Case: Sri Venkateswara Rice, Ginning &amp; Groundnutoil Mill Contract Vs. State Of Andhra Pradesh &amp; Ors

2. The Commercial Tax Officer came to the conclusion that a critical event took place when the assessee 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 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 purchase was crushed by the millers or when the 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 Officer3. 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 is purchase tax.

Court's reasoning:
Quite clearly in view of Section 14 and Section 15 of the Central Sales Tax Act and Section 6 of the Act, purchase of groundnut can be taxed only at one stage. Once a particular quantity of groundnut has been subjected to payment of tax, the States 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 employed therein, it is clear that first purchase becomes exigible to tax and in view of Section 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 assesseesAs 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 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 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 sale9. 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 latter decision of the same High Court in M. Madar Khan and Co. v. Asst. Commr. (Commercial Taxes) Anantpur, 27 STC 18   = (AIR 1971 Andh Pra 138) 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 latter case 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 decision4. The groundnut is one of the declared goods to be of special importance ine trade or commerce under Section 14 ofthe Central Sales Tax Act, 1956 and therefore in view of Section 15 (a) of that Act, the State is not empowered to levy purchase tax of more than three per cent. 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 with5. Now turning to the Act, Section 2 (f) defines declared goods as meaning goods declared under Section 14 ofthe Central Sales Tax Act, 1956 (Central Act 74 of 1956) to be of special importance ine trade or commerce. In compliance with the mandate of Sections 14 and 15 ofthe Central Sales Tax Act, 1956, Section 6 of the Act provides that notwithstanding anything contained in Section 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 be assessed, levied and collected in such manner as may be prescribed. Here again we need not refer to that part of Section 6 which deals withe trade. The only other provision which we have to notice is item 6 of the Third Schedule which deals with groundnut. The 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 rupeeIt 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 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. To 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 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.