1992 (2) TMI 348 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of explanations (a) and (b) to the Sixth Schedule of the Andhra Pradesh General Sales Tax Act, 1957.
2. Retrospective effect given by section 15 of the A.P. Act 25 of 1988.
3. Discrimination between liquor imported from other States and locally marketed liquor.
4. Compliance with clause (29-A) of article 366 of the Constitution.
5. Identification of what constitutes liquor and beer under the Act.

Issue-Wise Detailed Analysis:

1. Constitutional Validity of Explanations (a) and (b) to the Sixth Schedule:
The petitioners, who are dealers in liquor, challenged the constitutional validity of explanations (a) and (b) to the Sixth Schedule of the APGST Act, introduced by section 15 of the A.P. Act 25 of 1988. The court examined the legislative intent and the need for clarity in the definitions of 'first sale' and 'last sale' to prevent tax avoidance by dealers holding both wholesale and retail licenses. The court found that the explanations were necessary to close loopholes and ensure proper tax collection, thus upholding their validity.

2. Retrospective Effect Given by Section 15 of the A.P. Act 25 of 1988:
The petitioners argued that the retroactive application of section 15, affecting transactions from nearly five years back, was irrational, unreasonable, and caused serious prejudice. The court reiterated principles governing retrospective legislation, emphasizing that the Legislature has the power to enact laws retrospectively, especially to cure defects or clarify legislative intent. The court found that the retrospective application was reasonable and necessary to prevent tax avoidance and did not violate fundamental rights under articles 14 and 19(1)(g) of the Constitution.

3. Discrimination Between Liquor Imported from Other States and Locally Marketed Liquor:
The petitioners contended that the amendment discriminated against imported liquor, violating articles 301, 303, and 304 of the Constitution. The court clarified that clause (a) of the explanation treated both imported and locally manufactured liquor alike, ensuring uniform tax incidence. The court found no discrimination and upheld the amendment, noting that it aimed to bring uniformity rather than impose higher taxes on imported liquor alone.

4. Compliance with Clause (29-A) of Article 366 of the Constitution:
The petitioners argued that sections 15 and 16 of A.P. Act 25 of 1988 were ultra vires clause (29-A) of article 366, which defines "tax on the sale or purchase of goods." The court found no violation, stating that the Sixth Schedule and its explanations clearly pertained to the sale of liquor, which falls within the traditional and expanded concept of sale for tax purposes.

5. Identification of What Constitutes Liquor and Beer Under the Act:
The petitioners faintly argued that there was no guidance in the Act to identify what constitutes liquor and beer. The court dismissed this argument, stating that the expression "all liquors" in the Sixth Schedule obviously includes beer, with only toddy and arrack specifically excluded. The court found no difficulty in identifying liquor and beer under the Act.

Conclusion:
The High Court dismissed all the writ petitions, upholding the constitutional validity and retrospective application of the amendments to the APGST Act. The court found no discrimination against imported liquor and affirmed that the legislative provisions were within the competence of the Legislature and did not violate constitutional provisions. The identification of liquor and beer under the Act was also deemed clear and unambiguous. The writ petitions were dismissed with costs.

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