Full Judgment Text
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PETITIONER:
SRI SIDDHI VINAYAKA COCONUT & CO. & ORS. ETC.
Vs.
RESPONDENT:
STATE OF ANDHRA PRADESH & ORS.
DATE OF JUDGMENT02/05/1974
BENCH:
ALAGIRISWAMI, A.
BENCH:
ALAGIRISWAMI, A.
RAY, A.N. (CJ)
MATHEW, KUTTYIL KURIEN
GOSWAMI, P.K.
SARKARIA, RANJIT SINGH
CITATION:
1974 AIR 1111 1974 SCR (1) 440
1974 SCC (4) 835
ACT:
Andhra Pradesh General Sales Tax Act as amended by Act XII
of 1971--Sections 7 and 8 item 5 A to Third Schedule and
entries relating to "watery coconuts" in Third
Schedule--"Watery coconuts" and dried "coconuts"--Provision
for refund of tax paid--Provisions whether contravene
sections 14 and 15 of Central Sales Tax Act.
HEADNOTE:
The First Schedule to the Andhra Pradesh General Sales Tax
Act contains goods in respect of which a single point sales
tax only is leviable under sec. 5(2) (a). The Second
Schedule contains goods in respect of which a single point
purchase tax only is leviable under sec. 5(2)(b). The Third
Schedule contains declared goods in respect of which a
single point tax only is leviable under see. 6. The Fourth
Schedule contains goods exempted from tax under sec. 8. By
an amendment made in 1961, there was only one entry,
’,Coconuts’ in the Third Schedule and the Fourth Schedule
contained ’tender coconuts which are useful only for
drinking purposes’ which were exempted from tax. The
explanation to the Third Schedule containing definition of
the expression "coconuts" was replaced by another
explanation by the Amending Act XVI of 1963. The result was
that the Coconuts were divided only into two classes,
"coconuts" as defined in the explanation and the ’tender
coconuts". After the amendment of 1963 certain dealers
questioned their liability to tax on the purchases made by
them of watery coconuts. The challenge was upheld by the
Andhra Pradesh High Court in Sri Krishna Coconut Co., v.
Comml. Tax Officer (16. STC 511). Thereafter, by Amending
Act 18 of 1966 the explanation in the Third Schedule was
replaced by another explanation. At the same time item 10
"watery coconuts" was included in the Second Schedule and to
this there was added an explanation containing the
definition of the expression "watery coconuts". The result
was that for the first time "coconuts" were divided into
three classes, tender coconuts, watery coconuts and
coconuts.
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After this the question arose whether "watery coconuts" are
oilseeds and as such declared goods within the meaning of
that term in item 6 of section 14 of the Central Sales Tax
Act and the Andhra Pradesh High Court in Tagoob Mohammed v.
Comml. Tax Officer (28 STC 110) held that "watery coconuts"
were oilseeds. It was thereafter that the Andhra Pradesh
Legislature passed Amending Act XII of 1971 which came into
force on 17-4-1971. By this Act item 10 in Second Schedule
relating to "watery coconuts" and the explanation thereto
were omitted and this amendment was given effect to from
1-8-1963. Item 5 of the Third Schedule was amended as
"coconuts of all varieties" and a new item 5-A @as
introduced. The proviso to item 5-A inter alia provided
that, where during the periods (1-8-1963 to 31-3-1965, 1-4-
1965 to 22-12-1966 and 23-12-1966 and 16-4-1971), any tax
has been levied and collected in respect of watery coconuts
and where tax has also been levied and collected in respect
of coconuts formed out of such watery coconuts, the tax so
levied and collected in respect of such watery coconuts
shall alone be refunded. Explanation 1 to Third Schedule
was omitted. The Act also introduced two new sections 7 and
8. Section 7 seeks retrospectively to validate assessments
and collections of tax on past transactions from August 1963
to April 1971. Section 8 provides for revision of
assessments. The definition of oilseeds in item (vi) to
sec. 14 of the Central Sales Tax Act, after Amendment Act
LXI of 1972 which came into force on 1-4-1973 read as
follows : "(vi) Oilseeds. that is to say,-(8) Coconut (i.e.
copra excluding tender coconuts (Cocos nucifera)". The writ
petitions filed before the High Court of Andhra Pradesh
challenging the validity of the new item 5-A and sections 7
and 8 and also the entries relating to watery coconuts in
the Third Schedule to the Principal Act on the
441
ground that these provisions offend ss. 14 and 15 of the
Central Sales Tax Act, were dismissed by the division Bench
of the Andhra Pradesh High Court.
Rejecting the civil appeals and the petitions under Article
32 of the Constitution.
HELD : Act XII of 1971 deals with the period between August
1963 to April 1971 and validates taxes already levied and
collected. therefore. the proviso to entry 5-A of Schedule
III which provides for refund does not really suffer from
the defect pointed out by the Supreme Court in Bhawani
Cotton Mills case (20 STC 290) that a provision for taxation
which would not be justifiable cannot be upheld merely on
the ground that it provides also for a refund. The various
periods mentioned in item 5-A are there because of his-
torical reasons and they are only reproductions of
provisions of earlier law. [446E]
Decision in Rattan Lal & Co. v. Assessing Authority (25 STC
136) held to apply to the facts of the present case and not
the decision in Bhawani Cotton Mills case.
There is no possibility of "watery coconuts" suffering tax
after they became dried coconuts, if they have already
suffered tax as "watery ;Coconuts". Rule 45 of the Andhra
Pradesh General Sales Tax Rules enabling the dealers in
watery coconuts or in dry coconuts to include in their
return only goods which are liable to tax and not those
which have already suffered tax, provides sufficient
safeguards for this purpose. [447E-F]
The same commodity at different stages Could be treated and
taxed as commercially different articles. [447G]
A.Hajee Abdul Shakoor &, Co. v. State of Madras [1964] 8
SCR 217, Jagannath v. Union of India, [1962] 2 SCR 118, East
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India Tobacco Co. v. State of Andhra Pradesh [1963] 1 SCR
404 and Venkatraman v. Madras [1970] 1 SCR 615 referred to-
Commercially speaking, "watery coconuts" and dried coconuts
are two distinct commodities. Watery coconuts are put to a
variety of uses e.g., for cooking purposes, for religious
and social functions whereas dried coconuts are used mainly
for extracting oil. [447F-G]
The Amending Act XII of 1971 also does not contravene sec.
15 of the Central Sales Tax Act because under the Act.
though watery coconuts and dried coconuts are treated
separately there is a provision for refund when the same
watery coconuts, which have suffered the tax become dry
coconuts latter. [448B]
ARGUMENTS
For petitioners and appellants
Entry 5-A in Sch. III introduced in the Act by Act 12 of
1971 contravenes sec. 15 read with sec. 14 of the Central
Sales Tax Act in as much as it subjects coconuts which are
declared goods to taxation at two stages; namely. once at
the stage of watery coconuts and again at the stage of
’dried coconuts’. The mere possibility of double taxation
would render a taxing provision contravene sec. 15 of the
Central Act : Bhawani Cotton Mills Case (20 S.T.C. 290).
But the provision for refund in the impugned Act 12 of 1971
cannot cure the defect. Secondly, the provision for refund
is entirely illusory in character and ineffective by reason
(a) of inherent difficulty in the situation, in that no
dealer can identify that in a given case "watery coconuts"
or "coconuts" is sold by him or by a subsequent dealer as
"dried coconuts", (b) in that no dealer can have in his
possession material necessary for such identification; and
(e) Rule 45 of the A.P. General Sales Tax Rules cannot help
the dealer to trace the career of the "watery coconuts" and
ascertain whether it was sold as "dry coconuts" and if so,
by whom and when. It is not open to the State to divide the
genus i.e. "coconut", which is an oil seed, into different
varieties and tax each variety at a single stage and
circumvent the restrictions placed under sec. 15 of the
Central Act.
442
For the Respondent : It can hardly be argued that because
the State law imposes a tax on one type of oilseed it cannot
tax any other kind of oil-seed. The State Legislature has
taken not,., of tile realities of the trade in coconuts
while classifying them into three categories viz. "tender
coconuts". and "dried coconuts" Commodities belonging to on
genus have been treated is separate and distinct entities
for purposes of taxation and the courts have recognised such
distinction in several cases : [1962] ’2’ S.C.R. 118; [1963]
1 S.C.R. 404; [1970] 1 S.C.R. 615; [9641] 8 S.C.R. 217;
A.I.R. 1973 S.C. 1034 and 24 S.T.C. 430.
The scheme of the impugned Act is to tax both "watery
coconuts" and "dried coconuts" when they constitute
different commodities, but when they constitute one
commodity as in cases where "dried coconuts" are formed Out
of " waterly coconuts", which have already been Subjected to
tax, to tax only "dried coconuts" and refund the tax levied
on "watery coconuts". The impugned Act makes the stage at
which tax is to be levied amply clear and Rule 45 enables a
dealer to ascertain whether the goods had already suffered
tax at all earlier stage.
JUDGMENT:
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ORIGINAL JURISDICTION Writ Petitions Nos. 1424 & 1612 of
1973.
Petitions under Article 32 of the Constitution of India for
enforcement of fundamental rights.
S. V. Gupte (in W.P. No. 1424/73) only, A. Subba Rao and
G. Narayana Rao, for the petitioners/appellants).
B. Basi and P. P. Rao, for the respondents.
The Judgment of the Court was delivered by
ALAGIRISWAMI, J. The question for decision in these cases is
about the liability to sales tax under the Andhra Pradesh
General Sales Tax Act of "Watery coconuts". The Act
contains four schedules. The First Schedule contains goods
in respect of which a single point sales tax only is
leviable under section 5(2) (a). The Second Schedule
contains goods in respect of which a single point purchase
tax only is leviable under section 5 (2) (b). The Third
Schedule contains declared goods in respect of which a
single point tax only is leviable under section 6. The
Fourth Schedule contains goods exempted from tax under
section 8. By an amendment made in 1961, there was till 1963
only one entry, ’coconuts’, in the Third Schedule and the
Fourth Schedule contained ’tender coconuts which are useful
only for drinking purposes’ which were exempted from tax.
An explanation to the Third Schedule read as follows :
"The expression "coconuts" in this Schedule
means fresh or dried coconut shelled or
unshelled including copra, but excluding
tender coconuts."
By Amending Act XVI of 1963 this explanation
was replaced by another explanation, which
read
"The expression "coconuts" in this Schedule
means dried coconuts, shelled or unshelled
including copra,. but excluding tender
coconuts,"
Thus coconuts were divided only into two classes, "coconuts"
as defined in the explanation and "tender coconuts".
443
After the amendment of 1963 certain dealers questioned their
liability to tax on the purchases made by them of watery
coconuts. That challenge was upheld by a learned Single
Judge of the Andhra Pradesh High Court in Sri Krishna
Coconut Co. v. Comml. Tax Officer (16 STC 511) The learned
Judge’s reasoning was that a fully grown coconut with a
well-developed kernel which contains water could not be
called either a tender or a dried coconut, and that this was
the well-known variety of coconuts used for culinary
purposes and on auspicious occasions and as part of the
offerings in temples. He drew particular support for his
conclusion from the omission of the word "fresh" from the
new explanation in the Third Schedule.
Thereafter, by Amending Act 18 of 1966 the explanation in
the Third Schedule was replaced by another explanation which
read :
"The expression "coconuts" in item 5 means
dried coconuts, shelled or unshelled including
copra, but does not include watery coconuts
falling under item 10 of the Second Schedule
and tender coconuts failing under item 9 of
the Fourth Schedule."
At the same time item 10 "watery coconuts" was
included in the Second Schedule and to this
there was an explanation added which read
"The expression "watery coconuts" in item 10
includes all coconuts other than coconuts
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falling under item 5 of the Third Schedule and
tender coconuts falling under item 9 of the
Fourth Schedule."
Thus for the first time "coconuts" were
divided into three classes, tender coconuts,
watery coconuts and coconuts.
After this the question arose whether "watery
coconuts" are oilseeds and as such declared
goods within the meaning of that term in item
6 of section 14 of the Central Sales Tax Act
and the Andhra Pradesh High Court in Tagoob
Mohammad v. Comml. Tax Officer (28 STC 110)
held that "watery coconuts" were oilseeds. It
was thereafter that the Andhra Pradesh
Legislature passed Amending Act XII of 1971
which came into force on 17-4-1971. By that
Act item 10 in Second Schedule relating to
"watery coconuts" and the explanation thereto
were omitted and this amendment was given
effect to from 1-8-1963. Item 5 of the Third
Schedule was amended as " coconuts of all
varieties" and a new item 5-A was introduced
which reads as follows :
"5-A. (i) At the point of last purchase in the
State Watery during the period commencing
on the 1st Coconuts August, 1963 and ending
with the 31st March, 1965.
(ii)At the point of first sale in the State
2 paise in during the period commencing on
the 1st the rupee
444
April, 1965 and ending with the 22nd December,
1966.
(iii)At the point of first purchase in the
State during the period commencing on the 23rd
December 1966, and ending with the
date immediately before the date of the
commencement of the Andhra Pradesh General
Sales Tax (Amendment) Act, 1971 :3 paise in
the rupee
Provided that where during the aforesaid
periods, any tax has been levied and collected
in respect of watery coconuts and where tax
has also been levied and collected in respect
of coconuts formed out of such watery
coconuts, the tax so levied and collected in
respect of such watery coconuts shall alone be
refunded."
Explanation 1 to Third Schedule which related
to a definition of "coconut" was also
omitted.
The Act also introduced two new sections, ss.
7 and 8 which read as follows
"7. Validation of assessments etc.
(1)Notwithstanding anything in any
judgment, decree or order of any Court or
other authority to the contrary, and subject
to the provisions of section 8, any
assessment, reassessment, levy or collection
of any tax made or purporting to have been
made, any action or thing taken or done in
relation to such assessment, reassessment,
levy or collection under the provisions of the
principal Act before the commencement of this
Act, shall be deemed to be as valid and
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effective as if such assessment, re-
assessment, levy or collection or action or
thing had been made, taken or done under the
principal Act as amended by this Act and
accordingly-
(a)all acts, proceedings or things done or
taken by the State Government or by any
officer of the State Government or by any
other authority in connection with the
assessment, reassessment, levy or collection
of such tax, ,,hall for all purposes, be
deemed to be and to have always been, done or
taken in accordance with law;
(b)no suit or other proceedings shall be
maintained or continued in any court or before
any authority for the refund of any such tax;
and
(c)no court shall enforce an decree or
order directing the refund of any such tax.
(2)It is hereby declared that nothing in
sub-section (1) shall be construed as
preventing any person
445
(a)from questioning in accordance with the
provisions of the principal Act, as amended by
this Act, any assessment, reassessment, levy
or collection of tax referred to in sub-
section (1); or
(b)from claiming refund of any tax paid by
him in excess of the amount due from him by
way of tax under the principal Act as amended
by this Act :
Provided that every application for any relief
under this sub-section shall be made by the
person concerned to the assessing authority
within a period of one year from the date of
the commencement of this Act and the assessing
authority may, after making such inquiry as he
deems necessary and after giving the person
concerned an opportunity of being heard, pass
such order as he deems fit."
"8. Revision of assessment on coconuts
(1)Notwithstanding anything in any
judgment, decree or order of any court or
other authority to the contrary, the assessing
authority may assess or reassess the amount of
tax payable by the dealer on his turnover
relating to coconuts of all varieties during
the period commencing on the 1st August, 1963
and ending with the date immediately before
the date of the commencement of this Act, in
accordance with the provisions of the
principal Act, as amended by this Act.
(2)Notwithstanding the expiration of any of
the periods specified in section 14 of the
principal Act, an assessment or reassessment
under sub-section (1) may be made within a
period of one year from the date of
commencement of this Act."
Another statutory provision which should be
noticed is section 14 of the Central Sales Tax
Act with regard to what are called declared
goods. Item (vi) therein originally read as
follows
(vi)oil-seeds, that is to say, seeds
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yielding non-volatile oils used for human
consumption, or in industry, or in the
manufacture of varnishes, soaps and the like,
or in lubrication and volatile oils used
chiefly in medicines, perfumes, cosmetics and
the like";
By Amendment Act LXI of 1972, which came into
effect on 1-4-73 it was amended as follows :
"(vi) Oilseeds, that is to say,
(8) Coconut (i.e. copra excluding tender
coconuts (cocos nucifera);"
446
After the amendments made by Act XII of 1971 a number of
writ petitions were filed before the High Court of
Judicature, Andhra Pradesh. They were all dismissed by a
Division Bench consisting of.
the learned Chief Justice and Justice Lakshmaiah. The civil
appeals are by some of the petitioners therein and the writ
petitions are filed by certain other dealers direct to this
Court under Art. 32 of the Constitution,
It is unnecessary to consider whether the Andhra Pradesh
High Court was right in its decision that watery coconut is
an oilseed for the reasons given by them, especially after
the amendment made by the Central Act which seems to proceed
on the basis that only copra is an oilseed as the Andhra
Pradesh Act proceeds on the basis that watery coconut is
also an oilseed. That amendment applies only to the period
after 1 April 1973 and these appeals and petitions relate to
the period before 17 April 1971. Mr. Basi Reddy appearing
for the State of Andhra Pradesh does not seek to question
this finding either. Undoubtedly, it is the watery coconut
that in due course becomesdry coconut or copra. Mr.
Basi Reddy does not even seek to arguethat the same watery
coconut after having suffered tax should also be taxed as
dry coconut.
The first point to be noticed about the 1971 amendment is
that in one of its aspects it deals with the period between
August 1963 to April 1971 and validates taxes already levied
and collected. There fore, the proviso to entry 5-A of
Schedule III which provides for refund does not really
suffer from the defect pointed _out by this Court in Bhawani
Cotton Mills case (20 STC 290) that a provision for taxation
which would not be justifiable cannot be upheld merely on
the ground that it provides also for a refund. The various
periods mentioned in item 5-A are there because of
historical reasons and they are only reproductions of
provisions of earlier law. The decision in the Bhawani
Cotton Mills case on which the petitioners relied cannot
apply in this case because in the Act there under
consideration there was no provision indicating the stage at
which the tax was to be levied. The very same levy was
upheld in Rattan Lal & Co. v. Assessing Authority (25 STC
136) after the Act was amended by specifying the stage as
the last purchase or sale of declared goods by a dealer
liable to pay the tax and making the stage quite clear, and
by giving the dealer an option not to include other
transactions in his returns and thus saving him from the
liability to pay the tax till he was the dealer liable to
pay the tax. This Court then pointed out that the information
whether his was the, last purchase or sale was always
possessed by a dealer and by providing that he need not
include inhis turnover any transaction except when he
was the last dealer, the position was made clear. It is
this decision that will be applicable to the facts of this
case.
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In this connection we may point out that the provisions of
Rule 45 of the Andhra Pradesh General Sales Tax Rules are
similar.
447
It provides that every dealer has to maintain a true and
correct account showing the value of the goods produced,
manufactured, bought and sold by him, the names and
addresses of the persons from whom goods were purchased,
supported by a bill or delivery note issued by the seller.
Every dealer carrying on business in the goods specified in
the First, Second and Third Schedules whose total turnover
exceeds Rs. 10,000 a year and every other, dealer whose
turnover exceeds Rs. 20,000 a year shall issue a bill or
cash memorandum in respect of every sale involving an amount
of Rs. 5 or more. Every such bill or cash memorandum shall
be duly signed and dated and a counterfoil shall be kept by
the dealer. The bills or cash memoranda issued by a dealer
shall be serially numbered for each year and in each of the
bills or cash memoranda issued the dealer shall specify the
full name and style of his business, the number of his
registration certificate, the particulars of goods sold and
the price thereof and in the case of sales to a dealer the
full name and address and the number of the registration
certificate of the purchaser. The bill or cash memoranda
issued in the case of sales of goods liable to a single
point tax shall contain the following certificate . . . .
"Certified that in respect of the turnover of the goods men-
tioned in item(s) of this bill the tax has been paid or/is
payable by me or is payable by Sri/M/s. . . . being the
dealer who has purchased them from me." These make it amply
clear that there can be no question of either a dealer in
watery coconuts or in dry coconuts having to pay a tax over
again hereafter. They can include in their return only
goods which are liable to tax and need not include those
which have already suffered tax.
Another aspect of the 1971 Act that as a result of it there
are two entries, 5 and 5A in Schedule III, namely ’coconuts
of all varieties’ and ’watery coconuts’ there is no
possibility of ’watery coconuts, suffering tax after they
become dried coconuts, if they have already suffered tax as
’watery coconuts’. Rule 45 provides sufficient safeguards
for this purpose.
We also accept the contention put forward on behalf of the
State of Andhra Pradesh that ’watery coconuts’ and ’dried
coconuts’ are two distinct commodities commercially
speaking. Watery coconuts ,ire put to a variety of uses
e.g. for cooking purposes, for religious and social
functions whereas dried coconuts are used mainly for
extracting oil. This Court has in a number of cases held
that the same commodity at different stages could be treated
and taxed as commercially different articles. In A. Hajee
Abdul Shakoor & Co. v.State of Madras (1964 8 SCR 217) this
Court held that "hides and skins in the untanned condition
are undoubtedly different as articles of merchandise than
tanned hides and skins" and pointed out that "the fact that
certain articles are mentioned under the ’same heading in a
statute or the constitution, does not mean that they all
constitute one commodity." We may also refer to the
decisions in Jagannath v. Union of India (1962 2 SCR 118)
where tobacco in the whole leaf and tobacco in the broken
leaf were treated as two different
448
commodities, East India Tobacco Co. v. State of Andhra
Pradesh (1963 1 SCR 404) where Virginia tobacco and country
tobacco were treated as two different commodities, and
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Venkataraman v. Madras (1970 1 SCR 615) where cane jaggery
and palm jaggery were treated as two different commodities.
We do not think that the Act can be said to contravene
section 15 of the Central Sales Tax Act. Under the Act
though watery coconuts and dried coconuts are treated
separately there is a provision for refund when the same
watery coconuts, which have suffered tax, become dry
,coconut later. It is for this contingency that, as we have
pointed out earlier, provision for refund is made. In any
case in the future no difficulty would arise as we pointed
out earlier.
In the result all the writ petitions and appeals are
dismissed. The appellants and writ petitioners will pay the
costs- of the State of Andhra Pradesh, one set.
V.M.K. Petitions & appeals dismissed.
449