Skip to content


N. Pullayya Vs. the Government of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case Number Writ Petition No. 463 of 1964
Judge
Reported in[1968]21STC291(AP)
AppellantN. Pullayya
RespondentThe Government of Andhra Pradesh
Appellant Advocate P.A. Chowdary, Adv.
Respondent Advocate P. Venkatarama Reddy, Adv. for ; the Principal Government Pleader
DispositionPetition dismissed
Excerpt:
- - ..these rules are therefore intended to protect the state as well as the dealer including the miller who does not have sale transactions......loopholes in the previous act. to achieve these objects and to minimise if not eleminate the tax evasion by millers, these impugned provisions have been introduced. they do not violate any fundamental rights to carry on business or hold property.... these rules are therefore intended to protect the state as well as the dealer including the miller who does not have sale transactions.4. before we address ourselves to the contentions raised, we may briefly refer to the provisions impugned before us :-section 2(i-1) of the act defines 'miller' as the person who engages himself in rice milling operations in a rice mill and includes a person who, or the authority which, has the ultimate control over the affairs of the rice mill.section 12-a(1)(b) of the act says that a miller who is not a.....
Judgment:

Narasimham, J.

1. This is a petition under Article 226 of the Constitution of India for a declaration that the provisions of the Andhra Pradesh General Sales Tax (Amendment) Act, 1963 (Act 16 of 1963) introduced into the Andhra Pradesh General Sales Tax Act in so far as they pertain to a miller who is not a wholesale dealer or a retail dealer are null and void and ultra vires the powers of the Legislature of the State of Andhra Pradesh and for the issue of a writ of mandamus restraining the State of Andhra Pradesh from enforcing the said provisions against the petitioner.

2. The petitioner is a miller whose business consists in milling rice for hire only. He is neither a purchaser of paddy nor seller of rice. According to him, for about 30 customers 15 to 20 bags of paddy are milled per day at the rate of Re. 1 per bag out of which he has to pay the electricity charges and labour. The Union Government enacted the Rice Milling Industry (Regulation) Act, 1958 (Act 21 of 1958) which came into force on 18th May, 1958, regulating the business of milling and he has been conforming to the provisions of the said Act. While so, the State Legislature has introduced certain provisions by the Amending Act 16 of 1963. It is the petitioner's grievance that the said provisions imposed excessive and arbitrary restrictions violative of Articles 14, 19 and 31 of the Constitution and burdens on the petitioner's business as miller though as a miller, who is not a dealer, he is not liable to tax under the provisions of the Andhra Pradesh General Sales Tax Act.

3. The State of Andhra Pradesh, the respondent herein, filed a counter repudiating that the provisions introduced by the Amending Act 16 of 1963 infringed the rights of the millers as alleged, and pleading that the object of the amendments introduced was to check evasion. It is stated in para. 2 of the counter-affidavit thus :-

It has been observed, on verifying and checking certain transactions of millers and hullers that the hullers and millers are purchasing large quantities of paddy under the guise of converting it into rice for hire. The result is that a very substantial amount of tax was lost and not collected. With a view to check this evasion the impugned provisions in the Act relating to millers have been incorporated by the Amendment Act 16 of 1963. The object and purpose of these requirements as to maintenance of registers and submission of returns and the registration are that the huller or the miller who is not really a dealer will not be subjected to tax as a dealer and the huller or miller who is actually a dealer will not escape tax by the loopholes in the previous Act. To achieve these objects and to minimise if not eleminate the tax evasion by millers, these impugned provisions have been introduced. They do not violate any fundamental rights to carry on business or hold property.... These rules are therefore intended to protect the State as well as the dealer including the miller who does not have sale transactions.

4. Before we address ourselves to the contentions raised, we may briefly refer to the provisions impugned before us :-

Section 2(i-1) of the Act defines 'miller' as the person who engages himself in rice milling operations in a rice mill and includes a person who, or the authority which, has the ultimate control over the affairs of the rice mill.

Section 12-A(1)(b) of the Act says that a miller who is not a wholesale dealer or a retail dealer shall also get himself registered under the Act. Section 12-A(2) and (3) provide for applications for registration and the payment of the prescribed fees for registration.

Rule 45-A of the Rules made under the Act says that every miller who is not a wholesale dealer or a retail dealer receiving paddy into his mill for conversion into rice shall maintain certain registers which are enumerated therein, viz., a register of working of the mill in Form XV; a day to day account of paddy milled for rice in Form XVI; and a register of stocks in Form XVII. He shall also maintain a register in Form XV showing hour to hour working of the sheller and huller and the number of coolies employed for shelling and hulling. He shall also obtain from each person who entrusts him with paddy for conversion into rice, a declaration in Form XVIII. The declarations so obtained shall be serially numbered.

5. The learned counsel urged before us that the provisions affecting the petitioner, a miller who is not a wholesale or a retail dealer within the meaning of the Act, are not within the legislative competence of the State Legislature, as entry 54 of List II-State List-of the Seventh Schedule of the Constitution provides for legislation only on taxes on the sale or purchase of goods other than newspapers.

6. The contention of the State is that the amended provisions were meant to prevent evasion, of tax which power is incidental and ancillary to the power to impose and levy tax on the sale or purchase of goods.

7. The aspect of legislative competence thus turns on the question whether the measures were meant to prevent evasion of sales tax for which the State Legislature has power.

8. Now it is settled law that the entries in the lists are not powers but are only fields of legislation and that widest import and significance must be given to the language used by Parliament in the various entries. . Vide Balaji v. Income-tax Officer [1961] 43 I.T.R. 393. Cases have consistently expressed the view that the power to levy a tax includes incidental powers to prevent the evasion of such tax. Vide Baldev Singh v. Income-tax Commissioner [1960] 40 I.T.R. 605, Abdul Quader and Co. v. Sales Tax Officer A.I.R. 1964 S.C. 922 and Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver [1967] 20 S.T.C. 453, 464. Suffice it to refer to the observations of the Supreme Court in the last-mentioned case which is a succinct and clear statement of the law as expressed in the previous cases:

Now it has not been and cannot be disputed that the entries in the various lists of the Seventh Schedule must be given the widest possible interpretation. It is also not in doubt that while making a law under any entry in the Schedule it is competent to the Legislature to make all such incidental and ancillary provisions as may be necessary to effectuate the law; particularly it cannot be disputed that in the case of a taxing statute it is open to the Legislature to enact provisions which would check evasion of tax. It is under this power to check evasion that provision for search and seizure is made in many taxing statutes. It must therefore be held that the Legislature has power to provide for search and seizure in connection with taxation laws in order that evasion may be checked.

9. We have no doubt that on a reading of the impugned provisions, they are meant to check evasion of sales tax and if so, the contention against legislative competence fails.

10. The learned counsel for the petitioner sought assistance for his argument from two decisions of the Supreme Court: The State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. A.I.R. 1958 S.C. 560 and K. L. Johar and Co. v. Deputy Commercial Tax Officer, Coimbatore A.I.R. 1965 S.C. 1082. In the first of the cases, the question for determination was whether the provisions of the Madras General Sales Tax Act were ultra vires in so far as they sought to impose a tax on the supply of materials in execution of works contracts by the contractor treating it as a sale of goods. The question was answered in the negative that it was not within the competence of the Provincial Legislature under entry 48 to impose a tax on the supply of materials used in a contract of works treating it as a sale. But to avoid misconception it was also stated that that conclusion was reached where the works contracts were entire and indivisible.

11. In the second of the cases, the contention was that sales tax could not be levied in respect of hire-purchase transactions which were not sales. It was held that a hire-purchase agreement could not be made taxable as a sale by enacting an explanation that it should be deemed to be a sale.

12. These cases are of little assistance in sustaining the contention addressed to us questioning legislative competence.

13. The learned counsel next contended that these provisions were unreasonable restrictions on the petitioner carrying on his business. We are not convinced that the maintenance of registers of the transactions by the miller-petitioner imposes any restrictions on his carrying on the business. We are inclined to the view that that would only set his business on regular lines. We are not therefore persuaded that these provisions are violative of the right of the petitioner to carry on business or to hold property.

14. Even otherwise, we would say that these are reasonable restrictions having regard to the view taken by the Supreme Court that the provisions as to search and seizure are reasonable restrictions. Vide Commissioner of Commercial Taxes v. Ramkishan Shrikishan Jhaver [1967] 20 S.T.C. 453 and confiscation is a reasonable restriction as held by a Division Bench of this Court in Papanna v. Deputy Commercial Tax Officer, Guntakal [1967] 19 S.T.C. 506

15. The petition therefore fails and is dismissed with costs, Government Pleader's fee of Rs. 100.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //