1999 (8) TMI 940 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Constitutional validity of Entry 158(a) of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957.
2. Levy of tax under Entry 158(b) of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957.
3. Refund of excess tax paid by the petitioner.

Detailed Analysis:

1. Constitutional Validity of Entry 158(a):

The petitioner challenged Entry 158(a) of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957, arguing that it imposed a higher rate of tax on betel-nut powder imported from other States or manufactured from arecanuts that had not suffered tax under the APGST Act, while a lower rate was imposed if the arecanuts had suffered tax in the State. This was claimed to be discriminatory and violative of Articles 301 to 304 of the Constitution of India. The Court reviewed previous judgments, including the Supreme Court's decision in Anand Commercial Agencies v. Commercial Tax Officer, which held that imposing different tax rates on similar goods based on their origin was discriminatory. The Court concluded that Entry 158(a) was indeed illegal, arbitrary, ultra vires, and violative of Articles 301 to 304 of the Constitution of India.

2. Levy of Tax under Entry 158(b):

The petitioner sought a directive for the second respondent to levy tax at the rate applicable under Entry 158(b) of the First Schedule to the APGST Act for sales of betel-nut powder. The Court agreed that the petitioner was liable to be assessed under Entry 158(b), which imposed a lower tax rate on betel-nut powder manufactured from arecanuts that had suffered tax under the APGST Act. However, the petitioner restricted his request to apply this benefit from November 20, 1998, onwards. The Court directed that the petitioner's entitlement to this tax rate should be prospective and not retrospective, and any disputes for the preceding period should be resolved before the appropriate forum.

3. Refund of Excess Tax Paid:

The petitioner sought a refund of Rs. 2,51,93,646, which was allegedly paid as excess tax during the assessment years 1991-92 to 1994-95. The Court held that it could not grant such relief under Article 226 of the Constitution of India, as the entitlement to a refund depended on various factors, including the effect of Section 33-BB of the APGST Act. The Court emphasized that any refund should be directed to the consumer and not the dealer or manufacturer to avoid unjust enrichment. The petitioner was advised to approach the appropriate authority for any refund claims.

Conclusion:

The Court declared Entry 158(a) of the First Schedule to the APGST Act, 1957, as illegal, ultra vires, and violative of Articles 301 to 304 and 14 of the Constitution of India. It directed the respondents to levy tax on the sales of betel-nut powder by the petitioner under Entry 158(b) and advised the petitioner to resolve any issues regarding the tax rate from November 20, 1998, onwards before the appropriate forum. The petitioner's claim for a refund of excess tax was also directed to be agitated before the appropriate forum. The writ petition was disposed of with no order as to costs.