1970 (3) TMI 149 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Definition of "miller" under item 3 of Schedule IV of the Andhra Pradesh General Sales Tax Act.
2. Exigibility of groundnuts to tax during the specified period.
3. Compliance with Section 15(a) of the Central Sales Tax Act.
4. Validity of the assessment orders.

Detailed Analysis:

1. Definition of "miller" under item 3 of Schedule IV of the Andhra Pradesh General Sales Tax Act:
The primary issue was whether the term "miller" in item 3 of Schedule IV, as it stood between 1st October 1961 and 1st August 1963, included a person who merely decorticated groundnuts or was restricted to those who crushed groundnuts into oil. The petitioner argued that "miller" should be interpreted to mean only those engaged in crushing groundnuts into oil. The court agreed, stating, "the word 'miller' in entry 3 is used to mean the person engaged in crushing the groundnut and extracting oil by the employment of machinery." This interpretation was necessary to avoid the term becoming "obnoxious to section 15 of the Central Sales Tax Act."

2. Exigibility of groundnuts to tax during the specified period:
The court examined the amendments to Schedule IV and the point of tax exigibility for groundnuts. For the period from 1st October 1961 to 1st August 1963, groundnuts were taxable "when purchased by a miller in the State at the point of purchase by the miller and in all other cases at the point of purchase by the last dealer who buys in the State." The court concluded that the term "miller" did not include those who only decorticated groundnuts, aligning with the legislative intent to tax groundnuts at the point they cease to be groundnuts, either by being crushed into oil or leaving the state.

3. Compliance with Section 15(a) of the Central Sales Tax Act:
Section 15(a) mandates that tax on declared goods should only be levied at the last sale or purchase inside the state and should not exceed 2 percent of the sale or purchase price. The petitioner argued that including decorticators as millers could result in multiple taxation points, contravening Section 15(a). The court agreed, stating, "it would be impossible for the last dealer who buys in the State to say with any degree of certainty that so much of the groundnut purchased by him was already subjected to tax and so much was not." This uncertainty could lead to contravention of Section 15(a), as it would be impossible to ensure that groundnuts were taxed only once.

4. Validity of the assessment orders:
The petitioner sought writs of certiorari to quash the assessment orders, arguing that the Commercial Tax Officer's interpretation was incorrect. The court decided to dispose of the writ petitions on merits, despite the petitioner's failure to exhaust alternative remedies, due to the significant time lapse since the writ petitions were admitted. The court ultimately allowed the writ petitions, stating, "the word 'miller' in entry 3 does not include a person who merely decorticates groundnuts," and thus, the assessment orders were invalid.

Conclusion:
The court concluded that the term "miller" in item 3 of Schedule IV referred only to those who crushed groundnuts into oil, not those who merely decorticated them. This interpretation ensured compliance with Section 15(a) of the Central Sales Tax Act, which prohibits multiple taxation points. Consequently, the assessment orders were quashed, and the writ petitions were allowed. The court emphasized the legislative intent to tax groundnuts at the point they cease to be groundnuts, either by being crushed into oil or leaving the state.