1962 (4) TMI 71 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the Notification imposing purchase tax on butter and ghee.
2. Allegation of double taxation.
3. Infringement of fundamental rights under Article 19(1)(g) of the Constitution.
4. Interpretation of Section 5(5) of the Andhra Pradesh General Sales Tax Act, 1957.
5. The distinction between butter and ghee for tax purposes.

Detailed Analysis:

1. Legality of the Notification:
The petitioners challenged the Notification No. 112, G.O. Ms. No. 566, Revenue, dated 11th March 1960, which imposed a purchase tax on butter and ghee at the point of purchase by the last dealer in the State. The petitioners contended that this notification resulted in double taxation and was repugnant to the scheme of the Andhra Pradesh General Sales Tax Act, 1957. The State countered that the notification was issued under the authority of Section 41 of the Act and did not contravene any provisions of the Act or public finance principles.

2. Allegation of Double Taxation:
The petitioners argued that taxing both butter and ghee amounted to double taxation since ghee is merely clarified butter. They claimed that their vendors had already paid sales tax on butter, and taxing ghee again was unjust. The State rebutted this by stating that butter and ghee are distinct commodities with different physical and chemical properties. The Court held that the principle of multiple taxation is well-recognized in sales tax law, and single point taxation is an exception. The Court cited previous judgments to support the view that taxing products derived from the same commodity does not constitute double taxation.

3. Infringement of Fundamental Rights:
The petitioners claimed that the demand for tax on their purchase turnover infringed their fundamental right under Article 19(1)(g) of the Constitution. The Court did not find any merit in this argument, as the notification was issued under the authority of law.

4. Interpretation of Section 5(5):
Section 5(5) of the Act stipulates that in respect of the same transaction, either the buyer or the seller, but not both, shall be taxed. The Court interpreted this to mean that the same dealer cannot be taxed twice for the same goods. In this case, different dealers were taxed for butter and ghee, so the question of double taxation did not arise. The Court cited several precedents to support this interpretation, including Pullaiah v. State of Andhra Pradesh and Tungabhadra Industries Limited v. Commercial Tax Officer.

5. Distinction Between Butter and Ghee:
The Court examined whether butter and ghee could be considered identical for tax purposes. The petitioners relied on definitions from Encyclopaedia Britannica to argue that ghee is merely clarified butter. However, the Court held that butter and ghee serve different purposes and are treated as separate commodities by the Legislature for taxation. The Court emphasized that it is not within its province to question the policy of the Legislature.

Conclusion:
The Court concluded that the petitioners failed to establish that the notification violated Section 5(5) of the Act or any other legal provisions. The contention of double taxation was dismissed, and the Court held that butter and ghee are distinct commodities for tax purposes. The petition was also deemed premature as the facts required investigation by the assessing authority, and the petitioners had not exhausted alternative remedies provided by the Act. Consequently, the petition was dismissed with costs.

Judgment:
The rule nisi was discharged, and the petition was dismissed with costs. Advocate's fee was set at Rs. 100.

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