TMI Blog1997 (11) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... . -------------------------------------------------- The judgment of the Court was delivered by SUHAS C. SEN, J. -The appellant, M/s. Anand Commercial Agencies, is a partnership-firm. It is regularly assessed under the Andhra Pradesh General Sales Tax Act, 1957. The dispute in this case arose in the course of assessment for the assessment year 1977-78. Under entry 24(b) of the First Schedule to the Act, tax is payable on groundnut oil at the rate of 2 paise per rupee of the sale price. Under entry 24(a), tax is payable on groundnut oil or refined oil obtained from groundnut which has not borne any tax under the A.P. Act at the rate of 6 paise per rupee of the sale price. The assessee at the relevant period had a total turnover of Rs. 31,35,000 out of which Rs. 14,76,000 was on account of sale of groundnut oil and refined oil obtained from groundnut which had not borne tax under the A.P. Act because the oil was imported into Andhra Pradesh from the State of Karnataka. 2. The case of the appellant is that the oil had been extracted out of groundnuts which had borne tax under the Karnataka Sales Tax Act. The levy of tax on the oil imported from Karnataka into A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State at the rate of 4 paise in the rupee. 6.. On behalf of the appellant, it has been contended that on oil obtained from groundnut purchased locally the rate of tax is 2 paise in the rupee whereas in the case of oil imported from other States, the rate of tax on local sales is higher, namely, 6 paise in the rupee. Entry 24(a) is discriminatory and violative of articles 301 and 304 of the Constitution of India inasmuch as imported oil has to bear a higher rate of tax than locally produced oil. 7.. On behalf of the State of Andhra Pradesh, it has been contended that there was no discrimination in the rate of tax on oil indigenously produced within the State and imported oil. It has to be borne in mind that there was a tax on sale of groundnut at the rate of 4 paise in the rupee under item 6 of the Third Schedule to the A.P. Act. If this is taken into account, a further levy of 4 paise in the rupee in effect amounts to a total levy of 6 paise per rupee which is levied to the tax imposed on the imported oil. 8.. The majority view in the High Court was that having regard to the tax levied on groundnut in the State which was 4 paise in the rupee, the tax on imported oil a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of India shall be free. 302.. Power of Parliament to impose restrictions on trade, commerce and intercourse.- Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. 303.. Restrictions on the legislative powers of the Union and of the States with regard to trade and commerce.-(1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods from one State to another. Hence the mere fact that there is a difference in the rate of tax on goods locally manufactured and those imported would not amount to hampering of trade between the two States within the meaning of article 301 of the Constitution. As is manifest, article 304 is an exception to article 301 of the Constitution. The need of taking resort to exception will arise only if the tax impugned is hit by articles 301 and 303 of the Constitution. If it is not, then article, 304 of the Constitution will not come into the picture at all. But barring special circumstances, as stated hereinabove, the view of this Court has consistently been that a State is not entitled to tax locally made goods at a lower rate while taxing similar goods manufactured in other States at a higher rate. 12.. In the case of Firm A.T.B. Mehtab Majid Co. v. State of Madras [1963] 14 STC 355 (SC); AIR 1963 SC 928, hides and skins imported from outside the State were subjected to higher rate of tax than the rate of tax imposed on hides and skins tanned and sold within the State by rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The effect of this Rule wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey were dealers of Hindustan Photo Films Manufacturing Co. Ltd., a Government of India undertaking. In Uttar Pradesh, there was a single point levy of sales tax. The State of Uttar Pradesh had issued two notifications under the U.P. Sales Tax Act and Central Sales Tax Act exempting new units of manufacturers as defined in the Act in respect of the various goods for different periods ranging from 3 to 7 years, as the case may be, from payment of any sales tax. The benefit of the notifications could be availed of by the new industries set up in the State which were divided into two categories-(1) units with capital investment not exceeding three lakhs of rupees and (2) units with capital investment exceeding three lakhs of rupees. The period of exemption varied from 3 to 7 years in different districts. 17.. The case of the writ petitioners in that case was that the dealers had become liable to pay sales tax at 12 per cent + 10 per cent surcharge under the U.P. Sales Tax Act on photographic and graphic art material and at the rate of 8 per cent + 10 per cent surcharge on medical X-ray films and minimum of 10 per cent on their inter-State turnover. But the manufacturers in the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. In that case, with a view to protect local edible oil industry, Government of Jammu and Kashmir issued an order exempting goods manufactured by small-scale dealers within the State from payment of sales tax for a specified period. The rate of sales tax payable for other industries including manufacturers of the adjoining States was four per cent. A subsequent notification was issued on December 20, 1993 as a result of which the general rate of sales tax payable on edible oil became 8 per cent. The manufacturers of edible oil from the adjoining States claimed that the exemption granted from payment of tax to the local industries was discriminatory. The exemption given by the Government of Jammu and Kashmir to the manufacturers of the edible oil was total and the period of exemption was five years which was later extended by another five years. It was held that the unconditional exemption granted to edible oil industry within the State for a period of ten years and at the same time subjecting edible oil industries from other States to sales tax at 8 per cent was discriminatory and violative of article 304(a) of the Constitution. 21. In the case before us, exemption has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady borne tax. The appellant s contention, which has not been denied by the State, is that the oil manufactured in Karnataka which was imported into Andhra Pradesh was manufactured out of groundnuts which had also borne tax under the Karnataka Sales Tax Act. Therefore, it cannot be said that oil manufacturers in Andhra Pradesh are in a disadvantageous position and had to be compensated by a lower rate of tax. The State of Andhra Pradesh has not been able to make out any special case for imposing a lower rate of tax on groundnut oil produced within the State. 25.. In that view of the matter and having regard to the interpretation given to articles 301 to 304 of the Constitution by the courts in the various decisions referred to hereinabove, we are of the view that the appeal must succeed. 26.. Clause (a) of entry 24 of the First Schedule to the Andhra Pradesh General Sales Tax Act is declared violative of the provisions of articles 301 to 304 in so far as it imposes a higher rate of tax on groundnut oil or refined oil which has been obtained from groundnuts that have not been taxed under the Andhra Pradesh Act. It is declared that the groundnut oil imported by the appellant from ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
