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TMI Blog1989 (11) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... for such goods manufactured or produced in the dealer's own manufacturing unit which is located in the State of Andhra Pradesh and the goods are supplied to (1) the Departments of Government of India or Government of Andhra Pradesh; (2) public sector undertakings including corporations owned by the Government of India or Government of Andhra Pradesh; (3) Government companies as defined under section 617 of the Companies Act, 1956; and (4) local authorities mentioned therein. The case of the writ petitioner is that this notification by which the sales tax has been reduced on locally manufactured units supplying goods to the aforesaid specified undertakings is violative of article 304(a) of the Constitution. Reliance on behalf of the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me pipes, cement water and sanitary fitting, concrete poles and other cement products, be at the reduced rate of four paise in the rupee at the point of first sale in the State with effect on and from the 1st January, 1987." This notification is in pari materia with the notification impugned in the present case. In the present case, the notification reads as follows: "In exercise of the powers conferred by sub-section (1) of section 9 of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act VI of 1957), the Governor of Andhra Pradesh hereby directs that the rate of tax payable under the said Act in respect of sales by a dealer to any of the departments and other agencies mentioned below, which are located in the State of An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescribed rates (of tax mentioned in the Schedules to the said Act and additional tax payable under section 5-A and the surcharge on sales tax payable under section 6-B of the said Act) provided the total rate of tax together with the rate of additional tax under section 5-A and the surcharge on sales tax under section 6-B shall not exceed 4%. 1.. Departments of Government of India or Government of Andhra Pradesh; or 2.. Public sector undertakings including corporations owned by the Government of India or Government of Andhra Pradesh; or 3.. Government companies as defined under section 617 of the Companies Act, 1956; or 4.. Local authorities, namely-Municipal Corporations of Hyderabad or Vijayawada or Visakhapatnam or any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturers of cement products the benefit of reduced rate of taxation is not applicable. The prescribed rate of tax under the Andhra Act is 13.75 per cent on cement. Thus under the Andhra notification in regard to the local tax the indigenous producers of cement have a benefit of 9.75 per cent. The return made to the court admits of the position that preference has been shown to local manufacturers. Two reasons have been advanced by way of justification. One is that it is beneficial to the State revenue and secondly it protects the local manufacturers too. The counsel for the State Government has not been able to demonstrate to us how the reduction in the rate of sales tax is beneficial to the State revenue. The other justification is what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sales tax in the State which have been adopted by the Central Sales Tax Act for the purpose of levy of tax under that Act is, as already mentioned, not determinative of the giving of preference or making a discrimination. The view expressed by the High Court that section 8(2), 8(2A) and 8(5) infringe article 301 and article 303(1) cannot be sustained." Sri A. Venkataramana, learned Government Pleader for Commercial Taxes, submitted that article 301, 303 and 304, clause (a) should be read together and unless it can be shown that the difference in the rate of taxation on the imported goods and locally manufactured or produced goods affects the movement of the goods or the free-flow of trade in the country, the notifications are not liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Agencies v. Commercial Tax Officer, VI Circle, Hyderabad [1988] 71 STC 45. However, in view of the latest pronouncement of the Supreme Court in the aforesaid case of Indian Cement Ltd. v. State of A.P. [1988] 69 STC 305 (SC); AIR 1988 SC 567, we have no option but to hold that the impugned Notification dated February 13, 1986, is violative of article 304(a) of the Constitution. Having regard to the facts and circumstances of the case, Notification No. II in the aforesaid G.O. Ms. No. 172, Revenue (S) Department, dated February 13, 1986, is quashed. All concerned parties will pay tax at the uniform higher rate. In view of the facts and circumstances of the case and in view of this order, the past transactions will not be affected. The wr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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