B. G. Somanna & Sons Vs. State of
Andhra Pradesh & Ors  INSC 154 (24 July 1972)
BEG, M. HAMEEDULLAH BEG, M. HAMEEDULLAH RAY,
CITATION: 1972 AIR 2227 1973 SCR (1) 708
Andhra Pradesh General Sales-tax Act, (6 of
1970) Schedule 3 item 6-Item levying tax on groundnuts when purchased by a
miller other than a decorticating miller in the state at the point of purchase
by such miller and in all other cases at the point of purchase by the last
dealer who buys in the State-Item whether levies tax at two points and is thus
in conflict with Central Sales-tax Act, section 15.
Under s. 15 of the Central Sales-tax Act the
imposition of a tax on the sale or purchase of declared goods is inter alia
subject to the restriction that such tax shall not be levied at more than one
stage. Groundnuts are declared good under s. 14 of the Act. Item 6 of schedule
3 to the Andhra Pradesh General Sales-tax Act (6 of 1957) levies tax on
groundnuts when purchased by a miller other than a decorticating miller in the
State at the point of purchase by such miller, And in all other cases at the
point of purchase by the last dealer who buys in the State. The appellants were
millers other than decorticating millers.
In writ petitions under Article 226 of the
Constitution they challenged the levy of tax at the point of purchase by them
on the ground that item 6 of schedule III was in conflict with section 15 of
the Central Act in as much as tax on groundnut purchased by a non-decorticating
miller and later sold as such to other dealers would be taxed at two points
once in the hands of the said miller, and again, at the point of purchase by
the last dealer. The High Court dismissed the petitions. By certificate appeals
were filed in this Court.
Dismissing the appeals,
HELD : The validity of the levy of tax upon a
purchase by a last dealer could be questioned by one of the appellants only if
he was being taxed as a last dealer and not as a miller. It was apparent that
the appellants were being taxed at the point of purchase by them as millers
Each of the appellants became liable to the
payment of tax as a purchasing miller just as a last dealer would be liable on
the purchases made by him. Hence the last dealer and the miller who purchases
presumably to convert the groundnuts into other products, are placed on an
equal 'footing. It was not shown that there was a possibility of double
taxation or of taxation of the same product at more than one point of purchase.
[711 D] Sri Venkataswara Rice, Ginning &
Groundnut Oil Mill Contractors Co. etc. v. The State of A.P. & Ors., A.I.R.
1972 S.C. 51, applied to.
[On the facts of the case the Court did not
find it necessary to consider the position of a miller who purchases some
grounds( for milling and the rest for sale.]
CIVIL APPELLATE JURISDICTION: C.A. Nos.
323-332, 1312 & 1174 of 1969.
709 Appeals by certificate from the judgment
and a decree dated September 27, 1968 of the Andhra Pradesh High Court of
Judicature at Hyderabad in Writ Petitions Nos. 2956, 1798, 1931, 2313, 3372,
3740, 3964, 3956 and 4088 of 1968 and Civil Appeal No. 1518 of 1970.
On appeal by certificate from the judgment
and order dated March 31, 1970, of the Andhra Pradesh High Court in Writ
Petition No. 3501 of 1968 and Appeal by certificate against the judgment and
order dated August 25, 1970 of the Andhra Pradesh High Court of Judicature at
Hyderabad in Writ Petition No. 4034 of 1970.
B. V. Subramanyam and G. Narayana Rao for the
appellants (in CA Nos. 323/69 and 1312/69).
G. Narayana Rao, for the appellants (in all
P. Basi Reddy and B. Parthasarathy, for the
respondents (in C. As Nos. 323, 332, 1312, 1174/69.) P. Basi Reddy and A. V. V.
Nair, for the respondent, (In C.A. No. 1518/70).
P. Basi Reddy and P. Parameshwara Rao, for
the respondent (In C.A. Nos. 2117/70).
The Judgment of the Court was delivered Beg,
J. In these appeals by Certificate only one question of law has been argued. It
may be formulated as follows :
"Is any part of the provision of Item 6
of Schedule III of the Andhra Pradesh General Sales Tax Act (6 of 1957)
(hereinafter referred to as 'the Act') relating to the 'point of levy' void for
contravening Section 15 (a) of the Central Sales Tax Act, 1956 ?" Each of
the appellants before us is a miller and one of a large number of such millers
who had applied to the High Court of Andhra Pradesh, under Article 226 of the
Constitution, for a Writ of Prohibition against proceedings for assessment of
Sales-Tax taken on the strength of an allegedly void provision of law. The
validity of item 6 of Schedule III of the Act was challenged on a number of
grounds in the High Court which need not be mentioned here as the only ground
which has been argued before us is covered by the question formulated above.
It may be mentioned that none of the
appellants set out facts showing the nature of the demand in the proceedings
under the Act against them, or, the extent, if any, to which each petitioner,
who is a miller, registered also as a dealer under the Act as well 710 as under
the Central Act, sells groundnuts, or, whether groundnuts were purchased
specifically only for purposes of crushing them and converting them into oil or
into any other product or for the purpose of sale as well. They have merely
questioned the validity of item 6 of Schedule III of the Act by reason of
alleged conflict with Section 15 of the Central Act so that all we need do is
to set out the two provisions and give our reasons for our conclusions. We have
already dismissed the appeals after hearing them. We now proceed to record our
Item 6 of Schedule III reads as follows
Description of goods-Point of levy Rate of tax Groundnuts 3 naya paise in the
rupee When purchased by a miller other than a decorticating miller in the State
at the point of purchase by such miller, and, in all other cases at the point
of purchase by the last.
dealer who buys in the State".
Groundnuts have been declared as goods of
special importance in inter-state trade or commerce under Section 14 of the
Central Act. Section 15 of the Central Act lays down:
"15. Every sales tax law of a State
shall, in so far as it imposes or authorises the imposition of a tax on the
sale or purchase of declared goods, be subject to the following restrictions
and conditions, namely :
(a) the tax payable under that law in respect
of any sale or purchase of such goods inside the State shall not exceed three
per cent of the sale or purchase Price thereof, and such tax shall not be
levied at more than one stage;
(b) where a tax has been levied under that
law in respect of the sale or purchase inside the State of any declared goods
and such goods are sold in the course of inter-State trade or commerce, the tax
so levied shall be refunded to such person in such manner and subject to such
conditions as may be provided in any law in force in that State".
711 It may be mentioned that, in so far as
the rate of tax specified in item 6, Schedule III of the Act is concerned, the
Andhra Pradesh High Court had itself given some relief to the appellants, on
the ground that the definition of turn-over under the Act could include what is
more than the sale price as defined by the Central Act, so that the rate may
exceed the limit imposed by Section 15(a) of the Central Act. We are,
therefore, no longer concerned with the question of rate but only with that
part of item 6, Schedule III, which makes millers other than decorticating
millers liable to pay the tax when they purchase groundnuts.
It is contended that the groundnuts purchased
by the appellants would be taxed at the point of purchase by them and also
again in the hands of "last dealers" to whom they may sell. The short
answer to this argument could be that the validity of the levy of a tax upon a
purchase by a last dealer could be questioned by one of the appellants only if
he was being taxed as a last dealer and not as a miller. It is apparent that
they are, being taxed at the point of purchase by them as millers only. When
they purchase groundnuts as millers they do so presumably in order to convert
the groundnuts into another product altogether, and, they would, therefore,
presumably be last purchasers of ground-nuts as "groundnuts". They
may be selling their products in forms other than groundnuts. The appellants
are, however, not questioning the validity of a tax upon any sales of these
other products. They are questioning the validity of the tax on ground-nuts
purchased by them. They submit that only one point of taxation can be provided
for these sales by a State law. We will, therefore, consider this ground.
It is clear to us that, in such cases, the
liability to pay tax, which is a tax on purchase, falls only at one point.
In fact, the question raised before us seems
to us to be covered by a decision of this Court on item 6 of Schedule III in
Sri Venkateswara Rice, Ginning & Groundnut Oil Mill Contractors Co. etc. v.
The, State of A. P. & Ors. (1) where this Court said at page 5 3 :
"None of the assessees before us is a
decorticating miller. Hence we have to see whether the purchases of' groundnut
made by, them did not become taxable as soon as they made those purchases. it
is now well settled that even under the Sales Tax laws, the charge in respect
of a sale or purchase becomes effective as soon as the sale in the case of
purchase tax is made, though the liability of the dealer can be computed only
at the end of the year. The incurring of the charge is one thing and its
computation is a totally different (1) A.I.R. 1972 S.C.51.
712 thing.. Hence the turnover relating to
the purchases with which we are concerned in these appeals became charged with
the liability to pay tax as soon as those purchases were made by the
assessee-millers. To restate the position, whenever a miller purchases groundnut,
the turnover relating to that purchase becomes exgible to tax subject to such
exemptions as may be given under the Act.
This means that as soon as a first miller
purchases groundnut, the turnover relating to that purchase, the question of
exemption apart, becomes liable to tax. This is also the view taken by the High
It may be mentioned here that, in the above
mentioned case, the assessee had already been taxed and one of the arguments
advanced there was that the part of the taxed turnover which was sold by the
assessee miller to other millers should be excluded because it was not dealt
with by him as a miller but as a dealer who was not the last purchaser. The
Court said "The next argument advanced on behalf of the assessees is that
in the case of some of the assessees a part of the groundnut purchased had,
been sold to other millers; hence in those cases, the assessees must be taxed
only in respect of that part of the turnover which relates to groundnut which
they had crushed for extracting oil and in the case of remaining part, it is
the last dealer who purchased the same should be taxed. This contention again
is unacceptable. As mentioned earlier the event which attracted tax is the act
of the miller purchasing groundnut and not his act of crushing the groundnut
purchased or dealing with that groundnut in any other manner. We have earlier
mentioned that very act of purchase by a miller attracts the liability to pay
tax under Section 5 read with Schedule 3 item 6.
His subsequent dealings in those goods become
irrelevant. In none of the cases before us it was shown that any of. the
assessees had purchased groundnut with a view to sell them.
Hence we need not go into the question as to
what would be the position in law where a miller purchases some ground-nut for
milling and the rest for sale'.
In the cases before us also we need not
consider the position of a miller who purchases some groundnuts for milling and
the rest for sale. It is clear that each of the appellants becomes liable to
the payment of tax as a purchasing miller just as a last dealer would be liable
on the purchases made by him.
713 Hence, the last dealer and the miller,
who purchases presumably to convert the groundnuts into other products, are
placed on an equal footing. We were not satisfied that there is a possibility
of double taxation or of taxation of the same product at more than one point of
These appeals were, therefore, dismissed by
us on 1-5-1972.
The respondents are entitled to their costs
in this Court.
G.C. Appeals dismissed.