1984 (8) TMI 311 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of levy of sales tax on country liquors and liquors other than country liquors.
2. Retrospective operation of the amendment to the Andhra Pradesh General Sales Tax Act, 1957.
3. Constitutionality of the proviso to the Sixth Schedule under Article 14 of the Constitution of India.
4. Practical difficulties in compliance with the proviso to the Sixth Schedule.

Detailed Analysis:

1. Validity of Levy of Sales Tax on Country Liquors and Liquors Other Than Country Liquors:
The petitioners, who are wholesale and retail dealers in liquor, challenged the amendments made by Ordinance No. 11 of 1983 and the subsequent Andhra Pradesh General Sales Tax (Amendment) Act, 1984. The amendments introduced a Sixth Schedule and altered the point and rate of tax for country liquors and liquors other than country liquors. The court held that Ordinance No. 11 of 1983, which was in force from 8th July, 1983 to 20th September, 1983, validly amended Section 5(2) of the principal Act by adding clause (d), thereby authorizing the State to levy tax on the goods mentioned in the Sixth Schedule. The subsequent Act 11 of 1984 continued the operation of this provision. The court concluded that the amendments were valid and enforceable.

2. Retrospective Operation of the Amendment:
The petitioners argued that Section 2 of the amending Act, which added clause (d) to Section 5(2), was given retrospective operation only from 20th September, 1983. Therefore, for the period from 8th July, 1983 to 20th September, 1983, the tax should be levied as per the unamended provisions. The court rejected this contention, noting that Ordinance No. 11 of 1983 was in force during this period and had the same effect as an Act of the Legislature. The court held that the charge in respect of sales during this period became effective then and there, governed by the law existing during that period. Thus, the State was authorized to levy tax as per the Sixth Schedule for the period between 8th July, 1983 and 20th September, 1983.

3. Constitutionality of the Proviso to the Sixth Schedule Under Article 14:
The petitioners contended that the proviso to the Sixth Schedule was violative of the equality clause enshrined in Article 14 of the Constitution, as it discriminated between dealers at different points of sale. The court found that the classification of transactions with reference to every point of sale other than the first and last points of sale was rational. The scheme of levy at every point of sale other than the last point of sale with a set-off and the last point of sale without a set-off was reasonable. The reduction of the rate of tax at the point of last sale provided relief to small dealers. The court concluded that the proviso did not amount to any discrimination and was not violative of Article 14.

4. Practical Difficulties in Compliance with the Proviso to the Sixth Schedule:
The petitioners argued that the proviso was impossible to comply with, as dealers would not be able to provide particulars of the turnover of goods in the hands of the preceding dealer. The court dismissed this contention, stating that the definition of "turnover" in Section 2(s) of the Sales Tax Act clarified that the dealer only needed to produce the bill of sale under which the goods were purchased. This would allow the dealer to deduct the amount from their own turnover and pay tax on the balance. The court also clarified that the proviso was not ambiguous and provided a clear method for determining the turnover on which tax was payable.

Conclusion:
The court upheld the validity of the Andhra Pradesh General Sales Tax (Amendment) Ordinance No. 11 of 1983 and the Andhra Pradesh General Sales Tax (Amendment) Act No. 11 of 1984. It ruled that sales tax was leviable as per the Sixth Schedule on country liquors and liquors other than country liquors with effect from 8th July, 1983. The writ petitions were dismissed, and the court directed the respondents to make fresh assessments in accordance with the Sixth Schedule as it stood with effect from 8th July, 1983.