QUINN INDIA LIMITED Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) This writ petition is filed questioning the amended definition to section 2(r) of the Andhra Pradesh General Sales Tax Act as ultra vires of articles 14 and 19(1)(g) of the Constitution of India, as it lacks legislative competence by the State Legislature and consequently to declare that the assessment orders passed by the second respondent for the years 1986-87 and 1987-88 as illegal.

(2.) The petitioner is a limited company which is registered as small-scale industrial unit. It was also registered under the Andhra Pradesh General Sales Tax Act, 1957 and also under the Central Sales Tax Act, 1956. The State Legislature has introduced an amendment to the Andhra Pradesh General Sales Tax Act by Act 18 of 1985 with effect from 1/07/1985, according to which definition 2(r) was introduced by which total turnover in all goods of trader in all places of business in the State, whether or not the whole or portion of any such turnover is liable to tax should be taken into consideration. In view of this amendment, the second respondent who is the assessing authority imposed additional tax on the turnover of the petitioner-company in view of section 5-A of the Act. Section 5-A empowers the respondents to levy additional tax. As per section 5-A, additional tax has to be imposed on the turnover at one half paise on every rupee if the turnover in the year exceeds three lakhs, but does not exceed fifty lakh rupees; one paise if it exceeds fifty lakh rupees, but less than one crore of rupees; and one and half paise on every rupee when the total turnover exceeds one crore of rupees. In view of the amended definition to section 2(r), the respondents are including the total turnover, although it is exempt from sales tax under the Andhra Pradesh General Sales Tax Act. The second respondent is determining the total turnover basing on section 2(r) including the turnover in respect of inter-State sales by levying additional tax under section 5-A of the amended Act 19 of 1986 and also by Act 29 of 1988 which is unjust, arbitrary and illegal. The first respondent has no legislative competence. Hence, this writ petition.

(3.) In the counter-affidavit filed by the second respondent it is stated that the total turnover as defined under section 2(r) means aggregate turnover in all goods of a dealer. Earlier the method of calculation was the same. This amendment was made by way of clarification to remove the ambiguity, where the total turnover is to be understood as the total quantum of business of a dealer in the State. It was also denied that the tax liability of a dealer was enhanced in case the turnover in respect of inter-State sales or purchases are included in the turnover. The liability under the Act is confined only to the transactions within the State and additional tax liability is decided on the basis of the total quantum of business of a dealer. For the purpose of determining the tax liability of any dealer, total turnover is being taken into consideration, but tax is not imposed on the inter-State sales as such. Additional tax under the Act is not being fixed on inter-State transactions, but the inter-State sale turnover is being taken into account to determine the quantum of business of the dealer. Therefore, the amended definition is not unconstitutional and cannot be declared as illegal.