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1975 (12) TMI 154 - HC - VAT and Sales Tax

Issues:
Challenge to the vires of entry 9(b) of Schedule III of the Andhra Pradesh General Sales Tax Act based on discrimination between goods imported from other states and goods manufactured in Andhra Pradesh, violating Article 304(a) of the Constitution.

Analysis:
The petitioners, dealers in hides and skins, contested the validity of entry 9(b) of Schedule III of the Andhra Pradesh General Sales Tax Act, alleging discrimination between imported goods and locally manufactured goods. They argued that this differentiation contravened Article 304(a) of the Constitution. The Central Sales Tax Act's definition of "declared goods" includes hides and skins, with specific provisions for taxation based on tanning status and origin. The petitioners highlighted the substantial difference in tax liability based on whether hides and skins were tanned within the state or imported, leading to discrimination. This argument was supported by a previous Supreme Court ruling in Firm A.T.B. Mehtab Majid & Co. v. State of Madras, which struck down a similar rule for discriminatory taxation.

The Supreme Court's decision in Firm A.T.B. Mehtab Majid & Co. v. State of Madras emphasized that differential tax rates on imported goods and locally manufactured goods within the same state are prohibited by Article 304(a) of the Constitution. The court clarified that while the tax rate may be the same, the disparity in the value of raw and tanned hides and skins can result in varying tax burdens. Subsequent cases, including State of Madras v. Nataraja Mudaliar and Rattan Lal Co. v. Assessing Authority, reiterated the principle that as long as the tax rates are equal, Article 304(a) is satisfied, even if the resulting tax burden may differ due to the nature of the goods.

In Associated Tanners v. Commercial Tax Officer, the court acknowledged the conflicting interpretations of previous judgments but ultimately upheld the validity of the tax entry in question based on adherence to the principles established in later Supreme Court decisions. Despite recognizing the potential discriminatory nature of entry 9(b) under the Andhra Pradesh General Sales Tax Act, the court felt bound by the precedents and dismissed the writ petitions challenging its validity, without awarding costs to either party.

 

 

 

 

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