KRISHNA COCONUT COMPANY Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) THE petitioners allege that they are the purchasers of watery coconuts from registered dealers in East Godavari District and in turn they export the same to other States. The period for which the tax became exigible under the Central Sales Tax Act is said to be August-September, 1966. The petitioner had filed returns in Form 'c' under the Central Sales Tax Act for the relevant period and showed a turnover of Rs. 2,47,000. The Commercial Tax Officer, Amalapuram, on a scrutiny of these returns determined a turnover of Rs. 2,47,588. 78 and proposed to levy a tax at 10 per cent, as all 'c' Forms were not filed. On a show cause notice being issued on 25th October, 1966, calling for objections by 5th November, 1966, the petitioner asked for time which was given till 8th November, 1966. Certain other 'c' Forms were filed and ultimately the tax levy was determined in accordance with the material placed before the officer, at 3 per cent, on Rs. 2,23,240. 97 covered by 'c' Forms, and at 10 per cent, on a turnover of Rs. 24,347. 81 not covered by 'c' Forms and a demand for a tax amounting to Rs. 9,132. 03 according to the said rates was made on the petitioner. It is this demand that is challenged in this writ petition, on the ground that watery coconuts were at first totally exempt from the levy of tax under G. O. Ms. No. 1091, Revenue, dated 10th June, 1957; subsequently, however, this exemption was varied and he became liable to tax at the first sale under G. O. Ms. No. 608 dated 29th April, 1965, which came into force from 1st April, 1965. Subsequently, the A. P. General Sales Tax Act was amended on 23rd December, 1966, by Act No. 18 of 1966 under which item 10 was added to Schedule II. As a consequence Explanation I of item 5 to Schedule III was also amended with the result that watery coconuts were liable to be taxed at the first purchase as and from the date of the amendment and from 1st August, 1963, to 31st March, 1965, at the last purchase. It is, therefore, contended that the inter-State sales by the petitioner during the months of August and September, 1966, are covered by the amendment and, therefore, no tax is exigible. In support of this contention the learned Advocate has cited a decision of the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty and Sons [1965] 16 S. T. C. 231 at p. 239, where Section 9 (1) of the Central Sales Tax Act was considered vis-a-vis Section 5 of the Mysore Sales Tax Act. The principle, however, is applicable to all Sales Tax Acts, because their Lordships of the Supreme Court, by a majority held that the expression "levy" meaning "impose" in Section 9 (1) of the Central Act referred to the expression "levy" in Section 5 (3) (a) of the State Act and, therefore, the Central Act had not. made a departure in the manner of levy of tax on the specified goods which are taxed only at the single point under the State Act. In other words, whatever is taxable under the State Act alone is taxable under the Central Act, so that if under the A. P. General Sales Tax Act the transaction in question cannot be taxed, inter-State sales cannot also be taxed under the Central Sales Tax Act,

(2.) THE learned Government Pleader on the other hand contends that their Lordships of the Supreme Court were not considering Section 8 (2a) of the Central Act which authorised the Central Act to levy tax in cases where goods were not totally exempt or where they were exempt at specified sales subject to conditions. In order to understand this contention it is necessary to set out briefly the history of the levy of tax on watery coconuts.

(3.) AS we have already stated, coconuts under item 5 of Schedule III were taxable as declared goods only at the sale point and watery coconuts appear to have been exempted under the G. O. Ms, referred to by us. While this was the position, in Sri Krishna Coconut Co. v. Commercial Tax Officer, Amalapuram [1965] 16 S. T. C. 511 (decided on November 7, 1964), Gopalakrishnan Nair, J. , held that watery coconuts and tender coconuts formed a different category and they did not form part of item 5 to Schedule III and, therefore, it is open to the Government to tax them at multi-point. Probably, as a consequence of this decision, G. O. Ms. No. 608' dated 29th April, 1965, was passed with effect from 1st April, 1965, exempting the sale of watery coconuts at all stages of sale except at the stage of first sale by the dealer in the State under the tax payable under Sub-section (1) of Section 5 of the State Act with effect from 1st April, 1965. But for this notification, watery coconuts would have been liable to-multiple point, which sales after 1st April, 1965, became liable at the first sale. Thereafter the Act was amended, in so far as watery coconuts are concerned and the statement of objects furnishes the reasons for the amendment. It states :by the Andhra Pradesh General Sales Tax (Amendment) Act, 1963,. 'watery coconuts' became liable to tax at the rate of 2 paise in the rupee at each point of sale with effect from the 1st August, 1963. The coconut merchants of Andhra Pradesh represented to the Government that the levy of tax on watery coconuts at multi-point would adversely affect the trade and requested that a single point tax may be levied on watery coconuts at 2 paise in the rupee. As relief from the levy of multi-point tax was considered necessary by the Government pending amendments to the Act, instructions were issued to the assessing authorities to levy tax on watery coconuts at the point of last purchase in the State during the period from the 1st August, 1963, to the 31st March, 1965, and a notification was also issued under Section 9 of the Act, by which the dealings in watery coconuts were subjected to a single point tax from the 1st April, 1965, at the point of first sale in the State at the rate of 2 paise in the rupee. It is now proposed to amend the Second Schedule so as to provide for the levy of tax on watery coconuts at the point of first purchase in the State and in view of the increase in the general rate of sales tax from 2 per cent, to 3 per cent. , it is also proposed to fix the rate of tax on watery coconuts at 3 per cent. It is also proposed to provide for the levy of tax on watery coconuts at the point of last purchase in the State at the rate of 2 paise in the rupee from 1st August, 1963, to the 31st March, 1965, so as to validate the levy of tax during that period by making a provision in the Act. It is also proposed to amend the Explanation under the Third Schedule so as to make the intention clear that the expression 'coconuts' does not include watery coconuts and tender coconuts. Item 9 relating to 'tender coconuts' in the Fourth Schedule has been amended so as to make the intention clear that the exemption granted to the tender coconuts will apply to the variety of coconuts which are useful only for drinking purposes.