1967 (11) TMI 103 - HC - VAT and Sales Tax

Summary

Issues:
1. Constitutionality of provisions of Andhra Pradesh General Sales Tax (Amendment) Act, 1963 pertaining to millers who are not wholesale or retail dealers.
2. Legislative competence of the State Legislature to introduce provisions affecting millers under the Act.
3. Whether the provisions imposed unreasonable restrictions on the petitioner's business as a miller.

Detailed Analysis:
1. The petitioner, a miller, challenged the provisions of the Andhra Pradesh General Sales Tax (Amendment) Act, 1963, claiming they were null and void and ultra vires the State Legislature's powers. The petitioner argued that the provisions imposed excessive and arbitrary restrictions violating Articles 14, 19, and 31 of the Constitution. The State contended that the amendments aimed to prevent tax evasion by millers, emphasizing the need to maintain registers and submit returns to curb evasion. The State's objective was to protect both the State's revenue and genuine dealers, including millers who do not engage in sale transactions.

2. The provisions in question defined a "miller" and required registration, maintenance of specific registers, and submission of declarations by millers receiving paddy for rice conversion. The petitioner argued that these provisions exceeded the State Legislature's competence under Entry 54 of List II-State List-of the Seventh Schedule of the Constitution, which allows legislation on taxes on the sale or purchase of goods. The State justified the provisions as necessary to prevent tax evasion, asserting that such measures were incidental to the power to impose and levy taxes on goods.

3. The Court held that the power to levy a tax includes incidental powers to prevent tax evasion, citing precedents that supported legislative measures to check evasion. The petitioner relied on Supreme Court decisions related to sales tax on works contracts and hire-purchase transactions, but the Court found them irrelevant to the issue of legislative competence in the present case. The Court determined that the provisions did not unreasonably restrict the petitioner's business, emphasizing that maintaining transaction registers was a regular business practice and not a violation of business rights. The Court concluded that the provisions were reasonable restrictions, akin to provisions for search and seizure in taxation laws, and dismissed the petition, upholding the validity of the challenged provisions.

In conclusion, the High Court of Andhra Pradesh upheld the constitutionality of the provisions affecting millers under the Andhra Pradesh General Sales Tax Act, 1963, as they were deemed necessary to prevent tax evasion and were within the legislative competence of the State Legislature. The Court found the provisions to be reasonable restrictions that did not unduly burden the petitioner's business as a miller, ultimately dismissing the petition.