1981 (7) TMI 216 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of Rule 6-A of the A.P. General Sales Tax Rules, 1957.
2. Requirement of filing original declarations in Form I.
3. Discrimination against dealers purchasing through commission agents.
4. Compliance with Rule 6-A and substantial compliance.
5. Jurisdiction under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Legality of Rule 6-A of the A.P. General Sales Tax Rules, 1957:
The petitioners argued that Rule 6-A is beyond the rule-making power of the State as proviso (c) to item 1 of the Fifth Schedule does not contemplate the requirement of filing original declarations. The court found no substance in this submission, stating that Rule 6-A is within the scope of the proviso and is not beyond the rule-making power of the State. The rule provides for the formalities to be complied with by the registered dealer claiming exemption and does not amount to any hostile discrimination or contravene Articles 14 and 19(1)(g) of the Constitution of India.

2. Requirement of filing original declarations in Form I:
The petitioners contended that filing original declarations is not feasible when purchasing through commission agents, as the agents retain the originals. The court acknowledged this difficulty and held that filing a copy of the declaration given by the selling registered dealer is substantial compliance with Rule 6-A. The court emphasized that the main object is to levy tax at the point of purchase, and if the jaggery has already suffered tax, exemption from a second levy should be permitted upon substantial compliance with the rule.

3. Discrimination against dealers purchasing through commission agents:
The petitioners argued that Rule 6-A discriminates against dealers purchasing through commission agents, as they cannot obtain original declarations. The court rejected this argument, stating that Rule 6-A does not classify dealers in any manner and only prescribes formalities for claiming exemption. The court found no unreasonableness, arbitrariness, or discrimination in the rule and held that it does not contravene Articles 14 and 19(1)(g) of the Constitution of India.

4. Compliance with Rule 6-A and substantial compliance:
The court held that Rule 6-A should be construed as directory and not mandatory, allowing for substantial compliance. The court stated that filing a copy of the declaration in Form I is sufficient compliance with Rule 6-A, sub-rule (4), and the assessing authorities should act on such copies or make further inquiries to satisfy themselves that the goods have already suffered tax. The court cited several precedents, including State of Orissa v. M.A. Tulloch and Co. Ltd., Commissioner of Sales Tax, Maharashtra State v. Hindustan Silk Mills, and Sri Lakshminarayana General Traders v. Commercial Tax Officer, Tenali, to support its conclusion.

5. Jurisdiction under Article 226 of the Constitution of India:
The learned Government Pleader argued that the petitioners have an alternate remedy by way of appeal against the assessment orders and that the court should not exercise its jurisdiction under Article 226. The court observed that the Deputy Commissioner had expressed that the assessing authorities should not accept copies of declarations as proper compliance with Rule 6-A, sub-rule (4), and that no useful purpose would be served by pursuing the remedy of appeal. The court, therefore, exercised its powers under Article 226 and granted the necessary relief to the petitioners.

Conclusion:
The writ petitions were partly allowed, declaring that there is substantial compliance with Rule 6-A, sub-rule (4), if the petitioners file copies of declarations in Form I supplied by the commission agents. The assessing authorities were directed to act on such copies and complete the assessments pending for the relevant years. In cases where assessments had already been made, those assessments were set aside concerning the disputed turnovers, and the assessing authorities were directed to reassess the dealers in light of the objections filed and the observations made in the judgment. The writ petitions, in other respects, were dismissed, and the parties were directed to bear their respective costs.

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