1994 (8) TMI 233 - SC - VAT and Sales Tax

Whether entry 147 of the Andhra Pradesh General Sales Tax Act, 1957, relating to fried or parched gram dal, is valid or not? Held that - Appeal dismissed. The restriction is limited only to whole or separated gram or gulab gram and gram or gulab gram with husks or dehusked. Section 15 being so specific, it is impermissible to read it as applicable to gram which has been parched or fried. Lastly, the gram having undergone the process of parching or frying would appear to have become a new and distinct commodity and no evidence has been let in on behalf of the appellants to prove the contrary.

Summary

Issues: Validity of entry 147 of the Andhra Pradesh General Sales Tax Act, 1957 regarding fried or parched gram dal.

Analysis:
The Supreme Court granted special leave to appeal limited to the validity of entry 147 of the Andhra Pradesh General Sales Tax Act, 1957, concerning fried or parched gram dal. The entry prescribed a tax rate of 5 paise in the rupee for parched and fried Bengal gram or dal not obtained from gram or dal taxed at a lower rate. The appellant argued that this provision contravened the restrictions in the Central Sales Tax Act, 1956. The Andhra Pradesh High Court disagreed with the Madras High Court's interpretation, emphasizing the absence of discussion on the meaning of relevant terms in the Madras High Court judgment.

The appellant contended that gram, whether parched or fried, should be considered the same. Section 14 of the Central Act designates certain goods as of special importance in inter-State trade, including pulses like gram. Section 15 of the Act imposes restrictions on State sales tax laws, treating certain pulses as a single commodity for tax purposes. The appellant cited a Madras High Court judgment and a Division Bench decision that supported the inclusive interpretation of gram and pulses under the Central Act.

The Supreme Court analyzed the language of the Central Act, noting that the term "pulses" includes various kinds of grams and that the Act must be construed strictly as a restriction on State tax powers. The Court found that parched or fried gram would no longer fall under the botanical term "gram" and that the specific language of section 15(d) did not extend the restriction to processed gram. The Court concluded that parched or fried gram constituted a new commodity, distinct from the original gram, and dismissed the appeals. The Court also rejected reliance on a previous judgment, emphasizing the specific interpretation of the Central Act in the present case.

In summary, the Supreme Court upheld the validity of entry 147 of the Andhra Pradesh General Sales Tax Act, 1957, regarding fried or parched gram dal, ruling that processed gram constituted a new commodity distinct from the original gram, and therefore, was subject to a different tax rate.