Case Note & Summary
These appeals by certificate arose from writ petitions filed under Article 226 of the Constitution before the Andhra Pradesh High Court, where the appellants, millers other than decorticating millers, challenged the validity of Item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957, insofar as it levied purchase tax on groundnuts at the point of purchase by such millers. The High Court dismissed the writ petitions, and the Supreme Court heard the appeals. Groundnuts are declared goods of special importance under Section 14 of the Central Sales Tax Act, 1956, and Section 15(a) of that Act restricts state laws from levying tax on declared goods at more than one stage. Item 6 of Schedule III provided that groundnuts when purchased by a miller other than a decorticating miller in the State were taxable at that point, and in all other cases at the point of purchase by the last dealer who buys in the State. The appellants contended that this provision created a possibility of double taxation because groundnuts purchased by a miller could be taxed once in his hands and again when subsequently sold to a last dealer. The only question of law argued before the Supreme Court was whether any part of Item 6 of Schedule III relating to the point of levy was void for contravening Section 15(a) of the Central Sales Tax Act, 1956. The appellants argued that the same groundnuts would be taxed twice, once at the point of purchase by them as millers and again at the point of purchase by the last dealer. The respondents relied on the earlier decision of this Court in Sri Venkateswara Rice, Ginning & Groundnut Oil Mill Contractors Co. v. State of A.P., A.I.R. 1972 S.C. 51, where it was held that the liability to purchase tax arises immediately upon purchase by a miller and that subsequent dealings do not alter the taxable event. The Court held that the validity of the levy upon a last dealer could be questioned only by one who was being taxed as a last dealer; the appellants were being taxed as millers at the point of their purchase. Each appellant became liable to payment of tax as a purchasing miller, just as a last dealer would be liable on purchases made by him. The Court noted that the miller who purchases groundnuts presumably converts them into other products, and therefore the miller and the last dealer are placed on an equal footing because both are taxed at the point of their respective purchases. The Court found no possibility of double taxation or taxation of the same product at more than one point of purchase, as each taxable transaction is a separate purchase by a different category of dealer. The Court applied the ratio of Sri Venkateswara Rice that the charge becomes effective as soon as the purchase is made. The Court accordingly dismissed the appeals on 1 May 1972, with reasons recorded on 24 July 1972, and awarded costs to the respondents.
Headnote
A) Sales Tax - Purchase Tax on Declared Goods - Single-Stage Levy - Section 15(a), Central Sales Tax Act, 1956; Item 6 of Schedule III, Andhra Pradesh General Sales Tax Act, 1957 - The provision levying purchase tax on groundnuts at the point of purchase by a miller other than a decorticating miller and at the point of purchase by the last dealer in all other cases does not contravene the single-stage restriction because each point applies to different categories of purchasers and does not tax the same purchase twice - Appellants, being millers, are taxed only as purchasing millers and not as last dealers; the validity of the last dealer levy cannot be challenged by them in that capacity - Held that the provision is valid and no double taxation arises (Pages 709-713). B) Sales Tax - Liability of Purchasing Miller - Event of Taxation - Item 6 of Schedule III read with Section 5, Andhra Pradesh General Sales Tax Act, 1957 - The charge to purchase tax is attracted as soon as a miller other than a decorticating miller purchases groundnuts, irrespective of subsequent dealings - The Court applied the decision in Sri Venkateswara Rice, Ginning & Groundnut Oil Mill Contractors Co. v. State of A.P. and held that the miller's subsequent sale of groundnuts to another dealer does not shift the tax point; the miller remains liable at the point of his purchase - Held that each appellant becomes liable as a purchasing miller, placing the miller and last dealer on equal footing (Pages 711-713).
Issue of Consideration
Whether any part of Item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957 relating to the 'point of levy' is void for contravening Section 15(a) of the Central Sales Tax Act, 1956, due to alleged levy of tax at more than one stage on groundnuts.
Final Decision
The Supreme Court dismissed the appeals on 1 May 1972, with reasons recorded on 24 July 1972, and awarded costs to the respondents. The Court held that Item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957 is valid and does not result in double taxation; the appellants were liable as purchasing millers at a single point.
Law Points
- Purchase tax on declared goods cannot be levied at more than one stage under Section 15(a) of Central Sales Tax Act
- 1956
- a miller other than a decorticating miller is liable to purchase tax at the point of purchase
- last dealer and miller are placed on equal footing
- no double taxation arises from Item 6 of Schedule III of Andhra Pradesh General Sales Tax Act
- 1957.
