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PETITIONER: SRI VENKATESWARA RICE, GINNING & GROUNDNUTOIL MILL CONTRACTO

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH & ORS.

DATE OF JUDGMENT23/08/1971

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N.

CITATION:  1972 AIR   51            1972 SCR  (1) 346  1971 SCC  (2) 630  CITATOR INFO :  F          1972 SC2227  (4)

ACT: Andhra Pradesh General Sales Tax Act, 1956, Sch.  III,  item 6,  and Central Sales Tax Act (74 of 1956), ss. 14  and  15- Purchase of groundnut by millers-Used for extracting oil and re-sale-Liability to purchase tax. Practice and Procedure-Division Bench of High Court ignoring earlier decision of another Division Bench-Propriety.

HEADNOTE: Under  ss.  14 and 15 of the Central Sales  Tax  Act,  1956, groundnut  is one of the declared goods’ and a State is  not empowered  to  levy  purchase tax of more  than  3%  on  the turnover, and further the tax cannot be levied at more  than one stage.  Under s.. 6 of the Andhra Pradesh General  Sales Tax  Act, 1956, the sales or purchases of ’declared  good,&’ by  a dealer shall be liable to tax at the rate, and at  the point  of sale or purchase specified in the III Schedule  to the  Act.   Item 6 of the III Schedule provides,  that  with respect  to groundnut, the point of levy is, 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 assesseeswere  millers but not  decorticating  millers and they were registered dealersunder the Act.  Groundnut was purchased by them not for sale, but waseither used  by them  entirely for extracting oil or partly  for  extracting oil and the rest sold to others. On  the  question whether the event that gave  rise  to  tax liability was (a) the purchase by the assessees, or (b)  the crushing of the groundnut purchased by the assessees, or (c) the  last  purchase by a purchaser in the  State,  the  High Court,  in  revision, held that the purchase tax  should  be levied when the assessees purchased the groundnut. Dismissing the appeals to this Court, HELD : (1) 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 sales-tax and purchase in the case of  purchase- tax is made, though, the liability of the dealer is computed only  at the end of the year., Hence, the turnover  relating

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to  the purchases, in the present case, became charged  with the  liability  to pay tax as soon as those  purchases  were made  by the assesseemillers.  That is to say, as soon as  a first  miller purchased groundnut, the turnover relating  to that purchase-any question of exemption apart became  liable to tax. [348 H; 349 A-C] (2)This interpretation would not make subsequent purchases by other millersof  the same groundnut eligible to  tax, because, in view of ss. 14 and 15of the General Sales  Tax Act  and s. 6 of Andhra Pradesh Act, purchase  of  groundnut can be taxed only at one stage.  Once a particular  quantity of groundnut has beer subjected to tax the State’s power  in respect of those goods is exhausted. [349 D-E]  3 4 7 (3)The  language of item 6 of the III Schedule shows  that it is only the first purchase that becomes exigible to tax., Therefore,  there  was no need, for the Legislature  to  say ’when purchased by the first miller’ and the  interpretation does not involve the adding of any word into that item. [349 E-F] (4)The  event which attracted the tax in the present  case is the purchase of groundnut by an assessee and not his  act of  crushing  the groundnut purchased or  dealing  with  the groundnut  in  any  other manner,  because,  his  subsequent dealings in those goods is irrelevant.  Hence, it could  not be  said that the assessees should be taxed only in  respect of  that  part of the turnover which  related  to  groundnut crushed  for  extracting oil; and that with respect  to  the remaining part it was the last dealer who purchased it, that should be taxed. [349 G-H] (5)A Division Bench of a High Court is bound by an earlier decision of a co-ordinate Bench of the same High Court.   If the  Judges  felt  that  the  earlier  decision  should   be reconsidered  they  should have referred the question  to  a larger  Bench and should not have ignored the earlier  deci- sion. [350 C-D] M.   Madar Khan & Co. v. Assistant Commissioner  (Commercial Taxes) Anantpur, 27 S.T.C. 18, overruled.

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  1809  to 1812 of 1968. Appeals from the judgment and order dated April 20, 1967 of  the Andhra Pradesh High Court in T.R.C. Nos. 48, 43,  49 and 74 of 1966. M.   C. Chagla, C. A. Kanyaka Prasad, R. Gopalakrishnan and D.   P., Mahanty, for the appellants (in all the appeals). P.Ram  Reddy and G. S. Rama Rao, for the respondents  (in all the appeals). The Judgment of the Court was delivered by Hegde, J. In these.appeals by certificate a common  question of   law  arises  for  decision  viz.,  on  the  facts   and circumstances  of, these cases what is the point of levy  of purchase tax in respect of certain transactions relating  to purchase  of  ,  ground  nut  or  groundnut  kernel  by  the assessees-appellants under the Andhra Pradesh General  Sales Tax Act, 1956 in brief ’the Act’) ? The  Commercial Tax Officer came to the -conclusion  that  a critical event took place when the assessees. purchased  the groundnut with which we are concerned in these appeals.   In appeal  the Assistant Commissioner upheld the order  of  the Commercial  Tax  Officer.   On  a  further  appeal  by   the assessees, the Sales Tax Appellate Tribunal disagreeing with

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the  conclusion reached by the.  Commercial Tax  Officer  as well  as the Assistant Commissioner came to  the  conclusion that the turnovers relating to the purchases of groundnut in question  became exigible to tax either when  the  groundnut purchased was crushed by the millers or when the 3 48 same  was  purchased by the last purchasers.  But  when  the matter was taken up in revision to the High Court, the  High Court reversed the decision of the Tribunal and restored the order of the Commercial Tax Officer. In all these appeals, the assessees are admittedly  millers. They  are registered dealers under the Act.   The  groundnut purchased  by  them  was either entirely used  by  them  for extracting oil or partly used for extracting oil and  partly sold  to  others.  The levy with which we are  concerned  in these  appeals in purchase tax.  The question for  decision, as  mentioned  earlier, is which were the events  that  gave rise to tax liability-first purchase’, the crushing ,of  the groundnut purchased or the ’last purchase’ ? The Ground is one of the "declared goods" (to be of  special importance  in inter-state trade or commerce under S. 14  of the Central Sales Tax Act, 1956, and therefore in view of S. 15(a)  of  that  Act, the State is  not  empowered  to  levy purchase  tax of more than three percent on the turnover  in respect  of  those purchases and further the tax  cannot  be levied at more than one stage.  Herein we are not  concerned with inter-state sales or purchases. Now turning to the Act, S. 2(f) defines "declared goods"  as meaning goods declared under S. 14 of the Central Sales  Tax Act,  1956  (Central  Act  74 of  1956)  to  be  of  special importance in inter-state trade or commerce.  In  compliance with the mandate of ss.  14 and 15 of the Central Sales  Tax Act, 1956.  Section 6 of the      Act     provides      that notwithstanding anything contained in S.     5(the  charging section),  the  sales or purchases of declared  goods  by  a dealer  shall be liable to tax at the rate, and only at  the point  of  sale or purchase specified against  each  in  the Third  Schedule on his turnover of such sales  or  purchases for each year irrespective of the quantum of his turnover in such  goods;  and  the  tax  shall  beassessed,  levied  and collected  in such manner as may be prescribed.  Here  again we  need  not refer to that part of S. 6  which  deals  with inter-state  trade.  The only other provision which we  have to  notice is item 6 of the Third Schedule which deals  with groundnut.   ’Me  point of levy in respect of that  item  is 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 rate of tax is 2 paise  in  the rupee. 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  sales tax and purchase in the case  349 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  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

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restate the position, whenever a miller purchases groundnut, the  turnover relating to that purchase becomes exigible  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  was  urged on behalf of the assessees that if  we  place that  interpretation  then even the  turnovers  relating  to subsequent purchases of the same groundnut made by the other millers  would become exigible to tax despite the fact  that only a single point purchase tax is leviable under the  Act. It was further urged that we should not read into item 6  of the Third Schedule the word "first" before the word "Miller" under column 2 thereof.  We see no merit      in       these contentions.  Quite clearly in view of s. 14 and s.    15 of the Central Sales Tax Act and s. 6 of the Act, purchase of   groun dnut can be taxed only at one stage.  Once a particular  quantity of  groundnut  has  been subjected to payment  of  tax,  the State’s  power  to  tax  in  respect  of  those  goods  gets exhausted  and any further dealing in those goods cannot  be brought  to tax.  This is clear from the scheme of the  Act. There was no need for the legislature to say "when purchased by  first  miller"  in  column 2 of  item  6  of  the  Third Schedule,  because from the language employ Ada therein,  it is clear that the first purchase becomes eligible to tax and in view of s. 6 of the Act, the subsequent purchases of  the same  goods cannot be subjected to tax.  Therefore there  is no question of adding- any word into that item, as contended by Mr. M. C. Chagla on behalf of the assessees. 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  the  very  act of purchase by a  miller  attracts  the liability to pay tax under s. 5 read with Schedule 3 item 6. His subsequent dealings in those 4-Ll340 SupCI/71 350 goods becomes 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 groundnut for milling and the rest for sale. Our  approach to the question before us is similar  to  that adopted by the High Court in the decision under appeal.   We are  in  entire  agreement with the reasoning  of  the  High Court.  But our attention was invited to a later decision of the  same  High Court in M. Madar Khan &  Co.  v.  Assistant Commissioner  (Commercial Taxes) Anantpur and ors.(1)  which took  a  view contrary to that taken in the  decision  under appeal.  It is strange that a co-ordinate Bench of the  same High  Court  should  have tried to sit on  judgment  over  a decision of another Bench of that court.  It is  regrettable that   the  learned  judges  who  decided  the  later   case

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overlooked  the  fact that they were bound  by  the  earlier decision.   If they wanted that the earlier decision  should be  reconsidered, they should have referred the question  in issue  to  a  larger bench and not  to  ignore  the  earlier decision. For the reasons mentioned above, these appeals fail and they are dismissed with costs. V.P.S.                         Appeals dismissed. (1) 27 S.T.C. 18. 3 5 1