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PETITIONER: B.   G.SOMANNA & SONS ETC.

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH & ORS.

DATE OF JUDGMENT24/07/1972

BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH RAY, A.N. DUA, I.D. PALEKAR, D.G.

CITATION:  1972 AIR 2227            1973 SCR  (1) 708

ACT: 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.

HEADNOTE: 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  only. 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

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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.]

JUDGMENT: 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 the appeals). 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 aganist 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

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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 reasons. 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  appel- lants  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,

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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  ground-               nut,  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 Court". 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

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             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  pur-               chased  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 purchase. 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. -L152 Sup CI/ 73 714