VIRAT CRANE INDUSTRIES LIMITED Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) The petitioner, challenging the validity of the Government Memo No. 37289/CT-1/95-4, dated January 23, 1996 and also the consequential notice issued by the first respondent-Commercial Tax Officer, Patnam Bazar, Guntur, in G.I. No. 1486/94-95, dated February 8, 1996, prays for a writ of certiorari to call for the records relating to the said memo and notice and to quash the same.

(2.) The petitioner is a company registered under the Indian Companies Act, 1956. It is engaged in the business of manufacturing and marketing "gutka and fruit masala". The petitioner (for short, "the company") is the registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the Act"). For the assessment year 1993-94, the assessment proceedings were completed by exempting a turnover of Rs. 14,67,383 relating to the sale of "gutka", which was exempted from the sales tax. It appears that in exercise of the power under section 42A of the Act, the Commissioner of Commercial Taxes, Second respondent herein, issued a circular No. A. 1(1)3202/92, dated October 26, 1994 clarifying the position that "gutka" would have to be treated as a tobacco product falling under entry 7A of the Fourth Schedule to the Act. It may be noted that in exercise of the power vested under section 40 of the Act, the Governor of Andhra Pradesh amended the First Schedule adding entries Nos. 193 and 194. Here, we are concerned with the entry No. 194. The Governor of Andhra Pradesh also omitted item (i) of entry No. 7-A together with columns (1) and (2) in Fourth Schedule to the Act. Though the orders were issued in G.O.Ms. No. 83, Revenue (CT II) Department, dated January 23, 1996, the Principal Secretary to the Government, third respondent herein, has issued Memorandum No. 37289/CT-1/95-4 on the same day, i.e., January 23, 1996, withdrawing the clarification issued by the Commissioner on October 26, 1994 referred to above. In view of the memorandum of the Government, the first respondent issued show cause notice to the company in G.I. No. 1486/94-95 dated February 8, 1996, calling upon the company to file its objections as to why the sales of "Pan masala/gutka" should not be provisionally assessed as being taxable at the rates mentioned under the Seventh Schedule to the Act. It is the validity of the said memorandum of the Government dated January 23, 1996 and the notice issued by the first respondent dated February 8, 1996 that is assailed in this writ petition.

(3.) Sri S. Krishna Murthy, the learned counsel appearing for the petitioner-company, very extraneously contends that the turnover of sales of "gutka" cannot be taxed for the assessment year 1994-95 and the exemption cannot be withdrawn retrospectively. He submits that the impugned memorandum of the Government cannot have any retrospective effect and that the show cause notice issued by the first respondent is wholly illegal and therefore, the tax cannot be provisionally assessed.