TMI Blog1998 (12) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... t the said Act ) on the sale of poultry feed manufactured out of the ingredients which are either subject to tax or exempt from tax under the said Act and sold in the State. 4.. On July 13, 1995 the 4th respondent inspected the business premises of the petitioner and on the basis of the information furnished by the petitioner passed provisional assessment order under the said Act for the year 1994-95 dated September 4, 1995 levying tax on the turnover representing the sales of poultry feed manufactured out of ingredients that have not suffered tax under the said Act. Aggrieved by the assessment order, the petitioner filed an appeal before the 5th respondent who by his order dated October 28, 1995 set aside the assessment and remanded the matter to the assessing authority with certain directions. On January 5, 1998, the second respondent revised the said order and remanded the matter to the 1st respondent with a direction to subject the sales turnover of poultry feed manufactured out of the ingredients purchased outside the State and restrict the exemption in terms of G.O. Ms. No. 1055, Revenue, dated October 17, 1994 only to poultry feed manufactured from out of the ingredients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax while the poultry feed manufactured from out of the ingredients which have suffered tax in the State is to be sold at a lower price. In other words, the very same poultry feed depending on the use of ingredients that are imported from other States and the ingredients from the local market is to be sold at different prices-one at higher price and the other at lower price. Therefore, the benefit of the notification should be extended to the poultry feed manufactured from out of the ingredients imported from other States and not suffered tax in the State. 8.. While the learned special counsel for the Revenue contended that the question of discrimination under article 301 to 304 or 14 of the Constitution of India has no application to a notification issued exempting the goods from payment of tax. Having regard to the facts and circumstances of the case, it is open to the Government in exercise of the powers conferred under section 9 of the said Act to exempt certain goods from the payment of tax for a certain period and such power is upheld by the Supreme Court in Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82. Therefore the issue is now covered by the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultry feed to be sold in the market. 13.. In Rajashree Oils Extractions v. Deputy Commissioner (C.T.) [1998] 111 STC 668; [1998] 27 APSTJ 53 a Full Bench of this Court to which one of us (Justice S.V. Maruthi) is a party held that the incidence of tax on a dealer who extracts oil directly from groundnut cake vis-a-vis a dealer who purchases groundnut and extracts oil from the groundnut as well as cake should be subjected to the same rate of tax irrespective of the raw material from which it is extracted . It was further held that 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 rate of tax for groundnut oil extracted from groundnut cake suffers from the vice of discrimination and, therefore, is violative of article 14 of the Constitution of India. We declare entry 24(a) as discriminatory . Holding as above, this Court directed the Revenue to subject the groundnut oil extracted from groundnut cake which has already suffered tax to the same rate of tax as groundnut oil extracted from the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of local sales tax. In this background, the Government considered it necessary to reduce the tax rate under the Andhra Pradesh General Sales Tax Act to help the cement industries in easing out their marketing difficulty. Hence they have reduced the rate of tax in respect of the cement products manufactured out of cement manufactured in the State. The said notification was questioned on the ground that it violates Part XIII of the Constitution of India. It was held that under the notifications the rate of tax has been reduced to 4 per cent in respect of sales made by indigenous cement manufacturers to manufacturers of cement products. Admittedly, the Tamil Nadu producers have sales offices in Andhra Pradesh and in regard to their sale to such manufacturers of cement products the benefit of reduced rate of taxation is not applicable. The prescribed rate of tax under the Andhra Act is 13.75 per cent on cement. Thus under the Andhra Notification in regard to the local tax the indigenous producers of cement have a benefit of 9.75 per cent . The reason for the reduced rate of tax is that it is beneficial to the State revenue and secondly it protects the local manufacturers too. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, where the learned Judge pointed out the distinction between discrimination without reason and discrimination with reason , and held that the whole doctrine of classification is based on this and on the well-known fact that the circumstances covering one set of provisions or objects may not necessarily be the same as those covering another set of provisions and objects, so that the question of unequal treatment does not arise as between the provisions covered by different sets of circumstances. It was further observed that the question naturally arises whether the power to grant exemption to specified class of manufacturers for a limited period on certain conditions as provided by section 4-A of the U.P. Sales Tax Act is violative of article 304(a) . Answering the said question, the learned Judges held that, the power to grant exemption is always inherent in all taxing statutes... If the exemption is based on natural and business factors and does not involve any intentional bias, the impugned notifications to grant exemption for limited period on certain specific conditions cannot be held to be bad. Judged by that yardstick, the present notifications cannot be held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturers filed writ petitions challenging the said exemption. A Division Bench of the Jammu and Kashmir High Court relying on the decision of Video Electronics case [1990] 77 STC 82 (SC), dismissed the writ petitions. The matter went up to the Supreme Court. The Supreme Court referred to the observations made in Video Electronics case [1990] 77 STC 82 (SC), and observed that: For the purpose of this case, it is not necessary for us to say anything about the correctness of Video Electronics case [1990] 77 STC 82 (SC). Suffice it to say that the limited exception carved out therein cannot be widened or expanded to cover cases of a different kind. It must be held that the total exemption granted in favour of small-scale industries in Jammu and Kashmir producing edible oil is not sustainable in law. The learned Judges further observed that a limited exception has no doubt been carved out in Video Electronics case [1990] 77 STC 82 (SC), but, as indicated hereinabove, that exception cannot be enlarged lest it eat up the main provision ... It must be held that by exempting unconditionally the edible oil produced within the State of Jammu and Kashmir altogether from sales tax, even if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a specific period with certain conditions supported by justifiable reasons and held that the exception in the later case is not violative of articles 301 to 304(a) of the Constitution of India. The basis for the view is that discrimination without reason is bad and discrimination with reason is valid. The preference given to locally manufactured goods as against the goods which were imported from other States was justified on the ground that it is necessary for the purpose of economic development of the State which is backward and to bring it into equality with all other States and thereby develop the economic unity of India. The preference given was further justified on the ground that it is absolutely necessary for economic viability and survival of the industries and the said preference was based on cogent and intelligible reasons of economic encouragement and growth. In this context, the following observations of the learned Judges are relevant: A backward State or a disturbed State cannot with parity engage in competition with advanced or developed States. Even within a State, there are often backward areas which can be developed only if some special incentives are gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onics case [1990] 77 STC 82 (SC) is not applicable to the impugned notification. It is not a notification issued subject to certain conditions for a specific period for the economic development of a particular State to bring the State in equality with other States. Therefore, we are of the view that the impugned notification suffers from the discrimination without any reason and it is violative of articles 301 to 304(a) of the Constitution of India. 24.. If the notification suffers from the vice of discrimination without any reason, then the next question that arises for consideration is what is the relief that can be granted in this case. It is true that the petitioner do not want the notification to be quashed, on the other hand, the relief that is claimed is that the benefit of the notification should be extended to them. The question, therefore, is can such a relief be granted to the petitioner. 25.. In Anand Commercial Agencies v. Commercial Tax Officer [1997] 107 STC 586; [1997] 25 APSTJ 254 the Supreme Court while holding that entry 24-A of the First Schedule to the A.P. General Sales Tax Act is violative of provisions of articles 301 to 304 of the Constitution of India, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
