SRI VENKATESWARA RICE, GINLING & GROUNDNUT OIL MILL CONTRACTORS CO. & ORS. versus STATE OF ANDHRA PRADESH & ORS.

Citation: [1972] 1 S.C.R. 346 · Decided: 23-08-1971 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Judgment (excerpt)

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 ground-
nut 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 assessee-
miUers. 
That is to say, as soon as a first miller purchased groundnut, the 
turnover relating to that pu:rchase-any question of exemption apart-be-
came 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 res-
pect 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 pur-
chase of groundnut by an assessee and not his act of crushing the ground-
nut 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 deci-
sion. [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

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