1968 (9) TMI 110 - HC - VAT and Sales Tax

Issues Involved:
1. Vires of sub-section (6) of section 21 of the Andhra Pradesh General Sales Tax Act, 1957.
2. Alleged discrimination under Articles 14 and 19(1)(f) and (g) of the Constitution.
3. Precondition of tax payment for appeal under section 21(6).

Issue-Wise Detailed Analysis:

1. Vires of Sub-section (6) of Section 21 of the Andhra Pradesh General Sales Tax Act, 1957:
The core issue in both petitions is the challenge to the constitutionality of sub-section (6) of section 21 of the Andhra Pradesh General Sales Tax Act, 1957. The petitioners argue that this provision discriminates against assessees whose assessments are revised by the Deputy Commissioner of Commercial Taxes, as opposed to those revised by the Board of Revenue or other officers. This differentiation, they claim, violates Articles 14 and 19(1)(f) and (g) of the Constitution due to the lack of a rational basis or nexus between the classification and the objective sought to be achieved.

2. Alleged Discrimination Under Articles 14 and 19(1)(f) and (g) of the Constitution:
The petitioners contend that the Act discriminates against dealers based on the authority exercising the revisional powers. Specifically, the right of appeal against an order passed in revision by a Deputy Commissioner is subject to the onerous restriction of paying the entire tax demanded before the appeal can be entertained. This restriction does not apply to appeals against orders passed by the Board of Revenue or by officers other than the Deputy Commissioner. The petitioners argue that this differential treatment is arbitrary and unreasonable, thereby violating the principles of equality enshrined in Article 14 and the freedoms guaranteed under Article 19(1)(f) and (g).

3. Precondition of Tax Payment for Appeal Under Section 21(6):
The petitioners further argue that the precondition of tax payment under section 21(6) effectively takes away the right of appeal, making it unreasonable and arbitrary. They point out that under the scheme of the Act, appeals against original assessments or orders by authorities other than the Deputy Commissioner do not require prior payment of tax. Additionally, the Act provides mechanisms for staying the collection of tax pending appeals in other cases, but not when the appeal is against an order by the Deputy Commissioner under section 20(2).

Judgment Analysis:

Discrimination and Violation of Articles 14 and 19:
The court examined the relevant provisions of sections 14, 19, 20, 21, and 23 of the Act. It noted that there is a clear discrimination between authorities exercising revisional powers under section 14(4-C) and those under section 20(2). Appeals against orders by authorities higher than the assessing authority but below the Deputy Commissioner do not require proof of tax payment, whereas appeals against orders by the Deputy Commissioner do. The court found no valid reason for this differential treatment, deeming it arbitrary and lacking a rational nexus to the objective of the Act.

Unreasonable Restriction:
The court rejected the argument that the restriction under section 21(6) is justified because the Deputy Commissioner is the final authority for granting stays. It pointed out that an appeal against the Deputy Commissioner's order is provided to the Appellate Tribunal, a higher authority. The court held that the restriction imposed by section 21(6) is unreasonable and arbitrary, as it places undue hardship on assessees whose cases are revised by the Deputy Commissioner.

Conclusion:
The court concluded that sub-section (6) of section 21 is discriminatory and violates Article 14 of the Constitution. It struck down the provision to the extent that it imposes a precondition of tax payment for appeals against orders of the Deputy Commissioner under section 20(2). Consequently, appeals against such orders must be entertained by the Sales Tax Appellate Tribunal without requiring proof of tax payment.

Outcome:
The writ petitions were allowed, and the court directed that appeals against the Deputy Commissioner's orders under section 20(2) be entertained without the precondition of tax payment. The petitioners were awarded costs, with an advocate's fee of Rs. 100 in each case.

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