Andhra HC (Pre-Telangana)
Sumukha Veereswari Rice Mill vs Deputy Commercial Tax Officer-Ii, ... on 9 March, 1987
Equivalent citations: [1988]68STC187(AP)
Author: B.P. Jeevan Reddy
Bench: B.P. Jeevan Reddy, M. Jagannadha Rao
JUDGMENT B.P. Jeevan Reddy, J.
1. The petitioner is seeking an appropriate writ, order or direction to the Deputy Commercial Tax Officer-II, Kakinada, to release the 30 bags of paddy detained by him, and a further direction to him not to intercept the vehicles transporting paddy covered by documents specified in Government Memo No. 52856/A & CS dated 31st October, 1983, and also to implement the circular of the Deputy Commissioner, Commercial Taxes, Kakinada, dated 13th December, 1985.
2. The petitioner-rice mill is situated in Yanam, which is a Union Territory. In all there are eleven rice mills in Yanam. Inasmuch as the rice produced in Yanam was not sufficient to feed all these 11 rice mills, these rice mills requested the Government of Andhra Pradesh to permit them to make purchases of paddy in East Godavari district and to mill the same in their rice mills. The Government by its memo dated 31st October, 1983 permitted them to do so subject to certain conditions. The conditions specified are that they must obtain a no-objection certificate from Yanam administration, that they must purchase at prices not less than the notified price, that they shall maintain accounts as required by the Collector, East Godavari district, and communicate the same to him through Yanam administration, and further that they should deliver such percentage of levy-rice to the Food Corporation of India or the Andhra Pradesh Civil Supplies Corporation, as may be specified by the State of Andhra Pradesh. The levy-free rice, they were entitled to dispose of anywhere in the country after meeting the internal requirements of Yanam. In pursuance of the said arrangement, the petitioner has also been purchasing paddy at various places in East Godavari district and transporting the same to Yanam.
3. Paddy is taxable at purchase point under the A.P. General Sales Tax Act. The lorry bearing No. ADP 2223 which was carrying 150 bags of paddy belonging to the petitioner was intercepted by the 1st respondent on 29th December, 1986 at Tallarevu check-post. On being satisfied that the petitioner has not paid the sales tax due on the purchase of the said paddy, he detained the vehicle demanding a sum of Rs. 720 towards tax. In the alternative, the petitioner was called upon to furnish security in a sum of Rs. 3,600, i.e., five times the amount of tax. Since the petitioner's driver could not comply with either of the demands, the 1st respondent detained 30 bags of paddy valued at Rs. 3,600, and released the rest as contemplated by section 29. It is then that the petitioner approached this Court with this writ petition.
4. The petitioner's case is that the paddy which was being transported was accompanied by valid documents, viz., purchase voucher, delivery note, and no-objection certificate issued by the Yanam administration, and that as per the circular issued by the Deputy Commissioner of Commercial Taxes, Kakinada, dated 13th December, 1985, the transaction of purchase made by the petitioner in East Godavari district is not liable to be taxed under the Andhra Pradesh General Sales Tax Act. The circular of the Deputy Commissioner dated 13th December, 1985 says that "the purchase of paddy in so far as it is in conformity with the conditions of the Government memo (dated 31st October, 1983) seems to fall under section 3(a) of the Central Sales Tax Act, 1956. .......". Accordingly, it requests to record the full details of the paddy transported to Yanam in the lorry check registers and to verify the entries made with the records of the civil supplies department once a month in the first week of the following month. This circular was sent to all the Commercial Tax Officers of East Godavari district. The petitioner's counsel submits that this circular clearly recognizes that the transaction of purchase made by the petitioner does not attract the sales tax under the Andhra Pradesh General Sales Tax Act, but that it is an inter-State sale liable to be taxed only under the Central Sales Tax Act. He, therefore submits that the detention at the check-post, levy of A.P. sales tax, and the seizure of 30 bags in lieu of tax due, is all illegal and incompetent. A general direction is also sought for on the basis of the said circular.
5. A counter-affidavit has been filed by the Deputy Commercial Tax Officer, Kakinada, denying the several allegations made by the petitioner. It is submitted that the circular issued by the Deputy Commissioner (CT) is contrary to law and is based upon a misapprehension of facts and law and, therefore, not enforceable. The learned Government Pleader submitted that the Government memo referred to in the circular does not in any manner warrant the contents of the said circular. He submitted that the action of the 1st respondent is perfectly legal and justified. Both the counsel have taken us through the relevant provisions of the Act and the Rules.
6. The petitioner is not a registered dealer in Andhra Pradesh under the Andhra Pradesh General Sales Tax Act. It would be a "casual trader" as defined in clause (c) of section 2. Since it is not a registered dealer in Andhra Pradesh, it is not subject to any regular assessment in respect of its dealings in Andhra Pradesh. At the same time, the purchase of paddy made by it in the State is liable to sales tax under the Andhra Pradesh General Sales Tax Act, if it is an intra-State sale. If, however, it is an inter-State sale, the petitioner is liable to pay Central sales tax.
7. With a view to prevent the evasion of sales tax, section 29 of the Andhra Pradesh General Sales Tax Act empowers the State Government to establish check-posts and barriers at such places in the State as it may think necessary. Such check-posts are established on the borders of the State, and also at various points within the State. At these check-posts the goods being carried in vehicles are checked with a view to find out whether the goods being transported are subject to tax, and if so, whether the tax due has been paid. If the checking authority is satisfied that the tax due has not been paid, he is entitled to collect the tax due and, for that purpose, he is also empowered to detain the goods in case the tax demanded is not paid. An order made under this section is subject to appeal. In case the person so made to pay tax at the check-post/barrier is a registered dealer of Andhra Pradesh, the correctness of such collection will be gone into in his regular assessment and will be subject to appropriate adjustment; but, if he is not a registered dealer in Andhra Pradesh - and because no regular assessment is made upon him - his only remedy may be to file an appeal if he chooses to challenge the said collection. This is the purport of section 29, read with rule 46.
8. In this connection, we may also refer to rule 14 of the Andhra Pradesh General Sales Tax Rules. This rule deals with "casual traders". According to it, every casual trader shall, within 24 hours of his arrival in any place in the State, intimate to the assessing authority of the area, the address of his residence in the State, the nature of goods in which he intends to deal, and the period within which he intends to leave the place in the State, and shall also submit a return in form AA. On the return so submitted, the assessing authority may assess the casual trader provisionally and call upon him to pay the appropriate tax by way of a notice in form BB. The casual trader is liable to pay tax as per the notice. If a casual trader transports (i.e. brings in) goods through a check-post, he shall intimate to the officer-in-charge of the check-post, the place or places in the State where he intends to take his goods. On or before the last day he leaves the State, he is also obliged to file another return in form A-3 on the basis of which a final assessment will be made. In case the casual trader fails to submit such return, a best judgment assessment can be made upon him. This rule shows that every casual trader entering the State for the purpose of dealing in any goods must follow the procedure prescribed in the said rule. Under the said rule he is liable to submit a provisional return in the beginning, pay the tax provisionally assessed thereon, and is also liable to submit a final return before leaving the State, on the basis of which a final assessment will be made and the tax, if any due, will be collected. If a casual trader, who complies with the rule, transports goods which he has purchased in the State and in respect of which he has already been assessed in accordance with rule 14, he is entitled to transport his goods anywhere in the State, or beyond the State, and the check-post authority will not obviously levy any further tax upon him. If he shows the assessment order made under rule 14 and if the check-post authority is satisfied that the goods being transported are goods which are already subjected to tax, there is no question of his collecting the tax over again. But, there is no guarantee that every casual trader would comply with rule 14. It is to provide for such cases that check-posts are established; at the check-post the officer-in-charge of the check-post will check the goods and satisfy himself whether the goods are liable to tax, and if so, whether the tax is paid. If, however, he is satisfied that the goods are liable to tax but the tax has not been paid, he will collect the tax, and any casual trader who wishes to challenge the said collection will have to file an appeal under, and in accordance with section 19 of the Act. As already stated, if he is a registered dealer in Andhra Pradesh, there is no particular difficulty, because the said collection will be taken into account and considered in the course of his regular assessment. But, if he is a casual trader, he has no other way except to file an appeal if he wishes to challenge the collection. May be that there is certain inconvenience involved in filing an appeal against every collection; but this inconvenience cannot be avoided in the scheme of the enactment. Since such person is not a registered dealer in Andhra Pradesh, there is no consolidated assessment, nor is it possible to directed that such person should be assessed every month, or every quarter, or every year.
9. Mr. S. Dasaratharama Reddi, the learned counsel for the petitioner, contended that the purchase of paddy by the petitioner constitutes an inter-State sale and, therefore, it is not liable to tax under the Andhra Pradesh General Sales Tax Act. This is disputed by the learned Government Pleader. It is, however, not possible for us to decide the said question in this writ petition. Whether a particular sale is an "inter-State" or an "inter-State" sale is a mixed question of fact and law which must be decided by the appropriate authority. We express no opinion on this contention.
10. Now coming to the circular issued by the Deputy Commissioner (CT), we are unable to appreciate how he could issue a general circular saying that all purchases made by Yanam rice millers constitute inter-State sales and are liable to tax under the Central Sales Tax Act only. The reason is the same as indicated above, viz., that it is a question of fact to be determined in each case having regard to the relevant circumstances. If the sale is completed in the State of Andhra Pradesh, the mere fact that the purchaser transports the goods outside the State would not make it an inter-State sale. It would, however, be an inter-State sale if the sale or purchase occasions the movement of goods from one State to another, or where the sale or purchase is effected by transfer of documents of title to the goods during their movement from one State to another, as contemplated by section 3 of the Central Sales Tax Act. Whether a particular transaction falls under one enactment or the other is a mixed question of fact and law, as stated above, and no general instruction can be issued in that behalf.
11. Applying the above principles, it would be evident that the detention of the goods at the check-post cannot be said to be without jurisdiction, or incompetent. If the petitioner seeks to challenge the validity or correctness of the said collection, the only remedy open to it is to file an appeal as provided by the Andhra Pradesh General Sales Tax Act. It is also not possible to give a general direction that the goods purchased by the petitioner are not liable to A.P. sales tax, nor can it be said that such goods shall not be stopped or checked and dealt with as contemplated by section 29 of the Andhra Pradesh General Sales Tax Act.
12. The writ petition, accordingly, fails and is dismissed. No costs. Advocate's fee Rs. 150.
13. This order, however, does not preclude the petitioner or other rice millers of Yanam from approaching the Government for evolving an arrangement which is both effective and convenient to both parties concerned. We are sure that if the petitioner so approaches, the Government/Commissioner, Sales Tax, will consider the said request and explore whether it is possible to evolve an effective and convenient arrangement, so that the rice millers are relieved of the necessity of challenging each and every collection and, at the same time, the Government does not lose the revenue due under law. At the request of the counsel for the petitioner it is directed that the respondents shall sell the paddy seized, retain the amount of tax payable, and refund the balance to the petitioner.
14. Writ Petition dismissed.