1977 (6) TMI 98 - HC - VAT and Sales Tax

Issues Involved:
1. Applicability of the Central Sales Tax Act as amended by Central Act 103 of 1976.
2. Validity of Andhra Pradesh Act 49 of 1976 in light of the Central Sales Tax (Amendment) Act, 1976.
3. Interpretation and application of Section 5(3) of the Central Sales Tax Act.
4. Interaction between Section 38 of the Andhra Pradesh General Sales Tax Act and Article 286 of the Constitution.
5. Jurisdiction of the High Court under Article 226 of the Constitution to issue directions to sales tax authorities.

Detailed Analysis:

1. Applicability of the Central Sales Tax Act as amended by Central Act 103 of 1976:
The court examined the amendments made to the Central Sales Tax Act by Central Act 103 of 1976, particularly the insertion of sub-section (3) to Section 5, which was given retrospective effect from April 1, 1976. The amendment aimed to include not only the actual exporter's sale but also the penultimate sale preceding the export within the scope of "sale or purchase in the course of export."

2. Validity of Andhra Pradesh Act 49 of 1976:
The petitioners argued that Andhra Pradesh Act 49 of 1976, which amended the Andhra Pradesh General Sales Tax Act to include items 19 and 20 in the Second Schedule, was invalid due to the enactment of Central Act 103 of 1976. They contended that the state law was competent before the Central enactment but became invalid post the amendment of Section 5(3) of the Central Sales Tax Act. The court rejected this argument, stating that the Andhra Pradesh State Legislature did not abdicate its legislative function and that Section 38 of the Andhra Pradesh General Sales Tax Act merely gave effect to Article 286 of the Constitution.

3. Interpretation and application of Section 5(3) of the Central Sales Tax Act:
The court clarified that Section 5(3) of the Central Sales Tax Act provides relief to the last dealer whose sale or purchase immediately precedes the export of goods. For exemption under Section 5(3), three conditions must be satisfied: (1) a pre-existing agreement or order with a foreign buyer, (2) the last purchase must occur after this agreement, and (3) the purchase must be for complying with the agreement. The court emphasized that these conditions must be assessed by the sales tax authorities.

4. Interaction between Section 38 of the Andhra Pradesh General Sales Tax Act and Article 286 of the Constitution:
The court discussed the provisions of Section 38 of the Andhra Pradesh General Sales Tax Act, which align with Article 286 of the Constitution. Section 38 exempts sales or purchases that occur outside the state or in the course of import/export. The court reiterated that Section 38, read with Article 286(2), does not imply that the state legislature abdicated its legislative power to the central legislature.

5. Jurisdiction of the High Court under Article 226 of the Constitution:
The court concluded that it could not issue specific directions to the sales tax authorities under Article 226 of the Constitution, as the assessment of whether a sale or purchase falls under Section 5(3) of the Central Sales Tax Act involves factual determinations. The court held that the existing machinery for assessment is competent to handle these issues.

Conclusion:
Each writ petition was dismissed, and the court upheld the constitutional validity of Andhra Pradesh Act 49 of 1976. The court refrained from issuing directions to the sales tax authorities, emphasizing that the assessment of the applicability of Section 5(3) of the Central Sales Tax Act involves factual questions to be determined by the appropriate authorities. No costs were awarded, and the advocate's fee was set at Rs. 150 for each petition.

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