# SRI DOKI CHINA GURUVULU SON & CO. AND ANR v. GOVT. OF ANDHRA PRADESH AND ANR

- **Citation:** [1989] Supp. 2 S.C.R. 422
- **Court:** Supreme Court of India
- **Decided:** 1989-12-07
- **Case number:** Civil Appeal No. 4879 of 1989
- **Bench:** Sabyasachi Mukharji, B:C. Ray
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sri-doki-china-guruvulu-son-co-and-anr-v-govt-of-andhra-pradesh-and-anr-10610
- **Pages:** 8

## Headnote

Andhra Pradesh Sales Tax Act, 1957 (As amended by Act 19 of
1986): First Schedule Item 170/Second Schedule Item 14-Tamarind
obtained from outside the State-Taxation of-At a stage different from
tamarind produced in the State-Whether results in double taxationWhether discriminatory and violative of Articles 304(a) and 14 of the
Constitution.
Constitution of India, 1950: Articles 14 and 304: State sales tax
law--Taxing commodity obtained from outside the State at a stage different from commodity produced in the State-Whether discriminatory
and unconstitutional.
Under item 14 of Second·Schedule to the Andhra Pradesh General
Sales Tax Act, 1957 tamarind was subjected to sales tax at the point of
first purchase in the State irrespective of whether it was purchased
within the State or outside the State. However, by virtue of an amendment to the Act by Act 19 of 1986 tamarind which is purchased within
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the State was retained in Second Schedule, while tamarind purchased
outside the State was transferred to First Schedule as item 170, making
it taxable at the same rate at the point of first sale in the State.
The appellants had purchased tamarind from the State of Orissa
paying tax there and incurred expenditure in bringing it to Andhra
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Pradesh for sale. They challenged the said amendment modifying the
point of taxability as discriminatory between tamarind produced and
purchased within the State and the tamarind produced and purchased
outside the State and as such, violative of Articles 304(a) and 14 of the
Constitution. The submission was that imported tamarind which had
suffered tax at the first sale point will again be taxed at the purchase
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point when purchased within the State, which would amount to double
taxation, and that tax in case of imported tamarind would be more
because its price will include freight charges and other State taxes.
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The High Court found that there was no discrimination.
Dismissing the appeal by special leave, the Court,
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D.C. GURUVULU v. GOVT. OF. A.P .
423
HELD: When a taxing State is not imposing rates of tax on
imported goods different from rates of tax on goods manufactured or
produced, Article 304 of the Constitution has no application. In the
instant case, both tamarind purchased within, and outside, the State
was taxed uniformly. There was. therefore, no infraction of clause (a) of
Article 304 '.'fthe Constitution. [429D-E; 426A; 425G-H]
Rattan Lal & Co. & Anr. v. The Assessing Authority & Anr.,
[1969] 2 SCR 544, applied.
Firm A. T.B. Mehtao Majid & Co. v. The State of Madras, 14
STC 355 and Indian Cement Ltd. & Ors. v. State of /,ndhra Pradesh &
Ors., 69 STC 305, distinguished.
It may be that when the rate is applied the resulting tax in respect of
imported tamarind may he somewhat higher because its price will
include freight charges and other State taxes. But that cannot be said to
be the effect of what law has amended. Tamarind will he imported only
when it can be sold in the market at the same price as the tamarind
produced within the State. Only when after hearing the other State
taxes and freight charges, if it is able to compete with the locally produced tamarind it will normally be imported from outside the State. If
there is any difference in prices because of market conditions and other
factors, that cannot be said to be due to discrimination prohibited by
clause (a) of Article 304. [429E; 427D-E]
Mis Associated Tanners, Vizianagaram, A.P. v. C. T.O., Vizianagaram, A.P. & Ors., [1986] 2 SCC 479, referred to.
Weston Electroniks & Anr. v. State of Gujarat & Anr., [1988] 3
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SCR 768, distinguished.
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Once the imported tamarind is taxed at the first sale point under
the First Schedule there is no occasion for taxing it over again at the sale
point under the Second Schedule. The idea of both the Schedules is to
tax only at one point, though the point of taxability is different in both
the cases. In case of tamarind purchased within the State, i.e., proG
duced within the St

## Text

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SRI DOKI CHINA GURUVULU SON & CO. AND ANR.
v.
GOVT. OF ANDHRA PRADESH AND ANR.
DECEMBER 7, 1989
[SABYASACHI MUKHARJI AND B:C. RAY, JJ.]
Andhra Pradesh Sales Tax Act, 1957 (As amended by Act 19 of
1986): First Schedule Item 170/Second Schedule Item 14-Tamarind
obtained from outside the State-Taxation of-At a stage different from
tamarind produced in the State-Whether results in double taxationWhether discriminatory and violative of Articles 304(a) and 14 of the
Constitution.
Constitution of India, 1950: Articles 14 and 304: State sales tax
law--Taxing commodity obtained from outside the State at a stage different from commodity produced in the State-Whether discriminatory
and unconstitutional.
Under item 14 of Second·Schedule to the Andhra Pradesh General
Sales Tax Act, 1957 tamarind was subjected to sales tax at the point of
first purchase in the State irrespective of whether it was purchased
within the State or outside the State. However, by virtue of an amendment to the Act by Act 19 of 1986 tamarind which is purchased within
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the State was retained in Second Schedule, while tamarind purchased
outside the State was transferred to First Schedule as item 170, making
it taxable at the same rate at the point of first sale in the State.
The appellants had purchased tamarind from the State of Orissa
paying tax there and incurred expenditure in bringing it to Andhra
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Pradesh for sale. They challenged the said amendment modifying the
point of taxability as discriminatory between tamarind produced and
purchased within the State and the tamarind produced and purchased
outside the State and as such, violative of Articles 304(a) and 14 of the
Constitution. The submission was that imported tamarind which had
suffered tax at the first sale point will again be taxed at the purchase
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point when purchased within the State, which would amount to double
taxation, and that tax in case of imported tamarind would be more
because its price will include freight charges and other State taxes.
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The High Court found that there was no discrimination.
Dismissing the appeal by special leave, the Court,
422
. •
D.C. GURUVULU v. GOVT. OF. A.P .
423
HELD: When a taxing State is not imposing rates of tax on
imported goods different from rates of tax on goods manufactured or
produced, Article 304 of the Constitution has no application. In the
instant case, both tamarind purchased within, and outside, the State
was taxed uniformly. There was. therefore, no infraction of clause (a) of
Article 304 '.'fthe Constitution. [429D-E; 426A; 425G-H]
Rattan Lal & Co. & Anr. v. The Assessing Authority & Anr.,
[1969] 2 SCR 544, applied.
Firm A. T.B. Mehtao Majid & Co. v. The State of Madras, 14
STC 355 and Indian Cement Ltd. & Ors. v. State of /,ndhra Pradesh &
Ors., 69 STC 305, distinguished.
It may be that when the rate is applied the resulting tax in respect of
imported tamarind may he somewhat higher because its price will
include freight charges and other State taxes. But that cannot be said to
be the effect of what law has amended. Tamarind will he imported only
when it can be sold in the market at the same price as the tamarind
produced within the State. Only when after hearing the other State
taxes and freight charges, if it is able to compete with the locally produced tamarind it will normally be imported from outside the State. If
there is any difference in prices because of market conditions and other
factors, that cannot be said to be due to discrimination prohibited by
clause (a) of Article 304. [429E; 427D-E]
Mis Associated Tanners, Vizianagaram, A.P. v. C. T.O., Vizianagaram, A.P. & Ors., [1986] 2 SCC 479, referred to.
Weston Electroniks & Anr. v. State of Gujarat & Anr., [1988] 3
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SCR 768, distinguished.
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Once the imported tamarind is taxed at the first sale point under
the First Schedule there is no occasion for taxing it over again at the sale
point under the Second Schedule. The idea of both the Schedules is to
tax only at one point, though the point of taxability is different in both
the cases. In case of tamarind purchased within the State, i.e., proG
duced within the State, the tax is levied at the point of first purchase
under the Second Schedule, and in case of imported tamarind i.e.,
purchased outside the State, the tax is levied at the point of first sale in
the State under the First Schedule. It could not therefore, be said that
taxing the imported tamarind at the point of first sale in the State would
amount to double taxation. [427H; 428A; 427B-C; 427G]
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SUPREME COURT REPORTS
[ 1989] Supp. 2 S.C.R.
In the facts and circumstances of the case, there was, therefore,
no ground to complain about the breach of Article 14 of the
Constitution [ 429E-F J
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4879
of 1989.
From the Judgment and Order dated 12.11.1986 of the Andhra
Pradesh High Court in W.P. No. 16535 of 1986
P. Rama Reddy and A.V.V. Nair for the Appellants.
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C. Sitaramaiah, Jagan Rao, D.R.K. Reddy and T.V.S.N. Chari
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for the Respondents.
The Judgment of the Court was delivered by
SABY ASA CHI MUKHARJI, J. Leave granted.
This is an appeal from the judgment and order of the High Court
of Andhra Pradesh dated 12th November, 1986. The appellants challenged the validity of an amendment to the Schedule to the Andhra
Pradesh General Sales Tax Act, 1957 (hereinafter called 'the Act').
The appellants are dealers in tamarind in Parvathipuram in SrikakuE
lam district, a border district in Andhra Pradesh. They had purchased
tamarind from the State of Orissa paying tax there and incurring
expenditure in bringing the said goods to Andhra Pradesh for the
purpose of sale. Under the Act, tamarind was item 14 of Second
Schedule and was subjected to sales tax at the point of first purchase in
the State irrespective of whether it was purchased within the State or
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outside the State. The subject-matter of challenge in this application
under Art. 226 of the Constitution before the Andhra ·Pradesh High
Court, was the validity of an amendment to the Schedule to the Act
modifying the point of taxability of tamarind in question. Prior to the
amendment tamarind was taxable as mentioned hereinbefore at the
first purchase point, being item No. 14 in Schedule II to the Act. The
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entry therein read as follows:
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"Description of
the goods
14.
Tamarind (2014)
Point of levy
At the point of
first purchase
in the State."
Rate of tax
4 paise in
the rupee.
D.C. GURUVULU v. GOVT. OF. A.P. [MUKHARJI, J.]
425
By virtue of the amendment, the said entry was amended.
Tamarind which is purchased within the State, was retained in Ilnd
Schedule while tamarind purchased outside the State was transferred
to Ist Schedule. After the amendment, item No. 14 in Schedule II and
item 170 in Schedule I stood as follows:
"SECOND SCHEDULE
S. No. Description of goods
14.
Tamarind when pur,
chased within the
State.
Point of levy
At the point of
first purchase
in the State.
FIRST SCHEDULE
S.No. Description of Goods
170
Tamarind when
obtained from outside the State.
Point oflevy
At the point
of first sale
in the State."
Rate of tax
4 paise in
the rupee.
Rate of tax
4 paise in
the rupee.
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It appears that the result of the said amendment was that
tamarind purchased outside the State, was taxable at the point of first
sale in the State. It was contended before the High Court that the said
amendment brought about a discrimination between tamarind purchased within the State i.e. one produced within the State, and the
tamarind purchased outside the State i.e. produced in other States;
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and that the incidence of tax was more on the tamarind purchased
outside the State. It was contended that it violated clause (a) of Art.
304 as also Art; 14 ofthe Constitution.
Clause (a) of Art. 304 states that notwithstanding anything contained .in Art. 301 or Art, 303, the legislature of State may by law
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impose on goods imported from other States or the Union Territories
any tax to which similar goods manufactured or produced in the State
are subject, so,-however, -as not to discriminate between goods so
imported and goods so manufactured or produced. The question is
whether as a result of the said amendment, there has been any infraction of clause (a) of Art. 304 of the Constitution. We are unable to
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SUPREME COURT REPORTS
I 1989] Supp. 2 S.C.R.
accept the contention that there was any such discrimination. The
High Court in the judgment under appeal has so held. We are of the
opinion that the High Court was right. Both the tamarind purchased
within, and outside, the State is taxed uniform Iv.
On behalf of the appellants, reliance was placed on Firm A. T.B.
Mehtao Majid and Co. v. The State of Madras, 14 STC 355, wherein on
an analysis of the relevant provisions it was held that the provisions of
rule 16(2) of the Madras General Sales Tax [Turnover and Assessment] Rules, 1939 (substituted in the place of the old rule w.e.f. 1st
April, 1955) discriminate between hides and skins imported from outside the State and those manufactured or produced inside the State
and as such contravened the provisions of Art. 304(a) of the Constitution, and therefore were invalid. It was reiterated by this Court that
taxing laws can be restrictions on trade, commerce and intercourse, if
they hamp'-r the flow of trade and if these are not compensatory taxes
or regulatory measures. It was further held that sales tax on hides and
skins imposed under the Madras General Sales Tax Act, 1939 and the
D rules framed thereunder could not be said to be a measure regulating
any trade or compensatory tax levied for the use of trading facilities.
The similarity contemplated by Art. 304(a) is in the nature of the
quality and kind of the goods and not with respect to whether they
were already the subject of tax or not. There this Court was dealing
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with rule 16 of the relevant. Madras rules. Sub-rule (a) of rule 16
provides that in case of untanned (raw) hides and/or skins, the tax u/s
3( 1) of the Act was to be levied from the dealer who is the last purchaser in the State. Sub-rule (2) which was in two parts, dealt with
tanned hides and skins. Clause (i) of sub-rule (2) provided that in case
of hides and skins tanned outside the State, tax shall be levied upon
the dealer who in the State is the first dealer. Clause (ii) provided that
in case of tanned hides and skins which have been tanned within the
State, the tax u/s 3( I) shall be levied upon a p.yson who is the first
dealer in such hides or skins. The proviso, however, declared that if
the dealer proved that he had already been taxed under sub-rule ( 1) on
the untanned hides and skins, he shall not be subjected to tax under
sub-rule (2). It was held by this Court that this rule inevitably brought
about a discrimination in the quantum of tax because while the tanned
hides and skins which were imported from outside the State and were
sold within the State, were taxed at a higher rate, the hides and skins
tanned within the State and sold within the State, are taxed at a lower
rate by virtue of the proviso. It was, indeed, found that there was a
substantial variation between thP prices of tanned and untanned
goods. This Court pointed out that by virtue of the proviso, the tax on
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D.C. GURUVULU v. GOVT. OF. A.P. IMUKHARJI, J.l
427
the latter category was, in fact, on the purchase prico of the untanned
hides and skins-though ostensibly the rate of tax under >ab-rule (2)
was the same Hence, the mischief of discrimination was brought
about by the proviso which said that if hides and skins are taxed within
the State at raw (untanned) stage, they shall not be taxed again at the
tanned stage. But in view of the facts involved in the instant case, we
are unable to accept that the principles of the said decision have any
scope of application to the facts of instant case. In the instant case the
tamarind purchased within the State and outside the State, are taxed at
the same rate. But the point of taxability has necessarily to be different
in both the cases. In case of tamarind purchased within the State i.e.
produced within the State, the tax is levied at the point of first purchase, and i;: ~~~e of imported tamarind i.e. purchased outside the
State, the tax is levied at the point of first sale in the State.
It was contended by Mr. P. Rama Reddy, learned advocate for
the appellants, that tax in case of imported tamarind would be more
because its price will include freight charge and other State taxes.
Hence, it was submitted that the sales tax will also be more. That may
be so but it cannot be said to be the effect of what law has amended.
Tamarind will be imported only when it can be sold in the market here
at the same price as the tamarind produced within the State. Only
when after bearing the other State tax and freight charges, if it is able
to compete with the locally produced tamarind, it wiU normally be
imported from outside the State. If there is any difference in prices
because of market conditions and other factors, that cannot be said to
be due to discrimination prohibited by clause (a) of Art. 304 of the
Constitution. In order to ensure this, it would be necessary that
imported goods must always be taxed at a lower rate than the corresponding goods within the State because of freight and other
charges. That cannot be so. The High Court observed that tamarind is
an agricultural produce and that is why it was put in Second Schedule
i.e. to say, purchase point, but where it was imported and sold within
the State, there was no reason to tax it at the sak point. We.are of the
opinion that the High Court was right.
It was contended on behalf of the appellants before the High
Court that imported tamarind which had suffered tax at the first sale
point, will again be taxed at the purchase point when purchased within
the State, which would amount to double taxation. Once the imported
tamarind is taxed at the first sale pomt under the First Scheduie, there is
no occas10n for taxing it over again at the sale point under the Second
Schedule. The idea of both the Schedules is to tax only at one point
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SUPREME COURT REPORTS
[ 1989] Supp. 2 S.C.R.
though the point of taxability may be different under different
Schedules.
Our attention was drawn on behalf of the appellants to a decision
of this Court in Indian Cement Ltd. & Ors. v. State of Andhra Pradesh
& 0 rs., 69 STC 305. There this Court was concerned with Andhra
Pradesh General Sales Tax Act. It appears that in exercise of its
powers u/s 9( 1) of the Act, the State Government had passed a notification on January 27, 1987 reducing the rate of sales tax on sale of
cement from 13. 75% to 4% in respect of .cement manufactured by
cement factories situated in the State and sold to manufacturing units
situated within the State for the purpose of manufacture of cement
products such as cement sheets, asbestos sheets, cement flooring
stones, cement concrete pipes, cement water and sanitary fittings, concrete poles etc. On the same day the State Govt. had passed another
notification u/s 8(5) of the Central Sales Tax Act, 1956 reducing the
rate ,of tax on inter-State sale of cement to 2% with or without Form C.
On February 28, 1987 the State of Kamataka passed a similar notifkation reducing the rate of tax on inter-State sale of cement from 15% to
2 % . The petitioners, of whom some were manufacturers of cement
having their manufacturing units in. Tamil Nadu and others, were
stockists having places of business in the States of Karnataka, Kerala
and Tamil Nadu, filed writ petitions before this Court challenging the
validity of these notifications on the ground that these created trade
barriers and directly impinged upon the freedom of trade, commerce
and intercourse provided for in Art. 301 of the Constitution of India. It
was held that the variations in the rates of local and inter-State sales
tax affected free trade and commerce and created a local preference,
which was contrary to the scheme of Part XIII of the Constitution of
India; and as such the notification were bad.
This decision was rendered in the peculiar facts of that case.
While the principle enunciated by the Court in the said .decision there
can be no dispute that taxation was a deterrent in some cases, against
free flow of trade, and as ·a result of favourable or unfavourable treatment by way of taxation, the course of flow of trade gets regulated
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either adversely or favourably, and that if the scheme of Part XIII
guarantees has to be preserved in the national interest, it is imperative
that the provisions of Art. 301 must be strictly complied with, we are of
the opinion that the ratio of the said decision in the facts and circumstances of this case would not be relevant. In our opinion, the provisions of the Constitution should be strictly complied with not only with
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D.C. GURUVULU v. GOVT. OF. A.P. [MUKHARJI, J.J
429
be dealt with the other provisions of the Constitution. Our attention
was drawn to the observatiohs of this Court in Mis Associated Tanners,
Vizianagaram, A.P. v. C.T.O., Vizianagaram. A.P. & Ors., [1986] 2
sec 479. It was reiterated there that the effect of an imposition of tax
may work differently upon different dealers, namely, those who
import goods and those who purchase the goods locally. That effect
cannot be said to arise directly or as an immediate effect of the imposition of tax. It cannot be said that there was any violation of clause (a)
of Art. 304 of the Constitution.
We are of the opinion that in the instant case the differencdn
rates, if any, between the imported tamarind and locally prodllced
tamarind is not as an immediate or direct result of the imposition of
tax. The decision of this Court in Weston Electroniks & Anr. v. State of
Gujarat & Anr., I 1988] 3 SCR 768 dealt, in our opinion, with an
entirely different situation and for the purpose of the instant controversy, cannot be of any assistance.
Mr. C. S.itaramiah, appearing for the respondents, drew our
attention to Rattan Lal & Co. & Anr. v. The Assessing Authority &
Anr., I 1969] 2 SCR 544 wherein this Court had reiterated that when a
taxing State is not imposing rates of tax on imported goods different
from rates of tax on goods manufactured or produced, Art. 304 has no
application. So long as the rate is the same Art. 304 is satisfied. In the
instant case the tax is at the same rate and, hence, tax cannot be said to
be higher in the case of imported goods. When the rate is applied the
resulting tax may be somewhat higher but that does not contravene the .
equality contemplated by Art. 304 of the Constitution. In the facts and
the circumstances of the case, there is no ground to complain about the
breach of Art. 14 of the Constitution.
In the aforesaid view of the matter, we are of the opinion that the
High Court was right in the view it took and this appeal must fail. The
appeal is accordingly dismissed. In the facts and the circumstances of
the case, however, we make no order as to costs.
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Appeal dismissed.
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