FOOD SPECIALITIES LTD Vs. STATE OF A P

JUDGEMENT

(1.) ANDHRA Pradesh Dairy Development Co-operative Federation Ltd., is the only manufacturer of baby milk foods in the State of Andhra Pradesh. It marketed baby milk food manufactured by it under the trade name "Vijaya Spray". Under G.O.Ms. No. 1240, Revenue, dated 12th October, 1979 the Government of Andhra Pradesh exempted from sales tax "the sales of baby milk food known as 'Vijaya Spray' manufactured and/or marketed by the A.P. Dairy Development Corporation Ltd.". Prior to 1983 the 4th respondent was registered as a company under the Companies Act. After it was converted into a Co-operative Federation, G.O.Ms. No. 1240 was amended by G.O.Ms. No. 1200 dated 2nd September, 1983 substituting the name of the Co-operative Federation in the place of the Corporation. Baby food is exigible to sales tax at 5 per cent at the point of first sale in the State, as per entry 44 of the First Schedule to the A.P. General Sales Tax Act.

(2.) THE petitioner. Food Specialities Ltd., is engaged, inter alia, in the manufacture and marketing of baby milk foods under two brand names, "LACTOGEN Infant Formula", and "LACTOGEN Full Protein Follow-up Formula". The petitioner complains that granting of exemption to the the 4th respondent's product alone is discriminatory, since it amounts to conferring an undue preference upon the products of a particular manufacturer. It is also submitted that G.O.Ms. 1240 is inconsistent with section 9 of the Act and, accordingly, invalid.

(3.) IN this connection, we may refer to a Bench decision of this Court in Mahindra and Mahindra Ltd. v. State of Andhra Pradesh [1986] 63 STC 274. In that case, Mahindra and Mahindra Ltd., engaged in the manufacture of light commercial vehicles, challenged the notification issued by the Andhra Pradesh Government exempting the light commercial vehicles manufactured by M/s. Allwyn Nissan Ltd., a Government company, from the sales tax leviable on such vehicles. The grounds of attack therein were also identical, viz., (i) the exemption granted to Allwyn Nissan constituted an invidious discrimination in favour of an individual manufacturer, and (ii) that the said exemption was illegal and ultra vires the powers of the State Government under section 9 of the Act. It was also contended therein that the exemption so granted violates article 304(a) of the Constitution. All the three contentions were negatived. It was held that the exemption is indeed in the nature of a, rebate granted to Allwyn Nissan, and that having regard to the different circumstances and situation in which Allwyn Nissan was placed, there was no basis for complaint of discrimination. The said decision exhaustively refers to the several decisions rendered with respect to article 14 of the Constitution, and we do not think it necessary to repeat the same. It is sufficient to mention that according to the said decision. Corporations owned and controlled by a State constitute a class distinct from individual traders and manufacturers in the same field. It may also be mentioned that in this case the 4th respondent is a co-operative society registered under the Co-operative Societies Act, besides being, in truth and in effect, a Government-owned organisation. It needed encouragement in this line of products. And also because it is run on a "no-profit no-loss" basis, the exemption granted in its favour cannot be held to be discriminatory or bad.