1989 (12) TMI 290 - SC - VAT and Sales Tax

Validity of an amendment to the Schedule to the Andhra Pradesh General Sales Tax Act, 1957 challenged Held that - Appeal dismissed. In the instant case the tax is at the same rate and, hence, tax cannot be said to be higher in the case of imported goods. When the rate is applied the resulting tax may be somewhat higher but that does not contravene the equality contemplated by article 304 of the Constitution. In the facts and the circumstances of the case, there is no ground to complain about the breach of article 14 of the Constitution.

Summary

Issues Involved:
1. Validity of the amendment to the Andhra Pradesh General Sales Tax Act, 1957.
2. Alleged discrimination between tamarind purchased within the state and tamarind purchased outside the state.
3. Alleged violation of Article 304(a) and Article 14 of the Constitution.
4. Contention of double taxation on imported tamarind.
5. Comparison with previous case laws and their applicability.

Detailed Analysis:

1. Validity of the Amendment to the Andhra Pradesh General Sales Tax Act, 1957:
The appellants challenged the amendment to the Schedule of the Andhra Pradesh General Sales Tax Act, 1957, which differentiated the point of taxability for tamarind purchased within the state and tamarind purchased outside the state. The amendment resulted in tamarind purchased within the state being taxed at the first purchase point, while tamarind purchased outside the state was taxed at the first sale point within the state.

2. Alleged Discrimination Between Tamarind Purchased Within the State and Tamarind Purchased Outside the State:
The appellants argued that the amendment discriminated against tamarind purchased outside the state, as it was subjected to different tax points compared to tamarind purchased within the state. They contended that this resulted in a higher tax burden on tamarind purchased from outside the state.

3. Alleged Violation of Article 304(a) and Article 14 of the Constitution:
The appellants claimed that the amendment violated Article 304(a) and Article 14 of the Constitution. Article 304(a) prohibits discrimination between goods imported from other states and goods produced within the state. The Supreme Court held that there was no discrimination as both tamarind purchased within and outside the state were taxed uniformly at the same rate. The point of taxability being different did not constitute discrimination.

4. Contention of Double Taxation on Imported Tamarind:
The appellants argued that imported tamarind would be subjected to double taxation, first at the sale point when sold within the state and again at the purchase point when purchased within the state. The Supreme Court clarified that once the imported tamarind is taxed at the first sale point under the First Schedule, it would not be taxed again at the purchase point under the Second Schedule. The intent of the Schedules was to tax only at one point, though the point of taxability may differ.

5. Comparison with Previous Case Laws and Their Applicability:
The appellants relied on the case of Firm A.T.B. Mehtab Majid & Co. v. State of Madras, where it was held that certain tax provisions discriminated between imported and locally produced goods, violating Article 304(a). However, the Supreme Court found that the principles of this decision did not apply to the present case, as the tamarind purchased within and outside the state were taxed at the same rate, albeit at different points of taxability.

The appellants also cited Indian Cement Ltd. v. State of Andhra Pradesh, arguing that variations in tax rates affected free trade and commerce. The Supreme Court distinguished the facts of the present case from Indian Cement Ltd., noting that the difference in tax rates was not an immediate or direct result of the tax imposition but rather due to market conditions and other factors.

The court further referred to Rattan Lal and Co. v. Assessing Authority, reiterating that as long as the tax rate is the same for both imported and locally produced goods, Article 304 is satisfied. The resulting tax may be higher for imported goods due to additional costs like freight charges, but this does not contravene Article 304.

Conclusion:
The Supreme Court upheld the amendment to the Andhra Pradesh General Sales Tax Act, 1957, finding no discrimination or violation of constitutional provisions. The appeal was dismissed, and the High Court's judgment was affirmed. The court made no order as to costs.