9911796707
TMI Blog1997 (11) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... d from groundnut which has not borne any tax under the A.P. Act at the rate of 6½ paise per rupee of the sale price. The assessee at the relevant period had a total turnover of Rs. 31,35,000 out of which Rs. 14,76,000 was on account of sale of groundnut oil and refined oil obtained from groundnut which had not borne tax under the A.P. Act because the oil was imported into Andhra Pradesh from the State of Karnataka. 2. The case of the appellant is that the oil had been extracted out of groundnuts which had borne tax under the Karnataka Sales Tax Act. The levy of tax on the oil imported from Karnataka into Andhra Pradesh at a rate higher than the rate at which the oil manufactured in Andhra Pradesh is taxed is discriminatory and violative of the appellant's right of freedom of trade and commerce throughout India. This contention of the assessee was rejected by the Sales Tax Officer and also by the Assistant Commissioner (C.T.), Appeals, Secunderabad. 3. The assessee thereafter challenged the decision of the Assistant Commissioner by filing a writ petition in the Andhra Pradesh High Court (Anand Commercial Agencies v. Commercial Tax Officer [1988] 71 STC 45) challenging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced within the State and imported oil. It has to be borne in mind that there was a tax on sale of groundnut at the rate of 4 paise in the rupee under item 6 of the Third Schedule to the A.P. Act. If this is taken into account, a further levy of 4 paise in the rupee in effect amounts to a total levy of 6½ paise per rupee which is levied to the tax imposed on the imported oil. 8.. The majority view in the High Court was that having regard to the tax levied on groundnut in the State which was 4 paise in the rupee, the tax on imported oil and indigenously produced oil within the State was the same, i.e., 6½ paise in the rupee. It was observed: "Under entry 6 of the Third Schedule, tax is levied at the rate of 4 paise in a rupee on groundnuts at the point of purchase by the last dealer. Groundnut is the material from which groundnut oil is obtained. It is in respect of oil obtained from groundnut that suffered the tax, entry 24(b) prescribes a rate of 2½ paise in the rupee on the first sale. Otherwise, groundnut oil whether imported or made from groundnut locally tax is leviable at the rate of 6½ paise in the rupee. Take for instance a dealer who sells o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. 304.. Restrictions on trade, commerce and intercourse among States.- Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law- (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the view of this Court has consistently been that a State is not entitled to tax locally made goods at a lower rate while taxing similar goods manufactured in other States at a higher rate. 12.. In the case of Firm A.T.B. Mehtab Majid & Co. v. State of Madras [1963] 14 STC 355 (SC); AIR 1963 SC 928, hides and skins imported from outside the State were subjected to higher rate of tax than the rate of tax imposed on hides and skins tanned and sold within the State by rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The effect of this Rule was that tanned hides or skins imported from outside the State and sold within the State were subject to a higher rate of tax than the tax imposed on hides or skins tanned and sold within the State, inasmuch as sales tax on the imported hides or skins tanned outside the State was on their sale price whereas the tax on hides or skins tanned within the State was on the sale price of these hides or skins when they were purchased in the raw condition which was substantially less than the sale price of tanned hides or skins. 13.. It was held that the taxing laws can be treated as restrictions on trade, commerce and inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment not exceeding three lakhs of rupees and (2) units with capital investment exceeding three lakhs of rupees. The period of exemption varied from 3 to 7 years in different districts. 17.. The case of the writ petitioners in that case was that the dealers had become liable to pay sales tax at 12 per cent + 10 per cent surcharge under the U.P. Sales Tax Act on photographic and graphic art material and at the rate of 8 per cent + 10 per cent surcharge on medical X-ray films and minimum of 10 per cent on their inter-State turnover. But the manufacturers in the State of U.P. had no tax liability by virtue of exemption granted under the impugned notifications. The case of the petitioners was that the goods sold by them had become costlier by 8.8 per cent to 13.2 per cent depending upon the items sold compared to the goods manufactured in the State of Uttar Pradesh. Apart from the challenge based on articles 19(1)(g) and 14 of the Constitution, the petitioners based their case on the provisions of articles 301 to 305 of Part XIII of the Constitution of India. 18.. After an elaborate review of the case law, it was held: "Where the general rate applicable to the goods locally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al industries was discriminatory. The exemption given by the Government of Jammu and Kashmir to the manufacturers of the edible oil was total and the period of exemption was five years-which was later extended by another five years. It was held that the unconditional exemption granted to edible oil industry within the State for a period of ten years and at the same time subjecting edible oil industries from other States to sales tax at 8 per cent was discriminatory and violative of article 304(a) of the Constitution. 21. In the case before us, exemption has not been granted to a new industry or specially handicapped industry for any special reason for a limited period of time. Groundnut oil manufacturers within the State have been generally given the benefit of a lower rate of tax whereas the importers will have to pay sales tax at a higher rate. It is not even the case of the State that if imported oil was manufactured out of tax-paid groundnut the rate of tax on imported oil would be lower. 22.. On behalf of the State, it has been argued that if a manufacturer of oil does not purchase groundnut from the market but has his own supply of groundnut he pays tax at 6½ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
