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Mcdowell and Co. Limited Vs. the Secretary to Government, Revenue (Commercial Taxes) Department and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition No. 971 of 1978 and W.P.M.P. No. 1321 of 1978
Judge
Reported in[1978]42STC276(AP)
AppellantMcdowell and Co. Limited
RespondentThe Secretary to Government, Revenue (Commercial Taxes) Department and anr.
Appellant AdvocateP.R. Ramachandra Rao, Adv.
Respondent AdvocateThe Government Pleader for Commercial Taxes
DispositionPetition dismissed
Excerpt:
.....fail to see how this second category in respect of which only 25 paise in the rupee is payable includes by itself the duty of excise as part of the turnover. excise act provides for inclusion of the excise duty in the turnover, then as per the above mentioned supreme court decision, it may be bad......all liquors other at the point 25 paise in thethan country liquor. of first sale rupee.in the state._____________________________________________________________by virtue of clause 6(1) of the ordinance, the said item26 is amended in the following manner:______________________________________________________________(1) (2) (3)______________________________________________________________26. all liquors other at the point ofthan country first sale in theliquor- state.(a) not covered by 50 paise in theitem (b) below rupee.(b) where the considera 25 paise in thetion for the sale or rupee.purchase of liquorincludes the dutiesof excise payableunder the andhrapradesh exciseact, 1968.______________________________________________________________3. the learned government.....
Judgment:

Sambasiva Rao, J.

1. The Government of Andhra Pradesh promulgated an Ordinance, Ordinance No. 2 of 1978, amending certain provisions of the Andhra Pradesh General Sales Tax Act, 1957. The present writ petition is filed challenging the said Ordinance to the extent that it amends item 26 of the First Schedule of the A. P. G. S. T. Act. It is stated that in so far as item 26 is concerned the amendment is unconstitutional as it operates in a denial of equality before law.

2. Before the amendment, item 26 stood as hereunder :

______________________________________________________________Description of Point of levy Rate of taxthe goods______________________________________________________________(1) (2) (3)______________________________________________________________26. All liquors other At the point 25 paise in thethan country liquor. of first sale rupee.in the State._____________________________________________________________By virtue of Clause 6(1) of the Ordinance, the said item26 is amended in the following manner:______________________________________________________________(1) (2) (3)______________________________________________________________26. All liquors other At the point ofthan country first sale in theliquor- State.(a) not covered by 50 paise in theitem (b) below rupee.(b) where the considera 25 paise in thetion for the sale or rupee.purchase of liquorincludes the dutiesof excise payableunder the AndhraPradesh ExciseAct, 1968.______________________________________________________________

3. The learned Government Pleader for Commercial Taxes is present and opposed the writ petition.

4. Sri P. R. Ramachandra Rao commending the writ petition for our acceptance points out in the first place that the new amendment introduces a classification based on irrelevant differential which have no bearing at all with the imposition of sales tax. It is not possible to accept this contention. The power of the legislature to enhance the rate of tax is unquestionable. In the process of levying tax, the legislature can also make reasonable classification of the goods, commodities or persons on which the tax is sought to be imposed. In exercise of that undoubted power, the Ordinance is seeking to enhance the rate of sales tax from 25 paise in the rupee to 50 paise in the rupee on all liquors other than country liquor. But this 50 paise in the rupee is not leviable on all such liquors. Here the Ordinance seeks to introduce a classification. If the consideration for the sale or purchase of the liquor includes the duty of excise payable under the A. P. Excise Act, 1968, the enhanced rate of 50 paise in the rupee is not leviable on all liquors other than country liquor; only 25 paise in the rupee will be leviable. Patently the Ordinance classifies the liquors other than country liquors into two categories. All those liquors, where consideration for their sale or purchase includes the duty of excise payable under the Excise Act, 1968, are put in a class apart from the generality of other liquors other than country liquors. Obviously, the Ordinance is intended to give relief to dealers who have already paid duty of excise, as per the Andhra Pradesh Excise Act, 1968. By no stretch of imagination could it be said that this is a bad classification or the classification is hostile to the dealer. On the other hand, in our opinion, it is intended to be a help to the dealers in these liquors. In respect of all other liquors the enhanced rate is payable. Consequently, there is no arbitrary classification. On the other hand, in our opinion, it is a highly reasonable classification.

5. Even so, the learned counsel maintains that the inclusion of the excise duty in the price of liquor is repugnant to the decision of the Supreme Court in McDowell & Company Ltd. v. Commercial Tax Officer [1977] 39 S.T.C. 151 (S.C.) (Civil Appeals Nos. 248 to 251 of 1976 dated 25th October, 1976), wherein it was held that the excise duty and the countervailing duty paid directly by the buyers of the Indian liquors did not constitute as part of the turnover of the appellant. We fail to see how this second category in respect of which only 25 paise in the rupee is payable includes by itself the duty of excise as part of the turnover. What all the second category states is if by virtue of the provisions of the A. P. Excise Act, 1968, the duty of excise is included in the consideration for the sale or purchase of the liquor, then the reduced rate of tax would be leviable. The present amendment does not even purport to include the excise duty in the turnover. If any provisions of the A. P. Excise Act provides for inclusion of the excise duty in the turnover, then as per the above mentioned Supreme Court decision, it may be bad. But there is not even a suggestion of it in the amendment which has been effected and which is now challenged before us. Therefore, we cannot accept the contention of Sri Ramachandra Rao that the category of liquors in respect of Clause (b) of the amendment is contrary to the principle laid down by the Supreme Court.

6. The learned counsel also maintains that though the amendment has not introduced this forbidden system directly, it has done so in a colourable indirect manner. Once again we cannot accept this submission. If the excise duty has been paid as per the Andhra Pradesh Excise Act and is included in the consideration for the sale, the dealer gets the benefit by paying reduced duty. Therefore, there is no colourable exercise of the power.

7. For these reasons, we see no force in this writ petition. It is accordingly dismissed.

8. W. P. M. P. No. 1321 of 1978 : Since the writ petition itself is dismissed there cannot be any question of granting stay. The stay petition is accordingly dismissed.

9. Sri P. R. Ramachandra Rao makes an oral request for granting a certificate to enable his client to appeal to the Supreme Court. We are clear in our mind that there is no substance in the writ petition and we are therefore unable to certify that this is a case which deserves consideration by the Supreme Court. Consequently, the request is rejected.


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