1970 (9) TMI 91 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the validity of G.O. Ms. No. 300, Revenue (S), dated 8th March, 1966, amending the Andhra Pradesh General Sales Tax Rules, 1957.
2. Allegation of unreasonable restriction on the right to carry on business under article 19(1)(g) of the Constitution.
3. Claim of discriminatory treatment against oil-millers under the impugned rule.
4. Questioning the rule-making power of the Government under section 39 of the A.P. General Sales Tax Act.
5. Impact of the rule on the oil-millers' operations and machinery.
6. Evaluation of the reasonableness of the restriction imposed by the impugned rule.
7. Examination of the public interest served by the rule.
8. Comparison with a previous court decision regarding similar provisions for rice millers.
9. Analysis of the classification of oilmillers under article 14 of the Constitution.

Detailed Analysis:
The petitioners, a group of oilmillers, challenged the validity of G.O. Ms. No. 300, which introduced rule 45-D mandating hourly maintenance of a detailed register for groundnut oil production. They contended that the rule imposed unreasonable restrictions on their business operations, violating their fundamental right under article 19(1)(g) of the Constitution. Additionally, they argued that singling out oil-millers for such stringent record-keeping was discriminatory and lacked a rational basis compared to other businesses. The petitioners also questioned the Government's authority to make such rules under section 39 of the A.P. General Sales Tax Act.

The petitioners highlighted the adverse impact of the hourly maintenance requirement on their operations and machinery, asserting that it would significantly disrupt production efficiency and result in substantial losses of time and labor. They argued that existing registers under other tax laws could provide the necessary information without the need for additional hourly records. The court acknowledged the potential hardship faced by the oil-millers due to the rule and noted the lack of justification from the respondents on how the rule served the public interest or the objectives of the Sales Tax Act.

Drawing a parallel with a previous case involving rice millers, where a similar provision was upheld to prevent tax evasion, the court found the current rule to be excessively restrictive without aiding tax collection or evasion prevention. Despite a weak argument on the grounds of discrimination under article 14 of the Constitution, the court ultimately ruled in favor of the petitioners. The impugned rule 45-D was struck down as contravening article 19(1)(g) of the Constitution and exceeding the Government's rule-making power under section 39 of the A.P. General Sales Tax Act. The petitioners were granted costs, and the petition was allowed.

This judgment underscores the importance of balancing regulatory measures with business interests, emphasizing the need for rules to be reasonable, proportionate, and serving a legitimate public purpose to withstand constitutional scrutiny.