Tirupathi Roller Flour Mill Pvt. Ltd. Vs. Government of Andhra Pradesh and anr. - Court Judgment

Excerpt:
sales tax - different tax rates - articles 14 and 301 to 304 and entry 60 (a) of first schedule to constitution of india and andhra pradesh general sales tax act, 1957 - higher tax rate on sale of wheat products made from such wheat that has not suffered tax under a.p. act - constitutional validity challenged - petitioner imported wheat from other states where it had suffered tax - imposing different taxes on basis whether raw material has suffered tax or not is offensive to petitioner's right to freedom of trade and commerce - held, such provision is illegal, ultra vires and violative of articles 14 and 301 to 304 of constitution of india. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. the school tribunal constituted under section 8 of the maharashtra act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. teacher employed in the school run by cantonment board being covered under rule 2 (f) of the cantonment fund servants rules, 1937 can file appeal under rules 13, 14 and 15 to authorities provided therein against any order imposing any penalties etc. [deolali cantonment board v usha devidas dongre, 1993 mah. lj 74; 1993 lab ic 1858 overruled]. -- maharashtra employees of private schools (conditions of service) regulations act, 1978 [act no. 3/1978]. sections 9 & 2(21): jurisdiction of school tribunal whether a school run by cantonment board is not a recognised school within the meaning of section 2(21)? - held, the act is enacted to regulate recruitments and conditions of employees in certain private schools and provisions of the act shall apply to all private schools in the state whether receiving any grant-in-aid from the state government or not. private school is defined in section 2(2) of the act as a recognised school established or administered by a management other than the government or a local authority. recognised means recognised by director, the divisional board or state board. thus as far as the first part of the definition of being recognised is concerned, it includes, as stated above, four directors, the divisional boards and four state boards. the second part of this definition which comes after the comma refers to any officer authorised by director or by any of such boards. the question to be examined is whether school run by the cantonment board could be said to be one run by any such boards. a private school has to be recognised by the state or the divisional board or by any officer authorised in that behalf. when this phrase namely: recognised by any officer authorised by the director or by any such boards, is included in the latter part of section 2(21), such boards will be of the level of the state board or the divisional board. the boards referred to in the definition of the word recognised means the boards which deal with education at levels other than that of the level at which primary schools are operating. thus for being recognised, the school has to be recognised by the board and therefore, it has to be operating at a higher level i.e., secondary level. section 2(21) of the act defines the term recognised. the last clause therein is by any of such boards. the term such is defined in oxford dictionary as of the kind or degree indicated or implied by the context. therefore, the term such board will have to mean a divisional board of or the level of divisional board or the state board. the divisional board holds the examination and issues certificates after 10th and 12th standard examinations. the state board advises the state government on policy matters, ensures uniform pattern of secondary and higher secondary education, lays down principles for determining syllabi, prescribes text books, etc. the cantonment board does not discharge any of such duties nor is there any other board or body under the cantonments act discharging any such duties. the duties of the cantonment board are laid down in section 62 and amongst others, clause (xiv) lays down the duties of establishing and maintaining or assisting primary schools only. the cantonment board is not required to enter into the area of secondary education. therefore, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. that being the position, it is not possible to accept it to be a recognised school for being a private school under the act. for the reasons state above, the school tribunal constituted under section 8 of the act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. [deolali cantonment board v usha devidas dongre, 1993 mah.lj 74; 1993 lab ic 1858 overruled]. - 2. the petitioner manufactures wheat products like atta, ravva and maida from wheat, which is the raw material. since wheat is not grown in andhra pradesh, the petitioner purchases wheat from food corporation of india or from wheat growing states like punjab, maharashtra, madhya pradesh, etc. in the said show cause notice, the second respondent proposed to levy the basic rate of tax at 2 per cent on the wheat products of atta, ravva and maida manufactured during the year out of the imported wheat purchased from outside the state plus usual incidental taxes like additional tax/turnover tax and surcharge. 6. the learned counsel appearing for the petitioner, placing strong reliance on the judgment of the apex court in anand commercial agencies v.orders.r. nayak, j.1. the petitioner is running a wheat roller flour mill and is an assessee on the rolls of the commercial tax officer, mehdipatnam circle, hyderabad for the purpose of assessment under the andhra pradesh general sales tax act, 1957 (hereinafter referred to as 'the act') and also the central sales tax act.2. the petitioner manufactures wheat products like atta, ravva and maida from wheat, which is the raw material. since wheat is not grown in andhra pradesh, the petitioner purchases wheat from food corporation of india or from wheat growing states like punjab, maharashtra, madhya pradesh, etc. wheat is one of the declared goods under the act. for the assessment year 1993-94, the assessing officer, namely, the commercial tax officer, second respondent herein issued a show cause notice in g.i. no. 27043/93-94, dated february 28, 1995 to the petitioner herein proposing to complete the assessment as under :gross turnover ... rs. 7,92,09,856.19exempted turnover ... rs. 2,52,74,529.66net turnover ... rs. 5,39,35,327.53at different rates.in the said show cause notice, the second respondent proposed to levy the basic rate of tax at 2 per cent on the wheat products of atta, ravva and maida manufactured during the year out of the imported wheat purchased from outside the state plus usual incidental taxes like additional tax/turnover tax and surcharge. the petitioner filed objections to the said show cause notice on march 22, 1995 stating that there cannot be two rates of tax on the same products sold differentiating the products basing on the raw material used, namely, tax suffered raw material and raw material which has not suffered tax. it is contended in reply that the levy of basic tax at 2 per cent on the locally purchased wheat as against 1 per cent tax on the products manufactured from imported wheat is contrary to law and discriminatory.3. the plea of the petitioner was rejected by the assessing officer and he taxed differently in terms of the proposal made in the show cause notice and completed the assessment for the assessment year 1993-94. at that stage the writ petition was instituted in this court on june 12, 1995. it is stated that subsequently assessment for the assessment year 1994-95 was also completed by the assessing officer.4. in this writ petition, the petitioner has sought for the following relief :'for the reasons mentioned in the accompanying affidavit, the petitioner herein prays that this honourable court may be pleased to issue a writ or an order or a direction more particularly one in the nature of writ of mandamus declaring the different rates of tax prescribed under sl. nos. 60(a) and (b) of the first schedule to the apgst act for the assessment years 1993-94 and 1994-95 in respect of atta, ravva and maida as discriminative and violative of article 404(a) of the constitution of india and consequently direct the respondents herein to charge tax at 1 per cent uniformly on the sales of atta, ravva and maida effected by the petitioner and refund the excess amount of tax collected from the petitioner for the assessment years 1993-94 and 1994-95 and pass such other order or orders as are deemed fit and proper in the circumstances of the case, as otherwise the petitioner would be put to serious loss and irreparable damage.'5. though the respondents are served with notice and they are represented by the learned special government pleader, they have not filed any counter-affidavit.6. the learned counsel appearing for the petitioner, placing strong reliance on the judgment of the apex court in anand commercial agencies v. commercial tax officer, hyderabad [1997] 107 stc 586 ; air 1998 sc 113 and also a judgment of the division bench of this court in crane betel nut powder works v. state of andhra pradesh [2000] 117 stc 200 ; (1999) 29 apstj 316 submits that the entry 60(a) of the first schedule to the apgst act providing for levy of tax at 2 per cent is ex facie arbitrary, discriminatory and violative of article 14 of the constitution of india. elaborating the contention, the learned counsel would maintain that there cannot be two rates of tax in respect of the same products sold, making an artificial classification between the products basing on the raw material, namely, in the present case, wheat, which has suffered tax and the same raw material, which has not suffered tax.7. the learned special government pleader for taxes too quite fairly brought to our notice another recent judgment of a three-judge bench of the supreme court in i.t.c. agro tech ltd. v. commercial tax officer : 2001(132)elt269(sc) , where a similar opinion to the decision taken by the supreme court in anand commercial agencies v. commercial tax officer : air1997sc4067 , has been taken. in anand commercial agencies v. commercial tax officer [1997] 107 stc 586 ; air 1998 sc 113 the appellant, namely, anand commercial agencies was a partnership firm. the dispute brought before the apex court arose in the course of assessment for the assessment year 1977-78. under entry 24(b) of the first schedule to the act, tax is payable on groundnut oil at the rate of 2 1/2 paise per rupee of the sale price. under entry 24(a), tax is payable on groundnut oil or refined oil obtained from groundnut, which has not borne any tax under the a.p. act at the rate of 61/2 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. it was contended by the appellant-assessee that the oil had been extracted out of groundnuts which had borne tax under the karnataka sales tax act and that 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 was rejected by the sales tax officer and also by the assistant commissioner (c.t.), appeals and the high court in continued proceedings. the supreme court, while reversing the judgment of this court, has opined that the classification made under entry 24(a) and (b) on the basis, whether the raw material has suffered tax or not suffered tax, is discriminatory, offending the assessee's right of freedom of trade and commerce, guaranteed under articles 301 - 304 of the constitution of india. so opining the apex court held that the groundnut oil imported by the appellant from the state of karnataka for sale in andhra pradesh cannot be taxed at a rate higher than the rate prescribed in clause (b) of entry 24 of the first schedule to the andhra pradesh act.8. the facts of this case are also specifically identical to the facts in anand commercial agencies v. commercial tax officer, hyderabad : air1997sc4067 . in addition a division bench of this court in crane betel nut powder works v. state of andhra pradesh [2000] 117 stc 200 ; (1999) 29 apstj 316 basing on the judgment of the supreme court in anand commercial agencies v. commercial tax officer, hyderabad [1997] 107 stc 686 ; air 1998 sc 113 held that entry 158(a) of the first schedule to the act, which seeks to levy higher rate of tax on betel nut powder, imported from other states or manufactured from out of arecanut, which has not suffered tax in the state is violative of articles 14 and 301 - 304 of the constitution and is therefore declared as illegal and ultra vires of the constitution of india.further, in a recent judgment in i.t.c. agro tech ltd. v. commercial tax officer [2001] 124 stc 1 ; 2001 (4) dt 159 (sc) a three-judge bench of the apex court reiterated the principle stated by it in anand commercial agencies v. commercial tax officer, hyderabad [1997] 107 stc 586 ; air 1998 sc 113.9. in that view of the matter and for the foregoing reasons, we declare that entry 60(a). of the first schedule to the apgst act in so far as it imposes higher rate of tax on the atta, ravva and maida obtained from wheat, which has not suffered tax under the apgst act, while imposing a lower rate of tax on the same products, which has not suffered tax under entry 60(b), as illegal, ultra vires and violative of articles 14 and 301 - 304 of the constitution of india. consequently a direction shall issue to the respondents to levy tax on the sales of atta, ravva and maida manufactured by the petitioner, as required under clause (b) of entry 60 of the first schedule to the act by passing reassessment orders for the assessment years 1993-94 and 1994-95. the writ petition is accordingly disposed of.

Judgment:
ORDER

S.R. NAYAK, J.

1. The petitioner is running a wheat roller flour mill and is an assessee on the rolls of the Commercial Tax Officer, Mehdipatnam Circle, Hyderabad for the purpose of assessment under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as 'the Act') and also the Central Sales Tax Act.

2. The petitioner manufactures wheat products like atta, ravva and maida from wheat, which is the raw material. Since wheat is not grown in Andhra Pradesh, the petitioner purchases wheat from Food Corporation of India or from wheat growing States like Punjab, Maharashtra, Madhya Pradesh, etc. Wheat is one of the declared goods under the Act. For the assessment year 1993-94, the assessing officer, namely, the Commercial Tax Officer, second respondent herein issued a show cause notice in G.I. No. 27043/93-94, dated February 28, 1995 to the petitioner herein proposing to complete the assessment as under :

Gross turnover ... Rs. 7,92,09,856.19Exempted turnover ... Rs. 2,52,74,529.66Net turnover ... Rs. 5,39,35,327.53At different rates.

In the said show cause notice, the second respondent proposed to levy the basic rate of tax at 2 per cent on the wheat products of atta, ravva and maida manufactured during the year out of the imported wheat purchased from outside the State plus usual incidental taxes like additional tax/turnover tax and surcharge. The petitioner filed objections to the said show cause notice on March 22, 1995 stating that there cannot be two rates of tax on the same products sold differentiating the products basing on the raw material used, namely, tax suffered raw material and raw material which has not suffered tax. It is contended in reply that the levy of basic tax at 2 per cent on the locally purchased wheat as against 1 per cent tax on the products manufactured from imported wheat is contrary to law and discriminatory.

3. The plea of the petitioner was rejected by the assessing officer and he taxed differently in terms of the proposal made in the show cause notice and completed the assessment for the assessment year 1993-94. At that stage the writ petition was instituted in this Court on June 12, 1995. It is stated that subsequently assessment for the assessment year 1994-95 was also completed by the assessing officer.

4. In this writ petition, the petitioner has sought for the following relief :

'For the reasons mentioned in the accompanying affidavit, the petitioner herein prays that this honourable court may be pleased to issue a writ or an order or a direction more particularly one in the nature of writ of mandamus declaring the different rates of tax prescribed under Sl. Nos. 60(a) and (b) of the First Schedule to the APGST Act for the assessment years 1993-94 and 1994-95 in respect of atta, ravva and maida as discriminative and violative of Article 404(a) of the Constitution of India and consequently direct the respondents herein to charge tax at 1 per cent uniformly on the sales of atta, ravva and maida effected by the petitioner and refund the excess amount of tax collected from the petitioner for the assessment years 1993-94 and 1994-95 and pass such other order or orders as are deemed fit and proper in the circumstances of the case, as otherwise the petitioner would be put to serious loss and irreparable damage.'

5. Though the respondents are served with notice and they are represented by the learned Special Government Pleader, they have not filed any counter-affidavit.

6. The learned counsel appearing for the petitioner, placing strong reliance on the judgment of the apex Court in Anand Commercial Agencies v. Commercial Tax Officer, Hyderabad [1997] 107 STC 586 ; AIR 1998 SC 113 and also a judgment of the division Bench of this Court in Crane Betel Nut Powder Works v. State of Andhra Pradesh [2000] 117 STC 200 ; (1999) 29 APSTJ 316 submits that the entry 60(a) of the First Schedule to the APGST Act providing for levy of tax at 2 per cent is ex facie arbitrary, discriminatory and violative of Article 14 of the Constitution of India. Elaborating the contention, the learned counsel would maintain that there cannot be two rates of tax in respect of the same products sold, making an artificial classification between the products basing on the raw material, namely, in the present case, wheat, which has suffered tax and the same raw material, which has not suffered tax.

7. The learned Special Government Pleader for Taxes too quite fairly brought to our notice another recent judgment of a three-Judge Bench of the Supreme Court in I.T.C. Agro Tech Ltd. v. Commercial Tax Officer : 2001(132)ELT269(SC) , where a similar opinion to the decision taken by the Supreme Court in Anand Commercial Agencies v. Commercial Tax Officer : AIR1997SC4067 , has been taken. In Anand Commercial Agencies v. Commercial Tax Officer [1997] 107 STC 586 ; AIR 1998 SC 113 the appellant, namely, Anand Commercial Agencies was a partnership firm. The dispute brought before the apex court arose in the course of assessment for the assessment year 1977-78. Under entry 24(b) of the First Schedule to the Act, tax is payable on groundnut oil at the rate of 2 1/2 paise per rupee of the sale price. Under entry 24(a), tax is payable on groundnut oil or refined oil obtained from groundnut, which has not borne any tax under the A.P. Act at the rate of 61/2 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. It was contended by the appellant-assessee that the oil had been extracted out of groundnuts which had borne tax under the Karnataka Sales Tax Act and that 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 was rejected by the Sales Tax Officer and also by the Assistant Commissioner (C.T.), Appeals and the High Court in continued proceedings. The Supreme Court, while reversing the judgment of this Court, has opined that the classification made under entry 24(a) and (b) on the basis, whether the raw material has suffered tax or not suffered tax, is discriminatory, offending the assessee's right of freedom of trade and commerce, guaranteed under Articles 301 - 304 of the Constitution of India. So opining the apex Court held that the groundnut oil imported by the appellant from the State of Karnataka for sale in Andhra Pradesh cannot be taxed at a rate higher than the rate prescribed in Clause (b) of entry 24 of the First Schedule to the Andhra Pradesh Act.

8. The facts of this case are also specifically identical to the facts in Anand Commercial Agencies v. Commercial Tax Officer, Hyderabad : AIR1997SC4067 . In addition a division Bench of this Court in Crane Betel Nut Powder Works v. State of Andhra Pradesh [2000] 117 STC 200 ; (1999) 29 APSTJ 316 basing on the judgment of the Supreme Court in Anand Commercial Agencies v. Commercial Tax Officer, Hyderabad [1997] 107 STC 686 ; AIR 1998 SC 113 held that entry 158(a) of the First Schedule to the Act, which seeks to levy higher rate of tax on betel nut powder, imported from other States or manufactured from out of arecanut, which has not suffered tax in the State is violative of Articles 14 and 301 - 304 of the Constitution and is therefore declared as illegal and ultra vires of the Constitution of India.

Further, in a recent judgment in I.T.C. Agro Tech Ltd. v. Commercial Tax Officer [2001] 124 STC 1 ; 2001 (4) DT 159 (SC) a three-Judge Bench of the apex Court reiterated the principle stated by it in Anand Commercial Agencies v. Commercial Tax Officer, Hyderabad [1997] 107 STC 586 ; AIR 1998 SC 113.

9. In that view of the matter and for the foregoing reasons, we declare that entry 60(a). of the First Schedule to the APGST Act in so far as it imposes higher rate of tax on the atta, ravva and maida obtained from wheat, which has not suffered tax under the APGST Act, while imposing a lower rate of tax on the same products, which has not suffered tax under entry 60(b), as illegal, ultra vires and violative of Articles 14 and 301 - 304 of the Constitution of India. Consequently a direction shall issue to the respondents to levy tax on the sales of atta, ravva and maida manufactured by the petitioner, as required under Clause (b) of entry 60 of the First Schedule to the Act by passing reassessment orders for the assessment years 1993-94 and 1994-95. The writ petition is accordingly disposed of.