1965 (7) TMI 53 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of the Notification (G.O. No. 2923, Revenue, dated 9th November, 1951) under Article 14.
2. Classification of transactions as inter-State or intra-State sales.
3. Effect of the notification issued by the Board of Revenue and published in the Andhra Gazette dated 7th January, 1954.

Detailed Analysis:

1. Constitutionality of the Notification under Article 14:

The petitioner's contention was that the exclusion of refined oil from the rebate granted to raw oil and hydrogenated oil violated Article 14 of the Constitution. The court referred to the principles established in various Supreme Court cases, emphasizing that Article 14 forbids class legislation but permits reasonable classification. The classification must be based on an intelligible differentia with a rational relation to the statute's objective.

The court upheld the Division Bench's decision in Berar Oil Industries v. Deputy Commissioner of Commercial Taxes, which had ruled that the withdrawal of the rebate for refined oil did not contravene Article 14. The court found no basis in the Supreme Court's observations in Tungabhadra Industries Ltd. v. Commercial Tax Officer to reconsider this ruling. The court noted that the classification between raw groundnut oil, refined oil, and hydrogenated oil was reasonable due to differences in their manufacturing processes, market demand, and prices. Therefore, the notification did not suffer from unconstitutionality.

2. Classification of Transactions as Inter-State or Intra-State Sales:

The Tribunal had ruled that the transactions were intra-State sales because the sales were completed within the State after delivery and testing at Kurnool. The court found this view erroneous, referencing the Supreme Court's tests for inter-State sales, which involve the movement of goods across state borders as a direct result of the sale.

The court concluded that the transactions in question were indeed inter-State sales, as the contracts involved the transport of goods from outside the State into Andhra Pradesh. The Appellate Tribunal's conclusion was thus unsustainable, and the cases were remitted to the Tribunal for re-evaluation based on this opinion.

3. Effect of the Notification by the Board of Revenue:

The petitioner argued that the notification issued by the Board of Revenue in the Andhra Gazette dated 7th January, 1954, should apply. The court dismissed this contention, noting that the notification was not issued by the State Government under section 6 of the Madras General Sales Tax Act, 1939, and only applied to non-resident dealers. Since the petitioner was not a non-resident dealer, they could not claim the benefit of this notification.

Conclusion:
The Tax Revision Cases were allowed to the extent that the transactions were classified as inter-State sales and remitted to the Appellate Tribunal for disposal in accordance with the court's judgment. The notification excluding refined oil from the rebate was upheld as constitutional, and the petitioner's claim under the Board of Revenue's notification was rejected. There was no order as to costs in all these cases.