# SRI VENKATESWARA RICE, GINllilNG & GROUNDNUT ~ OIL MILL CONTRACTORS CO. & ORS v. STATE OF ANDHRA PRADESH & ORS

- **Citation:** [1972] 1 S.C.R. 346
- **Court:** Supreme Court of India
- **Decided:** 1971-08-23
- **Case number:** Civil Appeals Nos. 1809 to 1812 of 1968
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sri-venkateswara-rice-ginllilng-groundnut-oil-mill-contractors-co-ors-v-state-5361
- **Pages:** 5

## Headnote

Andhra Prad""h General Sales Tax Act, 1956, Sch. Ill, item 6, and
Central Sales Tax Act (74 of 1956), ss. 14 and 15-Purchase of groundnut by mUlers-Used for extracting oil and re-sale-Liability to purchase
tax.
B
Practice and Procedure-Division Bench of High Court ignoring earlier
C
decision oj q,nother Division Bench-Propriety.
Under ss. 14 and 15 of the Central Sales Tax Act, 1956, groundnut is
one of the 'declared goods' and a State is not empowered to levy purchase
tax of more than 3 % on the turnover, and further the tax cannot be levied
at more than one stage. Under s .. 6 of the Andhra Pradesh General Sales
Tax Act, 1956, the sales or purchases of 'declared goooo' by a dealer shall
be liable to tax at the rate, and at the point of sale or purchase specified in
D
the JU Schedule to the Act.
Item 6 of the III Schedule provides, that
with respect to groundnut, the point of tevy 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.
Tue assessees were mil1ers but not decorticating millers and they were
registered dealers under the Act.
Groundnut was purchased by them not
for sale. but was either used by them entirely for extracting oil or partly
for extracting oil and the rest sold to others.
On the question whether the event that gave rise to tax liability was :
(a) the purchase by the assessees, or (b) the crushing of the groundnut
purchased by the assessees, or ( c) the last purchase by a purchaser in the
State, the Higih Court, in revision, held that the purchase tax should be
le\ied when the as.sessees purchased the groundnut.
Dismissing the appeals to this Court,
HELD: (!) 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 is computed1 only at the end of the year.. Hence, the turnover
relating to the purchases, in the present case. became charged with the
liability to pay tax as soon as those purchases were made by the assesseemiUers.
That is to say, as soon as a first miller purchased groundnut, the
turnover relating to that pu:rchase-any question of exemption apart-became liable to tax. f348 H; 349 A-CJ
(2) This interpretation would not make subsequent purchases by other
miUers of the same groundnut exigible to tax, because, in view of ss. 14
and 15 of the General Sales Tax Act and s. 6 of Andhra Pradesh Act,
purchase of groundnut can be taxed only at one stage. .Once a particular
quantitv of groundnut has beeo subjected to tax the State's power in respect of those goods is exhausted. [349 D-E]
E
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G
H
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A
B
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SRI VENKATESWARA RICE MILL v. A. P. STATE (Hegde, /.) 347
(3) The language of item ~ of the HI Schedule shows that it is only
the first purchase that becomes exigible to tax. Therefore, there was no
111eed for the Legislature to say 'when purchased by the first miller' and
the interpretation does not involve the adding of any word into that item.
[349 E-Fl
( 4) The event which attracted the .tax in the present case is the purchase of groundnut by an assessee and not his act of crushing the groundnut purchased or dealing with the groundnut in any other manner, because,
his subsequent dealings in those goods is irrelevant. Hence, it could not
be said that the assessees should be taxed only in respect of that part of
the turnover which related to groundnut crushed for extracting oil; and
that with respect to the remaining part it was the last dealer who purchased
it, t~at should be taxed. [349 G-H]
(5) A Division Bench of a High Court is bound by an earlier decision
of a co-ordinate Bench of the same High Court. If the Judges felt that
the earlier decision should be reconsidered they should have referred the
question to a larger Bench and should not have ignored the earlier decision.

## Text

346
SRI VENKATESWARA RICE, GINllilNG & GROUNDNUT
~
OIL MILL CONTRACTORS CO. & ORS.
v.
STATE OF ANDHRA PRADESH & ORS.
August 23, 1971
[K. S. HEGDE AND A. N. GROVER, JJ.]
Andhra Prad""h General Sales Tax Act, 1956, Sch. Ill, item 6, and
Central Sales Tax Act (74 of 1956), ss. 14 and 15-Purchase of groundnut by mUlers-Used for extracting oil and re-sale-Liability to purchase
tax.
B
Practice and Procedure-Division Bench of High Court ignoring earlier
C
decision oj q,nother Division Bench-Propriety.
Under ss. 14 and 15 of the Central Sales Tax Act, 1956, groundnut is
one of the 'declared goods' and a State is not empowered to levy purchase
tax of more than 3 % on the turnover, and further the tax cannot be levied
at more than one stage. Under s .. 6 of the Andhra Pradesh General Sales
Tax Act, 1956, the sales or purchases of 'declared goooo' by a dealer shall
be liable to tax at the rate, and at the point of sale or purchase specified in
D
the JU Schedule to the Act.
Item 6 of the III Schedule provides, that
with respect to groundnut, the point of tevy 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.
Tue assessees were mil1ers but not decorticating millers and they were
registered dealers under the Act.
Groundnut was purchased by them not
for sale. but was either used by them entirely for extracting oil or partly
for extracting oil and the rest sold to others.
On the question whether the event that gave rise to tax liability was :
(a) the purchase by the assessees, or (b) the crushing of the groundnut
purchased by the assessees, or ( c) the last purchase by a purchaser in the
State, the Higih Court, in revision, held that the purchase tax should be
le\ied when the as.sessees purchased the groundnut.
Dismissing the appeals to this Court,
HELD: (!) 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 is computed1 only at the end of the year.. Hence, the turnover
relating to the purchases, in the present case. became charged with the
liability to pay tax as soon as those purchases were made by the assesseemiUers.
That is to say, as soon as a first miller purchased groundnut, the
turnover relating to that pu:rchase-any question of exemption apart-became liable to tax. f348 H; 349 A-CJ
(2) This interpretation would not make subsequent purchases by other
miUers of the same groundnut exigible to tax, because, in view of ss. 14
and 15 of the General Sales Tax Act and s. 6 of Andhra Pradesh Act,
purchase of groundnut can be taxed only at one stage. .Once a particular
quantitv of groundnut has beeo subjected to tax the State's power in respect of those goods is exhausted. [349 D-E]
E
F
G
H
_!
A
B
c
D
E
F
G
H
SRI VENKATESWARA RICE MILL v. A. P. STATE (Hegde, /.) 347
(3) The language of item ~ of the HI Schedule shows that it is only
the first purchase that becomes exigible to tax. Therefore, there was no
111eed for the Legislature to say 'when purchased by the first miller' and
the interpretation does not involve the adding of any word into that item.
[349 E-Fl
( 4) The event which attracted the .tax in the present case is the purchase of groundnut by an assessee and not his act of crushing the groundnut purchased or dealing with the groundnut in any other manner, because,
his subsequent dealings in those goods is irrelevant. Hence, it could not
be said that the assessees should be taxed only in respect of that part of
the turnover which related to groundnut crushed for extracting oil; and
that with respect to the remaining part it was the last dealer who purchased
it, t~at should be taxed. [349 G-H]
(5) A Division Bench of a High Court is bound by an earlier decision
of a co-ordinate Bench of the same High Court. If the Judges felt that
the earlier decision should be reconsidered they should have referred the
question to a larger Bench and should not have ignored the earlier decision. [350 C-D]
M. Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes)
Anantpur, 27 S.T.C. 18, overruled.
CIVIL APPELLATE JURISDICTION :
Civil Appeals Nos. 1809
to 1812 of 1968.
Appeals from the judgment and order dated April 20, 1967
of the Andhra Pradesh High Court in T.R.C. Nos. 48, 43, 49
and 74 of 1966.
M. C. Chagla, C. A. Kanyaka Prasad, R. Gopalakrishnan and
D. P .. Mahanty, for the appellants (in all the appeals),
P. Ram Reddy, and G. S. Rama Rao, for fhe respondents (in
all the appeals). _
The Judgment of the Court. was delivered by
Hegde, J. In these appeals by certificate a common question
of law arises for decision viz,, on the facts and circumstances of
these cases what is the point of levy of purchase tax in respect of
certain transactions relating to purchase of groundnut or groundnut kernel by the assessees-appellants under the Andhra Pradesh
General Sales Tax Act, 1956 (in brief 'the Act') ?
The Commercial Tax Officer came to the conclusion that a
critical event took place when the assessees 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 Sak~ Tax
Appellate Tribunal disagreeing with the conclusion reached by the
Commercial Tax Officer as well as the Assistant Commiss10ner
came to the conclusion that the turnovers relating to the purchases
of groundnut in· question became exigible to tax either when the
groundnut purchased was crushed by the millers or when the
348
SUPREME COURT REPORTS
[1972] I S.C.R.
5ame was
purchased by the last purchasers.
But when the
A
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 Officer.
In all these appeals, the assessees are admittedly millers. They
are registered dealers under the Act.
The groundnut purchased
B
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 in purchase tax.
The question for decision, as mentioned earlier, is which were the
events that gave rise· to tax liability-'first purchase', the crushing
-0f the groundnut purchased or the 'last purchase' ?
The Ground is one of the "declared goods" rto bo~ of special
importance in inter-state trade or commerce under s .. 14 of the
Central Sales Tax Act, 1956, and therefore in view of s. 15(a)
c
of that Act, the State is not empowered to levy purchase tax of
more than .three percent on the turnover in respect of those purchases and further the tax cannot be levied at more than one stage.
D
Herein we are not concerned with inter-state sales or purchases.
Now turning to the Act, s. 2(f) defines "declared goods" as
meaning goods declared under s. 14 of the Central Sales Tax Act,
1956 (Central Act 74 of 1956) to be of special importance in
inter-state trade or commerce. In compliance with the mandate
of ss. 14 and 15 of the Central Sales Tax Act,
1956. Section 6
E
of the Act provides that notwithstanding anything contained in
s. 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
F
tax shall be assessed, levied and collected in such manner as mav
be prescri1Jed. Here again we need not refer to that part of s. 6
which deals with inter-state 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 G
the point of purchase by the last dealer who buys in the State.
The rate of tax is 2 paise in the rupee.
None of the assessees before us is a
decorticating miller.
Hence we have to see whether the purchases of groundnut made
by them did not become taxable as soon as they made those purchases. It is now well settled th.at even under the Sales Tax laws,
H
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
A
B
c
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SIU VENKATESWAR RICE MILL v. A. P. STATE (Hedge, J.) 349
of purchase tax is made, though the liability of the dealer can be
computed only at the end of the year. The inc.urring of !he charge
is one thing and its computation is a totally different thing. Hence
the turnover relating to the purchases ~th whic~ ~~ are concerned in these appeals became charged with the jliabihty to pay tax
as soon as thos·~ purchases were made by the assessee-millers. To
restate the position, whenever a miller purchases groundnut, .the
turnover relating to that purchase becomes exigible to ta~ sub1ect
to such exemptions as may be given under the Act. Thls means
that as 1;oon as a first miller purchases groundnut, the turnover relating to that purchase, the question of exemption ~part-becomes
liable to tax. T:iis is also the view taken by the High Court.
It was urged on behalf of the assessees that if we place that
interpretation then even the turnovers relating to subsequent purchases of the same groundnut made by the other millers would
become exigible to tax despite the fact that only a single point
purchase tax is leviable under the Act. It was further urged !hat
we should not read into item 6 of the Third Schedule the word
"first" before the word "Miller" under column 2 thereof. We see
no merit in these contentions. Quite clearly in view of s. 14 and
s. 15 of the Central Sales Tax Act and s. 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
State's 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 the first -purchase becomes exigible to tax
and in view of s. 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 assessees.
The next argument advanced on behalf of the assessees is that
in the case of some of the assessees a part of the groundnut purchas!!d had been sold to other millers; hence in those ca~cs, the
G
assessees must be taxed only in respect of that part of the turnover
which relates to groundnut which they had crushed for extracting
oil and in the case of remaining part, it is the last dealer wh0
purchased the same should be taxed.
This contention again is
unaccpptable.
As mentioned earlier the ewnt which attracted tax
is the act of the miller purchasing groundnut and not his act of
R
crushing the groundnut purchased or dealing with that groundnut
in any other manner. We have earlier mentioned that the very
act of purchase by a miller attracts the liability to pay tax under
s. 5 read with Schedule 3 item 6. His subsequent dealings in those
4-L1340 SurCT/71
3 50
SUPREME COURT REPORTS
(1912 j l S.C.R.
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 >ell them. Hence we need not go into the question a~ to
what would be the position in law where a miller purchases some
groundnut for milling and the rest for sale.
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 agreem~ll't with the reasoning of the High Court. But our
attention was invited to a la!ter decision of the same High Court
in M. Madar Khan & Co. v. Assistant Commissioner (Commer·
cial Taxes) Anantpur and ors. C') 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 la1er case
overlooked the fact that 1they 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 decision.
For fhe reasons mentioned above, these appeals fail and they
<ire dismissed with costs.
V.P.S.
Appeals dismissed.
(1) 27 S.T.C. 18.
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