1975 (10) TMI 88 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the entry in the Andhra Pradesh General Sales Tax Act, 1957, imposing a single point sales tax on milk foods, powder, and baby milk foods, excluding fresh milk, is discriminatory and violates article 14 of the Constitution?

Analysis:
The petitioner challenged the assessment order imposing sales tax on milk powder, arguing that the distinction made by the entry between fresh milk and milk powder is discriminatory and violates article 14 of the Constitution. The respondent justified the classification, stating that fresh milk and milk powder are different commodities used for distinct purposes, and the legislature has the power to choose items for taxation or exemption. The court noted that the legislature itself differentiated between fresh milk and milk foods, powder, and baby milk foods, making the latter category taxable. Referring to legal precedents, the court emphasized the wide discretion of the State in taxation matters and the need for a valid classification to avoid discrimination.

The court analyzed whether the classification under the entry was rational, emphasizing that statutes must be understood in common parlance. It was observed that there are distinguishing features between fresh milk and milk foods, powder, and baby milk foods, both in usage and composition. While the petitioner relied on previous judgments, the court differentiated the present case, where a clear legislative distinction existed. Referring to a Full Bench decision, the court upheld the constitutional validity of the classification based on reasonable differentia between fresh milk and milk powder. The court also distinguished a relevant judgment regarding excise duty on milk powder, emphasizing its limited scope.

In conclusion, the court held that the legislature has the authority to decide on taxation subjects and must make a reasonable classification to avoid violating article 14 of the Constitution. The court found that the classification between fresh milk and milk powder was justifiable, and the entry in question was not repugnant to article 14. Consequently, the writ petition was dismissed, and the parties were directed to bear their own costs.