Tax (Amendment) Act (Act No. VII of 1981) held that a tax on 'turnover' was in reality a tax on the aggregate of the sales or purchases, as the case may be, of a dealer during the year and, accordingly, the State Legislature had the competence to levy a tax on the turnover under entry 54 List II of the Seventh Schedule to the Constitution. Following the above decision, we hold that the State is competent to impose the turnover tax which is in the form of a tax on the aggregate of the sales or purchases of a dealer during the year. The writ petition is, therefore, dismissed at the stage of admission.