TMI Blog1998 (6) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... dnut oil within the scope of entry 24(a) on the ground that the oil has been extracted not from the groundnut but only from groundnut oil cake and it will not, therefore, fall within the entry 24(b). For this proposition the basis is the decision of this Court in Jayanti Oil Mills case (1995) 20 APSTJ 255. 2.. It was argued by the learned counsel for the petitioner before the Bench that the judgment in Jayanti Oil Mills case (1995) 20 APSTJ 255 is not correct as it has overlooked the facts that the real source of the oil is only groundnut even though it has been transformed into groundnut oil cake after partial extraction and further oil is extracted from the groundnut oil cake by application of solvent extraction process due to technological advancement which was not available at the time when the entry was enacted in the statute. The learned Special Government Pleader for Taxes submitted before the Bench that since the matter is at the stage of issue of notice and that he was not aware that any assessment has been made so far, the judgment in Jayanti Oil Mills case (1995) 20 APSTJ 255 (AP) does not require reconsideration. 3.. The learned Judges on a consideration of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to refer to entry 24 of the First Schedule to the Act which reads as follows: Sl.No. Description of goods Point of levy Rate of tax 24 Groundnut oil or refined oil (a) Groundnut oil or refined oil not covered by sub-item (b) below. At the point of first sale in the State. 6 paise in the rupee (b) Groundnut oil or refined oil obtained from groundnut that has met tax under the Act. Do. 2 paise in the rupee 6.. A reading of the entry makes it clear that groundnut oil or refined oil obtained from groundnut that has already met tax under the Act is liable to be taxed at 2 paise in the rupee under entry 24(b) while the groundnut oil or refined oil not covered by sub-item (b) is taxable at 6 paise in the rupee. In other words, the end-product, viz., groundnut oil if extracted from groundnut which has suffered tax is liable to pay tax at 2 paise in the rupee while the very same groundnut oil if extracted otherwise than from the groundnut is to be taxed at 6 paise in the rupee. If we look at from a different angle the end-product, viz., the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake containing 7 to 8 per cent of oil is subjected to solvent extraction process and groundnut oil is extracted. Since an intermediate product, i.e., groundnut oil cake comes into existence, the groundnut oil extracted from it is subjected to higher rate of tax though the end-product is the same. 10.. In other words, the end-product has to suffer different rates of taxone lower and the other higher. There is no rationale behind levying different rates of tax-one lower and the other higher on the same end-product and, therefore, it is arbitrary. The effect of imposing different rates of tax on the same end-product, namely, groundnut oil is that the cost of groundnut oil which is extracted from groundnut cake costs more than the groundnut oil extracted from the groundnut. Since, there is no rationale behind such levy, the entry 24(a) suffers from discrimination. 11.. The Revenue tries to justify the same on the ground that the raw material used is different. It is difficult to agree with the contention of the Revenue. Whatever may be the raw material from which the end-product is extracted, the fact remains that the end-product remains the same, i.e., groundnut oil. The fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess of extraction adopted and the raw material from which the groundnut oil is extracted. In other words, a purchaser has to pay higher rate of tax on groundnut oil purchased depending on the method of extraction and the raw material used for extracting the groundnut oil, which in our view, is discriminatory. The same end-product is subjected to discriminatory rate of tax depending on the raw material from which it is extracted and the method of extraction adopted for extracting the oil. Groundnut oil, viz., the end-product should be subjected to the same rate of tax irrespective of the process of extraction followed and irrespective of the raw material from which it is extracted. Groundnut oil extracted from groundnut cake would cost more than the groundnut oil which is extracted from the groundnut under the present entry 24(a) and (b). Thus, there would be a case of discrimination in respect of the same end-product, viz., groundnut oil. Therefore, we are of the view that groundnut oil extracted whether from the groundnut which has suffered tax or from the groundnut cake which has suffered tax should be subjected to same rate of tax and entry 24(a) which prescribes a higher rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under the Karnataka Sales Tax Act. Therefore, the levy of tax on the oil imported from Karnataka into Andhra Pradesh at a rate higher than the rate at which the oil manufactured in Andhra Pradesh is taxed is discriminatory and violative of the appellant s right of freedom of trade and commerce throughout India. There was a difference of opinion between Justice Raghuvir and Justice Amareswari (as they then were) and the matter was referred to a third Judge, viz., Justice Jayachandra Reddy [Anand Commercial Agencies v. Commercial Tax Officer [1988] 71 STC 45 at 61 (AP)]. Justice Jayachandra Reddy (as he then was) agreed with the view of Justice Amareswari and disagreed with Justice Raghuvir. It was held by Justice Jayachandra Reddy that: ..........strictly speaking, the rate of tax was the same for both types of oil. A lower rate of 2 per cent was prescribed under entry 24(b) of the First Schedule to the Andhra Pradesh General Sales Tax Act, because groundnut from which this oil was extracted in the State had already met tax at the rate of 4 per cent under entry 6 of the Third Schedule, and if this oil were to be taxed again at the rate of 6 per cent the tax burden would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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