1967 (4) TMI 178 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Exact point of levy of tax in transactions relating to the purchase of groundnut or groundnut kernel.
2. Interpretation of the term "miller" in the context of tax liability.
3. Potential for multiple taxation and discrimination under Article 14 of the Constitution.
4. Applicability of previous case law and rules related to other commodities like hides and skins.

Detailed Analysis:

1. Exact Point of Levy of Tax:
The core issue in these tax revision cases is determining the exact point of levy of tax in transactions involving the purchase of groundnut or groundnut kernel. The assessees argued that tax should be levied against the miller who ultimately crushes the groundnut into oil, as the goods lose their character as groundnut at that stage. The State contended that the first miller who purchases the groundnut should be liable for the tax, regardless of whether he crushes them into oil or not.

2. Interpretation of the Term "Miller":
The term "miller" was a significant point of contention. The Tribunal interpreted "miller" to mean the last miller who crushes the groundnut into oil. However, the court held that the term "miller" refers to the first miller who purchases the groundnut, irrespective of whether he crushes it into oil or sells it to another miller. The court stated, "Once groundnut is purchased by the first miller, that is enough to bring him within the net of taxation."

3. Potential for Multiple Taxation and Discrimination:
The assessees argued that interpreting "miller" to include any miller could lead to multiple taxation and arbitrary power in the hands of the assessing authority, potentially violating Article 14 of the Constitution. The Government Pleader agreed that such an interpretation would not be appropriate. The court upheld the interpretation that the tax should be levied on the first miller to avoid complications and potential multiple taxation.

4. Applicability of Previous Case Law and Rules:
The assessees relied on previous case law related to the taxation of hides and skins, arguing for a similar interpretation. However, the court distinguished these cases, noting that the language of the rules governing hides and skins was different from the language of Item 6 of the Third Schedule of the Andhra Pradesh General Sales Tax Act. The court held that the principles applied to hides and skins could not be applied to groundnuts. The court emphasized that the tax should be levied on the first miller who purchases the groundnut, as per the specific language of the relevant statutory provisions.

Conclusion:
The court concluded that the words "when purchased by a miller in the State" in Item 6 of the Third Schedule refer to the purchase by the first miller. The orders of the Tribunal were set aside, and the revision cases were allowed with costs. The judgment clarified that the tax liability arises at the point of purchase by the first miller, thereby providing a clear and unambiguous point of levy for the tax on groundnut transactions.