Tirupati Roller Flour Mills and Others vs State of Andhra Pradesh and Others

Sardar Ali Khan, J.—The ten writ petitioners in this case are the roller flour mills who pray for the issue of a writ of mandamus declaring that the levy of sales tax u/s 5 of the Andhra Pradesh General Sales Tax Act, 1957, on maida, ravva, atta, sujji and bran is illegal, unjust and offending articles 265, 286 and 19(1)(g) of the Constitution of India and consequently pray for a direction to the respondents to refund the entire sales tax collected so far on maida, ravva, atta, sujji and bran from the petitioners.

The petitioners allege that they purchase wheat through Food Corporation of India or from various markets in North India. They are engaged in disintegrating the wheat through mechanical process and the resultant products, like maida, ravva, atta and other products, are obtained for being sold to the various consumers for the purpose of consumption as food-stuff. The petitioners are paying sales tax either under the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), hereinafter referred to as "the Central Act" or under the Andhra Pradesh General Sales Tax Act, 1957 (Act No. 6 of 1957), hereinafter referred to as "the State Act", or both, depending on the event of sale or purchase. The question, therefore, raised in this writ petition is whether sales tax could be levied u/s 5 of the State Act on maida, ravva, atta, sujji and bran, which are obtained by disintegrating wheat and converting the same into the abovesaid products.

u/s 14 of the Central Act certain goods have been declared to be of special importance in inter-State trade or commerce. Under the said section it is declared that cereals, like paddy, rice, wheat, etc., mentioned therein are goods of special importance for the purpose of inter-State trade or commerce. These cereals, which have been named as such in section 14 of the Central Act, come within the category of declared goods. It may be seen that cereal wheat is mentioned in clause (i)(iii) of section 14. In the same section 14, certain other materials like coal, including coke in all its forms but excluding charcoal is mentioned at clause (i-a). Similarly under clause (iv) of section 14 iron and steel with all its by-products like pig iron and cast iron including ingot moulds, bottom plates, iron scrap, cast iron scrap, etc., is also mentioned as coming within the category of declared goods. It is noteworthy that while certain categories of by-products have been mentioned by name which are obtained from the main product like coal or iron and steel, as indicated above, no mention is made of any of the by-products obtained from wheat which has been mentioned as a cereal by itself. The other products like ravva, atta, maida, sujji and bran, which are obtained after disintegrating wheat, are conspicuously absent from the list of declared goods given u/s 14 of the Central Act. u/s 15 of the Central Act certain restrictions and conditions in regard to tax on sale or purchase of declared goods within a State are provided. It is stated in section 15(a) that the tax payable in respect of any sale or purchase of the declared goods inside the State shall not exceed four per cent of the sale or purchase price thereof and such tax shall not be levied at more than one stage. Under clause (b) of section 15 of the Central Act it is stated that where a tax has been levied in respect of sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce and tax has been paid under the Central Act in respect of the sale of such goods in the course of inter-State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State. It may be mentioned that under article 301 of the Constitution of India it is clearly stated as follows :

Article 301. "Freedom of trade, commerce and intercourse. - Subject to the other provisions of this Part, trade, commerce and intercourse through out the territory of India shall be free."

The principle, which is to be safeguarded, therefore, is contained in article 301 of the Constitution of India, which guarantees freedom of trade and commerce and intercourse throughout the territory of India. It is under this principle that the provisions of sections 14 and 15 of the Central Sales Tax Act have been promulgated thereby declaring certain goods to be of special importance in inter-State trade or commerce. u/s 5(1) of the Andhra Pradesh General Sales Tax Act, 1957, every dealer is required to pay a tax for each year on every rupee of his turnover of sales or purchases of goods in each year irrespective of the quantum of his turnover at the rates of tax and at the point of levy specified in the Schedules. Under the First Schedule to the State Act a list of goods in respect of which single point tax is leviable u/s 5 is given. As serial No. 60 in the said First Schedule the following entries have been made :

------------------------------------------------------------------------ S. No. Description of goods Point of levy Rate of tax ------------------------------------------------------------------------ ....................... 60 (a) Maida, atta and ravva At the point of 5 paise in not covered by item first sale in the rupee. (b) below. the State. (b) Maida, atta and ravva do. 1 paise in obtained from wheat the rupee. that has met tax under this Act. (c) Wheat bran do. 1 paise in the rupee. ------------------------------------------------------------------------

The point to be considered is that while wheat is mentioned at clause (i)(iii) of section 14 of the Central Act in the category of declared goods as a cereal, the by-products of wheat, like maida, atta, ravva and wheat bran are mentioned in at Serial No. 60 under the First Schedule promulgated u/s 5 of the State Act as goods in respect of which single point tax is leviable u/s 5 of the said Act. The intention of the Legislature is, therefore, clear that while wheat has been mentioned u/s 14 of the Central Act as a declared goods on which the maximum tax that could be levied shall not exceed 4 per cent u/s 15 of the Act, no mention is made of maida, ravva, atta or wheat bran u/s 14 of the Central Act. If the intention of the Legislature was to treat the so-called by-products of wheat like maida, atta, ravva and wheat bran as "wheat", then the Legislature would have mentioned these goods by name in section 14 of the Central Act. This process of reasoning is fortified in the light of the fact that where the intention of the Legislature was to treat certain by-products on par with that of the main products from which such by-products are obtained, the same have been mentioned in section 14 of the Central Act. By way of an instance, it has already been stated above that in case of coal, coal including coke in all its forms has been included and charcoal has been specifically excluded. Similarly, in the case of iron and steel, several other products like pig iron, cast iron, ingot moulds, bottom plates, iron scrap, cast iron scrap, etc., have been mentioned which bring them within the purview of the declared goods u/s 14 of the Central Act. However, in the case of cereals no other products except the main cereal has been mentioned. The cereals, which are mentioned specifically, are paddy, rice wheat, jowar, bajra, etc., along with their Latinized nomenclature. It is, therefore, fair to assume that since no mention is made of the products like maida, atta, ravva, bran, etc., u/s 14 of the Central Act, they cannot be treated as declared goods under the said Act. Moreover, it has to be kept in mind that these products, which are identifiable by their names, have been included in the First Schedule u/s 5 of the State Act at serial No. 60 in the form as indicated above. This obviously means that the intention of the State Legislature is to treat them as separate products or goods, as the case may be, distinct from wheat. The products of maida, atta and ravva are identifiable by themselves in the open market. When we ask for wheat for purchase in the market, it cannot be said that we are actually asking for maida, atta and ravva or wheat bran for that matter. If a person wants to purchase any of these products in the market he will be obliged to name them specifically as maida, atta or ravva, without any mention of the cereal wheat as such. The point which is to be emphasised here is that even in the market overt the abovesaid goods form a distinct and separate products from wheat and are identifiable by their own name.

Mr. D. Mohana Rao, learned counsel for the petitioners, has relied on a decision of the Supreme Court reported in Alladi Venkateswarlu and Others Vs. Govt. of Andhra Pradesh and Another, wherein it was held that parched rice and puffed rice are "rice" within the meaning of entry 66(b) of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957. The Supreme Court held that the intention of the Legislature cannot be to tax u/s 5(1) of the Act as well as u/s 5(2) simultaneously. This decision of the Supreme Court is based upon the fact that there was no separate mention of parched rice and puffed rice which can be subjected to single point tax u/s 5(1) of the Act. What was mentioned in entry 66 is rice which was obtained from paddy. The Supreme Court held that rice obtained from paddy includes parched rice and puffed rice as it is one and the same product. In the present case the situation is entirely different. While the cereal wheat is mentioned in section 14 of the Central Act as a declared goods, a specific entry has been made in First Schedule u/s 5(1) of the State Act, in which the products of atta, ravva and maida are mentioned as separate products. It is also to be noted that in Schedule III which gives a list of declared goods in the respect of which a single point tax only is leviable u/s 6 of the State Act, mention is made at serial No. 16 of wheat alone which can be taxed to the extent of 4 paise in the rupee. Therefore, it is evident that it is the cereal wheat alone which is treated as declared goods and not the other products like ravva, maida or atta which have been included in Schedule I at entry No. 60, for a single point tax u/s 5(1) of the State Act. The judgment of the Supreme Court in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394, referred to above, therefore, is clearly not applicable to the facts of the present case as it deals with an entirely different situation existing at that time for the purpose of treating parched rice and puffed rice as rice itself.

Mr. D. Mohana Rao, learned counsel for the petitioners has also relied on a decision of this Court reported in The State of Andhra Pradesh Vs. Vayugundla Venkata Subbaiah and Sons, wherein a Division Bench of this Court held that if parched rice and puffed rice fall within the meaning of the expression "rice" in entry No. 66, there is no reason why ravva also should not be similarly treated as "rice". But it would be seen that the decision of the Division Bench in this matter is based exclusively on the judgment of the Supreme Court in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394, which we have discussed above. The Division Bench has not given any other reason except relying upon the Supreme Court decision and came to the conclusion that on a parity of reasoning within the meaning of the decision of the Supreme Court, parched rice and puffed rice fall within the meaning of the expression "rice" in entry No. 66 as it existed then and therefore, ravva obtainable form rice also must be treated as "rice". It may also be mentioned that entry No. 66 has since been omitted and in any case the facts of this case clearly show that the matter cannot be governed by the decision of the Supreme Court in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394, which has been rendered in different circumstances while dealing with the question of treating parched rice and puffed rice as "rice" itself. In Udata Narasimha Rao and Co. Vs. The State of Andhra Pradesh and Another, this Court held that ravva obtained from wheat, rice or maize and fried gram dhall are assessable to tax at the rates and conditions mentioned in entries 144 and 147 of the First Schedule to the State Act. The Division Bench further held that the meaning of any expression used in an enactment must be ascertained with reference to the object and scheme of that enactment. From that point of view, a reading of section 14 of the Central Sales Tax Act makes it clear that only those goods that are mentioned by name in that section are declared goods and not any other commodity or any other goods made or obtained from out of those commodities. In that view of the matter the Division Bench came to the conclusion that the commodities mentioned in entry 144, i.e., ravva obtained from rice or wheat and fried gram dhall mentioned in entry 147 cannot be considered as declared goods within the meaning of section 14 of the Central Sales Tax Act. We find ourselves in agreement with this decision of the Division Bench, i.e., Udata Narasimha Rao and Co. Vs. The State of Andhra Pradesh and Another, .

Sri. D. Mohana Rao, learned counsel for the petitioners, also relied upon a decision of the Patna High Court reported in Dhanbad Flour Mills v. State of Bihar [1989] 75 STC 47. The question arising for consideration in this case was whether the products like, atta, maida and sujji can be included in the item "wheat" and therefore treated as "declared goods". In this case also square reliance was placed on the decision of the Supreme Court in Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394. We have already discussed the matter in the light of entry No. 60 of Schedule I promulgated u/s 5 of the Andhra Pradesh General Sales Tax Act which provides for taxation of goods in respect of which single point tax is leviable and come to the conclusion that the said products, viz., maida, ravva, atta, sujji and bran cannot be included in the category of "wheat" and therefore can be subjected to tax as provided under entry No. 60 of Schedule I to section 5 of the State Act.

For the above reasons, it is held that the levy of sales tax u/s 5 of the Andhra Pradesh General Sales Tax Act, 1957, on maida, ravva, atta, sujji and bran is perfectly legal.

The writ petition is, therefore, dismissed, but, in the circumstances, there will be no order as to costs. Advocate''s fee Rs. 250.

After the judgment is pronounced an oral request is made for leave to appeal to the Supreme Court under article 133 of the Constitution of India. We do not see any substantial question of law of general importance is involved in the matter which requires consideration by the Supreme Court. Leave refused.

Writ petition dismissed.