GANNON DUNKERLEY Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS batch of writ petitions challenges the constitutional validity of Sections 5 -F, 5 -G & 5 -H of the Andhra Pradesh General Sales Tax Act and the Rules thereunder.

(2.) SRI Ratnakar appearing for one of the petitioners submitted that the pattern of taxation under the A.P. General Sales Tax Act was a single point levy, and therefore, the provisions of Section 5F imposing a tax on works contract amounted to an internal contradiction as it led to a double taxation of goods which had already suffered tax. He argued that the same goods which will be exempted in the hands of the second seller, would however, be taxed if it is used in a works contract and this amounted to discrimination because there was no rational basis for selecting works contracts for the additional levy. He submitted that this result could have been avoided if there was no Non Obstante Clause in the section. He relied on the decision of the Supreme Court in the case of Union of India v. Sanyasi Rao : 219 ITR 330 and submitted that the Non Obstante Clause should be struck down as unreasonable. He also pointed out that there was no such Non Obstante Clause in Section 5E which provide for tax on transfer of right to use any goods and this Court had held in the case of ITC Classic Finance and Services v. C.C.T., (1995) 97 STC 330 that when the basic norm regulating the tax structure under the Act was tax at a single point, levy of tax on a second sale in respect of the goods which have already suffered tax is impermissible, and therefore, a deemed sale likewise cannot be subjected to tax if the goods relatable to such deemed sale have already suffered tax. He submitted, on this analogy, that the same goods cannot be subjected to tax twice. Once as a sale and secondly as a deemed sale in the face of legislative intent of single point taxation. He relied on the decision of the Supreme Court in the case of Union of India v. Sanyasi Rao (supra) to argue that Article 14 of the Constitution of India applies to fiscal legislation also.

(3.) SRI Dilleswara Rao submitted that the reference to a 'Registered Dealer' in the fourth proviso to Section 5F cast an unreasonable burden on the assessee as he was required to purchase only from the registered dealers in order to avoid the tax in respect of sub -contracts. He also submitted that while the goods could be classified there cannot be differential rate according to the dealers and relied on the decision in Jamshedpur Contractors' Association v. State of Bihar : (1989) 75 STC 132.