1963 (4) TMI 18 - SC - VAT and Sales Tax

EXEMPTION TEXTILE GOODS ADDITIONAL DUTY OF EXCISE CONSTRUCTION OF NOTIFICATION GRANTING EXEMPTION GOODS NOT SUBJECT TO LEVY OF EXCISE DUTY UNDER CLAUSE 3, ADDITIONAL DUTIES OF EXCISE (LEVY AND DISTRIBUTION) BILL, 1957

Issues Involved:
1. Proper construction and legal effect of a notification under section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957.
2. Entitlement to exemption from sales tax under the notification dated December 13, 1957.
3. Interpretation of the proviso and conditions attached to the notification.
4. Constitutional validity of the Andhra Pradesh General Sales Tax Act, 1957 (abandoned at the Supreme Court level).

Issue-wise Detailed Analysis:

1. Proper Construction and Legal Effect of a Notification under Section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957:
The principal question in this appeal was the proper construction and legal effect of a notification issued under section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957. The notification exempted certain goods from sales tax, subject to specific conditions.

2. Entitlement to Exemption from Sales Tax under the Notification Dated December 13, 1957:
The appellants, dealing in textile goods, claimed exemption from sales tax based on the notification. The Sales Tax Authorities rejected this claim, leading the appellants to file a writ petition in the High Court, which was dismissed. The appellants then appealed to the Supreme Court.

3. Interpretation of the Proviso and Conditions Attached to the Notification:
The notification exempted the sale or purchase of certain goods from sales tax, provided that additional duties of excise were levied and collected by the Central Government. The High Court held that the appellants were not entitled to the exemption because the goods in question were not subject to additional excise duty. The Supreme Court, however, disagreed with this interpretation.

The Supreme Court observed that the first paragraph of the notification granted an exemption from sales tax for all varieties of textiles. This exemption was subject to a proviso that required additional duties of excise to be levied and collected. The Court noted that since no additional duty of excise was leviable on the goods in the appellants' possession, the proviso did not apply. Therefore, the appellants were entitled to the exemption.

The Court also addressed the argument based on the phrase "any class of such goods" in the proviso. The High Court had interpreted this to mean that the exemption did not apply unless the goods were subject to additional excise duty. The Supreme Court rejected this interpretation, stating that the proviso applied only to goods on which additional excise duty was actually leviable. Since the goods in question were not subject to such duty, the appellants did not need to fulfill the conditions of the proviso to claim the exemption.

4. Constitutional Validity of the Andhra Pradesh General Sales Tax Act, 1957:
The appellants initially challenged the constitutional validity of the Act and its provisions imposing sales tax on textile goods. However, this argument was not pursued before the Supreme Court, and the focus remained on the interpretation of the notification.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's order dismissing the writ petition. The Court declared that the appellants were entitled to the exemption from sales tax for textile goods in stock as of December 14, 1957, as per the notification. The respondents were restrained from levying or collecting sales tax on such goods. The appellants were awarded costs in the Supreme Court, but the High Court's order on costs was not interfered with due to the unsuccessful challenge to the constitutional validity of the Act.

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