Judgment

VENKATARAMA AIYAR, J. :These are appeals against the judgment of the High Court of Andhra Pradesh in petitions Nos. 1172 of 1956 and 56 of 1957 filed under Art. 226 of the Constitution questioning the validity of the Andhra Act XIV of 1955 insofar as it imposes a tax on the sale of Virginia tobacco, The appellants are firms doing business in the export of tobacco. The usual course of that business is stated to be that they first enter into contracts with their customers abroad for the sale of tobacco that thereafter they purchase the requisite quantities of goods locally and then export them to the foreign purchasers in performance of their contracts, Prior to October 1 1953, the area wherein the appellants carried on business formed part of the State of Madras, and on that date the State of Andhra was constituted, and the area in question fell within that State. The law relating to sales tax in force in that area is the Madras General Sales Tax Act, IX of 1939. Section 5 of this Act provides far exemption of tax on sales of goods specified therein and S. 6 confers on the State Government power to exempt the tax payable on the sale of any specified class of good or by any specified class of per- sons. In exercise of the powers conferred by S. 6 the Government of Madras issued on March 31, 1953, a notification No. 144 exempting the sale; of unmanufactured tobacco from sales tax. After the Andhra State came into existence the Legislature of that State enacted Act XIV of 1955 hereinafter referred to as the Amendment Act whereby it amended S. 5 of the Madras General Sales Tax Act by adding as item (viii) the following:-

"(viii) raw tobacco (except country variety thereof) whether cured on uncured shall be liable to tax under Section 3. Sub- section (1) only at the point of the first purchase effected in the State of Andhra by a dealer who is not exempt from taxation under Section 3, Sub-section (3) but at the rate of seven and half pies for every rupee on his turnover.

Explanation :- For the purpose of this item, country variety of tobacco means variety of tobacco other than Virginia and other similar varieties of tobacco."

As a result of this enactment exemption from tax was limited to sales of what is known as country tobacco (Nattu tobacco) and so far as sales of Virginia tobacco are concerned, they became liable to be taxed. Pursuant to the Amendment Act, the Andhra Government issued on November 4,1955, a notification No. 711 cancelling the earlier notification No. 144 dated March 31, 1953.

2. Acting under the provisions of the Amendment Act, the Additional Commercial Tax Officer, Guntur, issued notices to the appellants to produce the account books relating to their business in tobacco for the purpose of assessing sales tax. To this the appellants replied by filing petitions under Art, 226 of the Constitution in the High Court of Andhra Pradesh challenging the constitutionality of the Amendment Act on the grounds inter alia that in taxing sales of Virginia tobacco and exempting from tax sales of other tobacco the Act was discriminatory, and that in consequence it was obnoxious to Art. 14 of the Constitution and that further it was in contravention of Art. 286 (1) (b) as it was really a tax on sales in the course of export of tobacco. They accordingly prayed that a mandamus might be issued directing the respondents to forbear from making an assessment on the sales of tobacco. The learned judges disagreed with these contentions and dismissed the petitions, holding that the impugned Act did not infringe any constitutional provisions, but granted certificates under Art, 133 of the Constitution. That is how these appeals come before us.

3. On the arguments addressed to us, two questions arise for our determination:

(1) Is the impugned Act repugnant to Art, 14 for the reason that it singles out Virginia tobacco for taxation?

(2) Is the impugned legislation in contravention of Art. 286 (1)(b) as imposing a tax on sales in the