1988 (2) TMI 450 - HC - VAT and Sales Tax

Summary

Issues:
1. Discrimination in granting sales tax exemption to a Co-operative Federation for baby milk food.
2. Validity of the notification exempting a particular manufacturer from sales tax under section 9 of the A.P. General Sales Tax Act.

Issue 1: Discrimination in Granting Sales Tax Exemption:
The case involved a challenge by Food Specialities Ltd., a private company manufacturing baby milk foods, against the exemption granted to a Co-operative Federation for its baby milk food product "Vijaya Spray." The petitioner alleged discrimination, arguing that the exemption conferred undue preference on a specific manufacturer. The Court analyzed the situation and determined that the petitioner and the Co-operative Federation were not similarly situated. The Co-operative Federation operated on a "no-profit no-loss" basis, aiming to ensure fair prices for milk producers and consumers. The Court held that the exemption was a form of concession or subsidy to support the Federation's new entry into the market, distinct from the petitioner's established presence. Citing precedents, the Court emphasized that such concessions to specific entities or industries were common in the Indian economy, negating the discrimination claim.

Issue 2: Validity of the Notification under Section 9 of the Act:
The second contention focused on the validity of the notification under section 9 of the A.P. General Sales Tax Act. The petitioner argued that the notification was inconsistent with section 9 by mixing clauses related to specified goods and specified persons. However, the Court disagreed, explaining that the power of exemption was conditional legislation, allowing the government to exempt specific classes of goods or persons. The Court clarified that while clause (i) referred to exempting goods without specifying the manufacturer, clause (ii) pertained to exempting persons in relation to their turnover of specific goods. The Court held that the notification in question fell under clause (ii) of section 9(1), dismissing the petitioner's argument regarding the language of the Act. Citing a previous decision, the Court emphasized that the absence of the words "specified goods" did not limit the government's power to grant exemptions. Consequently, the Court dismissed the writ petition, ruling in favor of the Co-operative Federation.

In conclusion, the High Court of Andhra Pradesh dismissed the writ petition challenging the sales tax exemption granted to a Co-operative Federation for baby milk food, citing lack of discrimination and the notification's validity under section 9 of the Act. The Court rejected the petitioner's claims and declined the oral request for appeal to the Supreme Court, deeming the case not involving substantial questions of law warranting further consideration.