Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
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