RADHAKRISHNA AND CO Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) IN this batch of writ petitions, the validity of item 6 of Schedule III to the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter called "the State Act") is challenged on the grounds : (1) that it designates two stages of taxation in respect of groundnuts, which being oil-seeds are "declared goods" within the meaning of section 14 of the Central Sales Tax Act, 1956 (hereinafter called "the Central Act") and is therefore contrary to the provisions of section 6 of the State Act; (2) that the classification of dealers as millers and other dealers is discriminatory and unreasonable and as such violative of Article 14 of the Constitution; and (3) that the levy of tax on turnover of groundnuts in that entry exceeds the maximum fixed under section 15 (a) of the Central Act. Inasmuch as in all these writ petitions a general question of law alone arises, it is unnecessary to set out the facts in each case, except in one, i. e. , W. P. 362 of 1968, as typifying the points that arise for determination in all these cases.

(2.) THE petitioner-firm (hereinafter called the assessee) is a registered dealer under the Central and State Acts dealing in groundnuts, on the purchases of which it is being subjected to tax under item 6 of Schedule III of the State Act, and on which it is paying tax. For the year 1965-66, the assessee was assessed to a tax of Rs. 4,083. 00 on its purchases of groundnut, by the order dated 2nd September, 1966. The assessment for 1966-67 is not yet completed, but the assessee paid the tax in advance on a purchase turnover of Rs. 2,83,247. 37 at 3 per cent. For the year 1967-68 the assessee has been submitting monthly returns and has also paid the tax up to November, 1967. It is the case of the assessee that it was advised that the levy of tax on groundnuts is illegal and unconstitutional. It is contended that inasmuch as Article 286 (3) of the Constitution, added by the Constitution (Sixth Amendment) Act, authorises Parliament by law to impose such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as it may by law specify, on a law made by a State imposing or authorising the imposition of a tax on the sale or purchase of goods declared by the Parliament by law to be of special importance in inter-State trade or commerce, and that since Parliament, in exercise of that power, has passed the Central Act, section 14 of which lists the goods which are of special importance in inter-State trade or commerce- hence forward termed as declared goods of which item 6 of Schedule III of the State Act, namely, oil-seeds, is one, the levy and imposition of tax on which is the subject-matter of these writ petitions - and section 15 imposes restrictions on the sales tax law of a State in so far as it imposes or authorises the imposition of tax on the sale or purchase of declared goods inside the State by prescribing that it shall not exceed 3 per cent of the sale or purchase price thereof and that such tax shall not be levied at more than one stage, any imposition which exceeds the maximum prescribed under section 15 is invalid.

(3.) THE learned Advocate further contends that since under the State Act, tax is imposed on the turnover of declared goods, namely, groundnuts, which is levied under item 6 of the Third Schedule read with section 6 and since under section 5-A tax can be levied in addition to the tax payable under section 5, at the rate of one-fourth naya paisa on every rupee of the turnover of a dealer, if it exceeds Rs. 3,00,000 for that year, the rate of tax exceeds the maximum fixed under section 15 (a) of the Central Act, and hence the levy under item 6 is illegal and must be struck down. Even if it it held, as is contended by the learned Government Pleader, that section 5-A has no application to declared goods, the levy of tax under the State Act on the turnover of declared goods would exceed the restriction imposed under section 15 (a ). In other words, inasmuch as turnover as defined in section 2 (s) of the State Act means the total amount set out in the bill of sale (or if there is no bill of sale, the total amount charged) as the consideration for the sale or purchase of goods (whether such consideration be cash, deferred payment or any other thing of value) including any sums charged by the dealer for anything done in respect of goods sold at the time of or before the delivery of the goods and any other sums charged by the dealer, whatever be the description, name or object thereof, and the definition of sale price under the Central Act is not so wide as to include several things which may not be included in the definition of turnover under the State Act, the rate of tax prescribed in item 6 read with section 6 of the State Act will, in certain cases, exceed that prescribed in Schedule III to the State Act, and consequently, any levy made under the State Act would be illegal and unconstitutional. Sri Narasaraju in W. P. 1798 of 1968 and the batch in which he appears contends that the point of levy fixed under item 6 of Schedule III suffers from indefiniteness and lack of precision as it confers on the State on option to tax either under the first limb or under the second limb of item 6, and hence he contends that the principles of the decision of the Supreme Court in Bhawani Cotton Mills v. State of Punjab ([1967] 20 S. T. C. 290.), which struck down the provisions of the Punjab Sales Tax Act, imposing a maximum up to 4 per cent. contrary to the restrictions imposed under section 15 (a) of the Central Act on the ground of indefiniteness, is equally applicable to these writ petitions.