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The State of Andhra Pradesh Vs. Oruganti Venkateswarlu and Bros. and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case Number Tax Revision Case Nos. 56, 60 to 62, 66 to 73, 75 to 80, 82, 84 to 97, 99 to 105, 107 to 109, 112 t
Judge
Reported in[1967]20STC340(AP)
AppellantThe State of Andhra Pradesh
RespondentOruganti Venkateswarlu and Bros. and ors.
Appellant Advocate The Principal Government Pleader
Respondent Advocate W.V.V. Sundara Rao, ;T. Veerabhadrayya, ;D. Venkatappayya Sastry, ;T. Ramam, ;P. Krishnamoorthy, ;G.V.R. Mohana Rao, ;C.V. Kanyakaprasad, ;A.V.S. Ramakrishnaiah, ;T. Anantha Babu, ;P. Rama Rao, ;V. V
DispositionPetition dismissed
Excerpt:
- .....inpaddy that has met tax by the first wholesale the rupee.under this act at the dealer in the staterate of 3 naye paise in effecting the sale.the rupee. 2. the tribunal held that the provisions of section 8(2-a) are applicable, and though rice is not a commodity generally exempted nor is it exempted under any specified conditions, the tax on it has to be levied at a specified stage, which stage is indicated in item 66. the contention of the department, which is also adopted before us by the learned government pleader, was that since rice is subjected to tax generally at the rate of 4 np. in the rupee, which cannot be said to be lower than 2 per cent, as specified in section 8(2-a), the rate at which rice is to be taxed is at 2 per cent, and not at 1 per cent, under item 66(b). this.....
Judgment:
ORDER

P. Jaganmohan Reddy, C.J.

1. This batch of 68 revision petitions is against an order of the Sales Tax Appellate Tribunal remanding the appeals before them for the purposes of making an assessment after determining whether the rice that had been sold in inter-State trade has been obtained from paddy that has suffered tax at 3 nP. in the rupee and if so, to levy sales tax on such rice at 1 nP. in the rupee. The several petitioners before the Tribunal (respondents herein) are dealers in rice and in respect of inter-State trade in that commodity, they had been assessed by the Sales Tax Authorities at the rate of 2 nP. in the rupee while the petitioners (respondents) contended that they are liable to pay only at the rate of 1 nP. in the rupee. The controversy involves the interpretation of Section 8 of the Central Sales Tax Act (74 of 1956) and Section 5(2)(a) of the Andhra Pradesh General Sales Tax Act (6 of 1957) read with item 66(a) and (b) of the First Schedule to that Act. We give below the relevant provisions of the above sections :

Section 8. (1) Every dealer, who in the course of inter-State trade or commerce-

(a) sells to the Government any goods; or

(b) sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3);

shall be liable to pay tax under this Act, which shall be two per cent, of his turnover.

(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within Sub-section (1)-

(a) in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and

(b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent., or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher;

and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.

(2-A) Notwithstanding anything contained in Sub-section (1) or Sub-section (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than two per cent, (whether called a tax or fee or by any other name) the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil, or as the case may be, shall be calculated at the lower rate.

Explanation.-For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods.

Section 5.(1) 'Every dealer (other than a casual trader and an agent of a non-resident dealer) whose total turnover for a year is not less than Rs. 10,000 and every agent of a non-resident dealer, whatever be his turnover for the year, shall pay a tax for each year, at the rate of two naye paise on every rupee of his turnover. Every casual trader shall pay a tax at the rate of two naye paise on every rupee of his turnover:

Provided that...

(2) Notwithstanding anything contained in Sub-section (1), the tax under this Act shall be levied-

(a) in the case of the goods mentioned in the First Schedule at the rates and only at the point of the sale specified as applicable thereto effected in the State by the dealer selling them, on his turnover of sales in each year relating to such goods irrespective of the quantum of turnover.

Item 66 of First Schedule :

Description of the goods Point of levy Rate of tax66. Rice(a) Rice not covered by At the point of sale 4 naye paise in sub-item (b) below : by the first wholesale the rupee.dealer in the State effecting the sale.(b) Rice obtained from At the point of sale 1 naya paisa inpaddy that has met tax by the first wholesale the rupee.under this Act at the dealer in the Staterate of 3 naye paise in effecting the sale.the rupee.

2. The Tribunal held that the provisions of Section 8(2-A) are applicable, and though rice is not a commodity generally exempted nor is it exempted under any specified conditions, the tax on it has to be levied at a specified stage, which stage is indicated in item 66. The contention of the department, which is also adopted before us by the learned Government Pleader, was that since rice is subjected to tax generally at the rate of 4 nP. in the rupee, which cannot be said to be lower than 2 per cent, as specified in Section 8(2-A), the rate at which rice is to be taxed is at 2 per cent, and not at 1 per cent, under item 66(b). This contention was rejected by the Tribunal. It may be observed that the rate of tax on paddy under item 8 of the Second Schedule is at 3 nP. in the rupee at the point of the first purchase and if rice had been obtained from paddy that had not suffered tax at the rate of 3 nP. in the rupee, it must be rice that has been either directly imported into the State and then sold in inter-State trade or rice that has been obtained from ryots from the selling of their own paddy and sold in inter-State trade, both' of which transactions are rare. The question is what is meant by the words 'subject to tax generally' and whether that term excludes from the purview rice obtained from paddy that is made taxable under the Act at 3 nP. in the rupee. In our view, it cannot be so excluded, because the rate is generally applicable to goods which are sold or purchased in the course of inter-State sale by a dealer, who has been defined as any person who carries on the business of buying, selling, supplying or distributing goods directly or otherwise. Dealers who deal in rice either purchase paddy directly from the agriculturist or import it, mill it and sell it outside the State, or buy paddy in the market which is already subjected to sales tax, mill it and sell it outside the State. When paddy already subjected to sales tax and paddy not so subjected is milled and dealers sell it outside the State, the cost to them would be different if the sales tax is levied at the uniform rate of 2 per cent., i.e., the rice milled from paddy which is already subjected to 3 per cent, sales tax would cost more. There would thus be a case of discrimination in respect of the same end-product, viz., rice. Where there are two interpretations possible for a court to take, one against the constitutionality of the provision and the other in favour of sustaining it, the interpretation which favours the latter is the one which the courts must adopt. We find no difficulty in holding that rice from paddy which has not been subjected to tax and rice from paddy which has already been subjected to tax have to be taxed at different rates and with respect to each category the tax can be said to be generally at that rate. We cannot accept the contention of the learned Government Pleader that tax generally on rice is 4 per cent, and because that is not less than 2 per cent., Sub-section (1)(b) of Section 8 will apply.

3. In Karnatak Coffee Co. v. Commercial Tax Officer [1962] 13 S.T.C. 658, the Mysore High Court was dealing with a provision in the proviso to Section 8(1)(a) before its amendment which is similar to Section 8(2-A) in its application to coffee and coffee powder which was ground from coffee seeds, which has already been subjected to sales tax under item 43. It was held that coffee powder was not liable to tax under the Act. Their Lordships of the Supreme Court on appeal against this decision in State of Mysore v. Karnatak Coffee Co. [1966] 17 S.T.C. 311 confirmed it, following a similar decision in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons [1965] 16 S.T.C. 231. This decision further lends support to the view we have taken.

4. The learned Government Pleader further states that the question whether the costs of the containers are to be included in the turnover or not should also be left open to the taxing authorities on remand. We do not think that the Tribunal has restricted the scope of the remand.

5. In this view, the revision petitions are dismissed with costs. Advocate's fee Rs. 50 each.


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