1986 (2) TMI 330 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of section 6-C of the Andhra Pradesh General Sales Tax Act, 1957.
2. Inclusion of excise duty on beer in the turnover of the dealer.
3. Revised assessments and show cause notices related to sales tax on packing material prior to the insertion of section 6-C.

Summary of the Judgment:

1. Validity of Section 6-C:
The primary issue is whether section 6-C of the Act, which provides for the levy of sales tax on packing materials at the same rate as the goods packed in such materials, is violative of Article 14 of the Constitution of India due to arbitrariness and discrimination. The court held that the nature of the transaction involving the sale of beer or cement packed in materials is a composite and integrated sale of the container and contents. The containers are necessary concomitants and their transfer is incidental and unavoidable. The court concluded that section 6-C merely reflects the existing legal position and does not introduce any new element, thus it is not arbitrary or discriminatory.

2. Inclusion of Excise Duty on Beer:
The petitioners argued that excise duty paid on beer should not be included in the sale price and thus should not be exigible to tax. The court referred to the Supreme Court's decision in Hindustan Sugar Mills Ltd. v. State of Rajasthan, which held that excise duty forms a component of the consideration payable by the purchaser and thus is part of the "sale price". The court upheld that excise duty paid on beer is part of the turnover and is exigible to tax.

3. Revised Assessments and Show Cause Notices:
The petitioners challenged the revised assessments made u/s 20 of the Act and the show cause notices issued for the period before the insertion of section 6-C. The court noted that the insertion of section 6-C was to clarify and ensure uniformity in the application of tax rates on packing materials. It was observed that the consideration paid by the purchaser includes the price of the containers, and hence, the revised assessments and show cause notices were valid.

Conclusion:
The court dismissed all the writ petitions, holding that section 6-C is valid and not violative of Article 14, excise duty on beer forms part of the sale price and is exigible to tax, and the revised assessments and show cause notices are justified. The court granted the assessees time to pay the demanded amounts in installments due to financial constraints.