M/S ANAND COMMERCIAL AGENCIES ETC. versus THE COMMERCIAL TAX OFFICER VI CIRCLE, HYDERABAD AND ORS. ETC.

Citation: [1997] SUPP. 5 S.C.R. 76 · Decided: 06-11-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
c 
MIS ANAND COMMERCIAL AGENCIES ETC. 
v. 
THE COMMERCIAL TAX OFFICER VI CIRCLE, 
HYDERABAD AND ORS. ETC. 
NOVEMBER 6, I997 
[S.P. BHARUCHA AND SUHAS C. SEN, JJ.] 
Sales Tax: 
Andhra Pradesh General Sales Tax Act 1957-First Schedule-Ent1y 
24 Clauses (a) and (b)-lmposition of Sales Tax-Groundnut oil-Imported 
from Karnataka for sale in Andhra Pradesh-Groundnut not faxed under the 
Andhra Pradesh General Sales Tax Act-Higher rate of tax imposed on 
groundnut oil-Validity of-Held, groundnut oil imported by appellant cannot 
D be taxed at higher rate than the rate prescribed in clause (b) of Entry 24 
of first Schedule. 
Co.nstitution of India, I 950: 
Articles 301, 302, 303, and 304~Andhra Pradesh General Sales Tax 
E Act, I957-Clause (a) of Entry 24 of the First Schedule-Imposition of 
higher rate of tax on groundnut oil-Held, violative of Articles 301 to 304 
of Constitution of India, I950 : 
The appellant-firm was engaged in manufacturing and selling groundnut 
oil. Under Entry 24(b) of the First Schedule to the Andhra Pradesh General 
F Sales Tax Act, 1957 tax was payable on groundnut oil at the rate of2-l/2 
paise per rupee of the sale price. Under Entry 24(a), tax was payable on 
groundnut oil or refined oil obtained from groundnut which has not been 
taxed under the Andhra Pradesh Act, at the rate of 6-1/2 paise per rupee of 
the sale price. For the relevant assessment year tax at a higher rate was 
demanded from appellant as the groundnut oil was imported from Karnataka 
G for sale in Andhra Pradesh. The appellant challenged the imposition of 
higher levy. The claim of appellant was rejected by both the Sales Tax Officer 
and the Assistant Commissioner. On further appeal, the High Court dismissed 
the petition. Hence the present appeal. 
H 
The contention of the appellant was that the oil had been extracted out 
76 
ANAND COMMERCIAL AGENCIES v. COMMERCIAL TAX OFFICER 
77 
of groundnuts which had already been taxed under the Karnataka Sal.es Tax ·.A 
Act. The levy of higher tax on the oil imported from Karnataka into Andhra . 
Pradesh was discriminatoryand violative of right of freedom of trad.e and 
commerce throughout India .. 
The contention of the respondents was that if a manufacturer of oil 
does not purchase groundnut oil from the market but has his own supply of B 
groundnut he pays tax at 6-1/2 paise in the rupee which was the rate at which 
imported oil was taxed. The distinction was only in the case of oil 
manufactured out of groundnut which has borne tax at the rate of 4 paise 
in the rupee in Andhra Pradesh. In such a case; the tax was at the rate of 
2-1/2 paise in the rupee so that the manufacturer pays 6-1/2 paise in the C 
rupee as tax in all. Therefore, no discrimination was being practised by 
taxing the imported oil at the rate of 6-1/2 paise in the rupee. 
· Allowing the appeal, this Court 
HELD: I.I. Clause (a) ofEntry 24 of the First Schedule to the Andtira D 
Pradesh General Sales Tax Act, 1957 is violative of the provisions of Articles 
301 to 304 of the Constitution of India, 1950 in so far as it imposes a higher 
rate of tax on groundnut oil or refined oil which has been .obtllined from 
groundnuts that have not been taxed under the Andhra Pradesh Act. 
187cC-DJ 
E 
1.2. The groundnut oil imported by the appellant from Karnataka for 
sale in Andhra Pradesh cannot be taxed at a rate higher than the rate 
prescribed in clause (b) of Entry 24 of the First Schedule to the Andhra 
Pradesh Act. Under Entry 24 of the First Schedule a lower rate of duty was 
imposed oil groundnut oil or refined oil obtained from groundnuts that have F 
been taxed under the Andhra Pradesh Act. Groundnut oil manufactured in 
Andhra Pradesh has not generally been charged at a lower rate of tax has 
not been substantiated by any fact or figure. It is not the case of the state 
that only a small portion of the oil manufactured by local manufacturers is 
produced from groundnuts purchased in Andhra Pradesh. Unless that can be 
established, it cannot be held that groundnut oil or refined oil within the G 
State is generally charged at the same rate as the imported oil. 
[87-D; 86-F-H] 
1.3. The oil manufactured in Karnataka which was imported into 
Andhra Pradesh was manufactured out of groundnuts which had also borne 
tax under the Karnataka Sales Tax Act. Therefore, it cannot be said that oil H 
78 
SUPREME COURT REPORTS (1997] SUPP. 5 S.C.R. 
A manufacturers in Andhra Pradesh are in a disadvantageous positi

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