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TMI Blog2006 (3) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... gher rate of taxation include tea and coffee. Under this new dispensation, all the dealers who have a turnover limit up to Rs. 40 lakhs have to pay one per cent turnover tax on quarterly basis, while dealers with more than Rs. 40 lakhs turnover are to be registered as VAT dealers. It is submitted that an Empowered Committee of State Finance Ministers was set up in the year 2000 under the Chairmanship of West Bengal Finance Minister Dr. Asim Dasgupta and it held 89 meetings for arriving at consensus and some States have accepted the recommendations of the Empowered Committee. The petitioners, on November 18, 2004, submitted a representation by way of memorandum to the Finance Minister, Union of India, requesting that the VAT on tea at 12.5 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent under sub-section (3) of section 4 of the A.P. Value Added Tax Act, 2005 as illegal, arbitrary and in violation of articles 14 and 19(1)(g) of the Constitution of India. The petitioners also asked this court to give a direction that the tea should be placed in Schedule IV and charged tax at four per cent. The second respondent in his counter-affidavit contends that it is the wisdom of the Legislature that has placed different commodities under different Schedules. There are two Schedules to the VAT; items falling in one of the Schedules carry a tax of four per cent and items falling in another Schedule attract 12.5 per cent tax and this is not within the purview of the court to fix a rate of tax for a particular commodity. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. He has also contended that the empowered committee had recommended four per cent, but the State had imposed tax at 12.5 per cent. In our view, this would hardly make a difference because the committee does not have any legislative power and its recommendations cannot govern the Legislature. However, the learned Standing Counsel for Commercial Taxes appearing for the respondents submits that this is not correct, as the empowered committee has recommended tax at 12.5 per cent. He has drawn our attention to a letter which reads as under: Some States have raised a question about the rate of VAT on a few commodities like tea. You would recall that the EC had decided that items that are to be taxed at four per cent on the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The argument made before the court was that it would not be permissible to impose two different rates of tax in respect of sale of the same article, one rate when the article is sold separately and a different rate when there is deemed sale in connection with the execution of a works contract. This argument was countered by submitting that it was permissible for the State to impose a particular rate of tax on all goods involved in the execution of a works contract which may be different from the rates of tax applicable to those goods when sold separately. The Supreme Court held that in the field of taxation the decisions of this court have permitted the Legislature to exercise an extremely wide discretion in classifying items for tax pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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