Back
Andhra Pradesh High Court
Union of India - Appellant
Versus
State OF A.P. - Respondent
Decided On : 03-18-96
A.P. GENERAL SALES TAX ACT - SECTION 2(E) - EXPLANATIONS - VALIDITY - SALE OF CONFISCATED GOODS BY CUSTOMS AUTHORITIES - WHETHER LIABLE TO SALES TAX - ARTICLE 285(1) OF THE CONSTITUTION OF INDIA - EXEMPTION FROM TAXES IMPOSED BY A STATE OR BY ANY AUTHORITY WITHIN A STATE - WHETHER INCLUDES SALES TAX ON SALE OF CONFISCATED GOODS - ARTICLE 131 OF THE CONSTITUTION OF INDIA - DISPUTE BETWEEN THE GOVERNMENT OF INDIA AND ONE OR MORE STATES OR BETWEEN THE GOVERNMENT OF INDIA AND ANY STATE OR STATES ON ONE SIDE AND ONE OR MORE OTHER STATES ON THE OTHER OR BETWEEN TWO OR MORE STATES - WHETHER INCLUDES DISPUTE RELATING TO LEVY OF SALES TAX ON SALE OF CONFISCATED GOODS BY CUSTOMS AUTHORITIES - ARTICLE 226 OF THE CONSTITUTION OF INDIA - WRIT PETITION UNDER ARTICLE 226 - MAINTAINABILITY - WHETHER BARRED BY ARTICLE 131 OF THE CONSTITUTION OF INDIA.
Fact of the Case:
The Union of India and other petitioners filed a writ petition under Article 226 of the Constitution of India challenging the validity of Section 2(e) of the A.P. General Sales Tax Act, as amended by Act 18 of 1985, on the ground that it is ultra vires the Constitution of India as well as arbitrary and sought a consequential direction to refund the sales tax collected by the respondent - State of Andhra Pradesh.
Finding of the Court:
1. The dispute between the Government of India and the State of Andhra Pradesh relating to the levy of sales tax on the sale of confiscated goods by the Customs authorities does not fall within the ambit of Article 131 of the Constitution of India, which provides for the exclusive original jurisdiction of the Supreme Court in disputes between the Government of India and one or more States or between the Government of India and any State or States on one side and one or more other States on the other. 2. The sale of confiscated goods by the Customs authorities is not a business or trade activity and therefore, the Central Government is not a 'dealer' liable to pay sales tax under the A.P. General Sales Tax Act. 3. The Explanations to the definitions of 'dealer' and 'sale' in the A.P. General Sales Tax Act, which bring within the ambit of tax, transactions by the Central and State Governments whether in the course of the business or not, are constitutionally valid.
Issues: 1. Whether the dispute between the Government of India and the State of Andhra Pradesh relating to the levy of sales tax on the sale of confiscated goods by the Customs authorities falls within the ambit of Article 131 of the Constitution of India? 2. Whether the sale of confiscated goods by the Customs authorities is a business or trade activity and therefore, the Central Government is a 'dealer' liable to pay sales tax under the A.P. General Sales Tax Act? 3. Whether the Explanations to the definitions of 'dealer' and 'sale' in the A.P. General Sales Tax Act, which bring within the ambit of tax, transactions by the Central and State Governments whether in the course of the business or not, are constitutionally valid?
Ratio Decidendi: 1. The expression 'dispute' in Article 131 of the Constitution of India must be construed in the context of the constitutional relationship that exists between the constituent units of the Union of India and the powers, rights, duties, immunities, liabilities, disabilities, etc., flowing therefrom. A dispute relating to the levy of sales tax on the sale of confiscated goods by the Customs authorities does not arise in the context of the constitutional relationship between the Union of India and the State of Andhra Pradesh and therefore, does not fall within the ambit of Article 131 of the Constitution of India. 2. The sale of confiscated goods by the Customs authorities is not a business or trade activity. The Customs authorities are not engaged in any business or trade and the transaction of disposal of confiscated goods is not a voluntary sale in the course of business or otherwise. It is a process of recovering Government revenue. 3. The Explanations to the definitions of 'dealer' and 'sale' in the A.P. General Sales Tax Act, which bring within the ambit of tax, transactions by the Central and State Governments whether in the course of the business or not, are constitutionally valid. These Explanations are not violative of Article 14 or Articles 301 and 304 of the Constitution of India.
Final Decision: The writ petition was dismissed.
( 1 ) THE Union of India along with Collector, Customs and Central Excise, Guntur and Additional Collector of Customs, New Customs House, Port Area, Visakhapatnam has moved this Court under article 226 of the Constitution of India for a declaration that section 2 (e) of the A. P. General Sales Tax Act, as amended by Act 18 of 1985, is ultra virus the Constitution of India as well as arbitrary and a consequential direction to refund to them Rs. 4,45,077. 38 being the sales tax collected by the respondent - State of Andhra Pradesh. According to them, whenever there are violations of the provisions of the Customs Act, 1962, goods involved are confiscated, they are put to sale and upon the sale of such goods the State Government has been imposing sales tax. They have been paying the tax until, however, they learnt that the Collectors of Customs of Bombay and Calcutta had filed writ petitions in their respective High Courts and the High Courts of Bombay and Calcutta had granted stay of collection of sales tax on the proceeds of sale of confiscated goods under the Customs Act, 1962. Deciding, for the said reason, to move this Court in the petition they, i. e. the Union of India and others have averred that Collectors of Customs exercise statutory duties and functions of administering Customs Act, 1962 which is enacted by the Union Legislature on the subject of customs duties and other ancillary subjects. The of "customs duties" in enumerated under entry 83, List I of the Seventh Schedule to the Constitution of India. While administering the said Act, petitioners, as enjoined by law, make disposal of confiscated contraband goods as well as unclaimed goods. In doing so, they discharge the sovereign function of the Union. They are not engaged in any business. The transaction of disposal of goods is involuntary and not voluntary sales in the course of business or otherwise. It is a process of recovering Government revenue. Thus, when engaged in the transaction of disposal of goods which are confiscated under the Customs Act, 1962 or are otherwise with them, they are not "dealer or dealers carrying on business" or "a deemed dealer or dealers".
( 2 ) RESPONDENT s return, inter alia, states, however, that goods that are confiscated under the Customs Act are put in sale by auction and after mentioning about the definition of "dealer" under section 2 (1) (e) of the A. P. General Sales Tax Act, 1957 and mentioning about Explanation (iii) to the same, point out that the amendments carried out in the A. P. General Sales Tax Act are similar to one in section 2 (b), Explanation (2) in the Central Sales Tax Act, 1956.
( 3 ) LEARNED Additional Solicitor-General has taken us through the various provisions in the A. P. General Sales Tax Act and particularly to the definition of "business" in section 2 (bbb), definition of "dealer" in section 2 (e), definition of "goods" in section 2 (h) and the definition of "sale" in section 2 (n) of the Act. He has contended that Explanation (iii) to the definition of "dealer" in section 2 (e) of the Act and Explanation (viii) to the definition of "sale" in section 2 (n) of the Act conflict with the definition of "business" in section 2 (bbb) of the Act and go beyond definition to create liability upon the Central Government or the State Government which, whether or not in the course of business buys, sells, supplies or distributes goods directly or otherwise for cash or for deferred payment or for commission, remuneration or other valuable consideration. Learned Additional Solicitor-General has placed reliance upon article 285 of the Constitution and contended that the property of the Union, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State.
( 4 ) LEARNED Advocate-General has drawn our attention to article 131 of the Constitution of India and contended that Government of India cannot bring its dispute with the
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
