Prakash Enterprises and Others vs Commercial Tax Officer, Gowliguda, Hyderabad and Another

Ramanujulu Naidu, J.—These writ petitions are filed under article 226 of the Constitution of India for issue of writs of mandamus declaring G.O.Ms. No. 1176, Revenue (CT-II) dated 17th December, 1987 published in the Andhra Pradesh Gazette on 21st December, 1987 as unconstitutional and appropriate directions quashing the provisional assessments made by the 1st respondent subjecting the petitioners to sales tax. The entire disputed turnover represents the total sale proceeds of cycle tyres and tubes effected by the petitioners during the period commencing from 15th June, 1987 and ending with 21st December, 1987.

All the petitioners are dealers in tyres and tubes including cycle tyres and tubes. Under item 17 of the First Schedule to the Andhra Pradesh General Sales Tax Act, cycles, their accessories and parts including tyres and tubes and accessories used therewith made of rubber or other material are taxable at the point of first sale in the State at 6 paise in the rupee. On a representation received from the cycle trade by the Government of Andhra Pradesh, G.O.Ms. No. 379, Revenue (S) Department dated 9th April, 1986 was issued by the Government exempting from tax under the A.P. General Sales Tax Act, sales of cycles with effect from 1st April, 1986. On a further representation made by the cycle trade, G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987 was issued by the Government exempting with effect from 15th June, 1987 tax payable under the Act on sales of parts and accessories of cycle. Later under G.O.Ms. No. 1176, Revenue (CT-II) dated 17th December, 1987 impugned in this batch of writ petitions, the notification issued under G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987 was amended with effect from 15th June, 1987 withdrawing exemption granted on sales of tyres and tubes.

Sri S. Dasaratharama Reddi, learned counsel appearing for the petitioners, submits that the power to notify exemptions and reductions of tax conferred upon the Government u/s 9 of the Act is not retrospective that it is only u/s 39(2A) of the Act, added by Ordinance 19 of 1983 with effect from 20th September, 1983, rules made by the Government thereunder can be given retrospective effect and that the impugned G.O. withdrawing exemption of tax on sales of cycle tyres and tubes with retrospective effect is bad and without authority. Reliance is placed upon the decision of a Division Bench of this Court in Yemmiganur Spinning Mills Ltd. v. State of Andra Pradesh [1976] 37 STC 314 whereunder it was held, construing the scope of power conferred upon the Government u/s 9 of the Act, that unless empowered expressly or by necessary implication, a delegate could not make a rule or issue a notification with retrospective effect and that any such notification would come into force only from the date of its publication in the Gazette. The decision relied upon by the learned counsel is on all fours and we express our respectful agreement with the decision of the Division Bench. It therefore follows that the impugned G.O. to the extent it withdraws exemption of tax on sales of cycle tyres and tubes from 15th June, 1987 to 21st December, 1987 is bad and without authority of law. We accordingly direct the assessing authority to revise the assessments in the light of the decision rendered by us. The writ petitions are accordingly allowed to the extent indicated above. No costs.

Anjaneyulu, J.

I am in respectful agreement with my learned brother. I would however like to make full observations. The learned Government Pleader contends that the effect of G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987 was not to exempt the sales of tyres and tubes because that order referred to only cycle parts and accessories. It is therefore urged that pursuant to G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987 the assessee could never have anticipated exemption of turnover of cycle tyres and tubes. It is not possible to accept this contention. If the real effect of G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987 is to continue the levy of tax in respect of sales of tyres and tubes, there is no reason as to why the impugned G.O.Ms. No. 1176, Revenue (CT-II) dated 17th December, 1987 was issued. The purpose of issuing the present G.O. amending the earlier G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987 excluding tyres and tubes would be necessary implication show the intention of the Government to exempt the sales of tyres and tubes by G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987. Otherwise the impugned G.O. would be meaningless. It is not therefore possible to accept the contention of the learned Government Pleader that the impugned G.O.Ms. No. 1176, Revenue (CT-II) dated 17th December, 1987 is to bring about any new situation not envisaged by the earlier G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987.

The Government should act with some sense of responsibility and care in withdrawing exemptions with retrospective effect. Undoubtedly action on G.O.Ms. No. 575, Revenue (S) Department dated 9th June, 1987 cycle tyres and tubes were sold by the dealers without collecting sales tax. There is no evidence whatsoever to the effect that sales tax was collected in respect of sales of cycle tyres and tubes after 15th June, 1987. From the cases before us, we see that the sales of cycle tyres and tubes run into crores of rupees and the tax corresponding to that is considerable. Before calling upon the tax-payers to share burden of such a heavy amount of tax which was not collected the Government should consider the matters properly and take decisions concerning the serious liability that will be attached by implementation of the G.Os. withdrawing exemption with retrospective effect. What is more unfortunate in this case is that the Government showed total disregard and defiance to the decision of the Division Bench of this Court in Yemmiganur Spinning Mills Ltd. v. State of Andhra Pradesh [1976] 37 STC 314, referred to by my learned brother stating categorically the legal position that section 9 of the Act which empowers the Government did not confer power retrospectively giving effect to the notifications. The Government is either unaware of the decision above referred or if it is aware of the decision did not agree to implement the decision of this Court. We must express distress at this state of affairs.

Writ petitions allowed.