2000 (3) TMI 961 - SC - VAT and Sales Tax

Validity of Act 25 of 1988 passed by the Andhra Pradesh State Legislature which came into force on September 6, 1988 having retrospective effect from July 8, 1983 Whether the levy with retrospective effect from July 8, 1983 was reasonable or not? Held that - Appeal dismissed. The High Court proceeded to notice that the holder of a licence in form FL 15 is permitted to sell liquor in quantities of not less than nine litres in sealed or capsuled bottles at any time and in any single transaction to licensees holding the licences in form FL 24, i.e., the (retail licence), FL 17, i.e. (bar licence), etc., and is not permitted to carry on retail sale or allow consumption of liquor in the licensed premises. Licence holder in form FL 24 is permitted to sell liquor obtained only from the wholesale licensees. On the facts stated, the view taken by the High Court is unexceptionable.

Summary

Issues involved:
Validity of Act 25 of 1988 with retrospective effect, oppressive and unreasonable levy, discrimination between local and imported goods, interpretation of tax rate on a particular transaction.

Analysis:
1. Validity of Act 25 of 1988 with Retrospective Effect:
The main issue raised in the appeals was the validity of Act 25 of 1988 passed by the Andhra Pradesh State Legislature, which came into force with retrospective effect from July 8, 1983. The High Court upheld the retrospective levy of tax, stating that the Legislature had the necessary competence to do so. The High Court considered the legislative history and concluded that the retrospective action was remedial and not unreasonable or oppressive. The Supreme Court found no reason to interfere with the High Court's decision, thus affirming the validity of the Act with retrospective effect.

2. Oppressive and Unreasonable Levy:
One of the contentions raised was that the retrospective effect of the enactment resulted in an oppressive and unreasonable levy spanning over five years. However, the High Court ruled against the appellants, emphasizing that the inability to realize the tax did not render the levy unreasonable. The Supreme Court concurred with the High Court's decision, stating that the retrospective levy was neither oppressive nor unreasonable based on the legislative history and purpose of the Act.

3. Discrimination between Local and Imported Goods:
Another issue raised was the alleged discrimination between local goods and imported goods regarding the levy in question. The appellants argued that there was discrimination, but the High Court rejected this argument, providing detailed reasons for its decision. The High Court's analysis of the provisions led to the conclusion that the levy did not result in any discrimination. The Supreme Court upheld the High Court's decision on this issue as well.

4. Interpretation of Tax Rate on a Particular Transaction:
The final issue concerned the interpretation of the point of first sale or last sale as per the relevant provisions of the Act. The High Court considered the appellants' licenses and the nature of their sales to determine the applicable tax rate. The appellants contended that their sales constituted the first and last sale, warranting a lower tax rate. However, the Supreme Court stated that without relevant facts, they could not examine this claim. The Court advised the appellants to raise such contentions during assessment or other proceedings before the authorities under the Act. The appeals were ultimately dismissed by the Supreme Court, leaving the appellants the opportunity to present their case before the relevant authorities.