1961 (9) TMI 47 - HC - VAT and Sales Tax

Issues Involved:
1. Exemption from tax on turnover of Rs. 69,654-10-0.
2. Rate of tax applicable to coconuts.

Detailed Analysis:

1. Exemption from Tax on Turnover of Rs. 69,654-10-0
The petitioner, a dealer in coconuts and copra, sought exemption on a turnover of Rs. 69,654-10-0, claiming it should be exempt under the Andhra Pradesh General Sales Tax Act, 1957. This claim was based on Rule 27-A(1) of the Andhra Pradesh General Sales Tax Rules, 1957, which was introduced by a notification dated 30th September 1958, and came into force on 1st October 1958.

The court examined Rule 27-A, which states that taxes levied and collected on declared goods sold in inter-State trade should be refunded. The petitioner argued that this rule should apply retrospectively from the date the Andhra Pradesh General Sales Tax Act came into effect, i.e., 15th June 1957.

The court, however, ruled against this interpretation, stating that the language of the rule did not support a retrospective application. The court referred to the established principle that statutes are generally presumed to be prospective unless explicitly stated otherwise. The court cited Maxwell's "Interpretation of Statutes," emphasizing that retrospective operation should not be inferred unless it is unavoidable due to the clear and unambiguous language of the statute.

The court concluded that Rule 27-A and Section 15 of the Central Sales Tax Act, 1956, did not have retrospective effect. Therefore, the petitioner was not entitled to the claimed exemption for transactions prior to the promulgation of Rule 27-A or the coming into force of Section 15. The claim for exemption was rightly disallowed by the department.

2. Rate of Tax Applicable to Coconuts
The petitioner contended that coconuts should be taxed at 2 naye paise per rupee as they fall under "declared goods" in Section 14 of the Central Sales Tax Act, 1956, which includes oil-seeds. The petitioner argued that coconuts should be listed in Schedule IV of the Andhra Pradesh General Sales Tax Act, 1957, which prescribes a tax rate of 2 naye paise, rather than Schedule III, which prescribes a rate of 3 naye paise.

The court examined Section 6 of the Andhra Pradesh General Sales Tax Act, which states that declared goods should be taxed at the rate specified in Schedule IV. The court acknowledged that coconuts were initially listed in Schedule III but were later moved to Schedule IV by an amendment in 1958, which also fixed the tax rate at 3 naye paise per rupee until 1st October 1958, after which the rate would be 2 naye paise.

The petitioner also argued that the differential tax rates violated Article 14 of the Constitution, which guarantees equality before the law. The court rejected this argument, stating that Article 14 allows for reasonable classification for legislative purposes. The court noted that different tax rates for different commodities are permissible if they are based on an intelligible differentia and have a rational relation to the objective of the statute, which in this case was to generate additional revenue for the state.

The court concluded that the classification and differential tax rates were reasonable and did not violate Article 14. The imposition of a higher tax rate on coconuts was justified as it aimed to generate more revenue from a commodity abundantly produced in Andhra Pradesh.

Conclusion:
The tax revision case was dismissed, and the petitioner's claims were rejected. The court upheld the department's decision to disallow the exemption on the turnover of Rs. 69,654-10-0 and to levy a tax rate of 3 naye paise per rupee on coconuts until 1st October 1958.

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