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f9d7282d0aa7-29 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | (a) the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used or to be used in the prospecting for, or extraction or production of, mineral oils in India; and | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-30 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | (b) the amounts received or deemed to be received in India by or on behalf of the assessee on account of the provision of services and facilities a in connection with,or supply of plant and machinery on hire used or to be used in the prospecting for, or extraction or production of, mineral oils outside India.
Explanation. - For the purposes of this section -
(i) 'plant' includes ships aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business;
(ii) 'mineral oil' includes petroleum and natural gas."
Section 44 BBA prescribes a special provision for computing profits and gains of business of operation of aircraft carried on by a non-resident. The provision is similar to section 44BB with the difference that the percentage in this case is 10, as against 7-1/2 in section 44B. Even with respect to deduction, a special rule is evolved and apllied in specified cases. Section 44D places a ceiling on the deductions to be allowed in the case of foreign companies. According to it, the deductions to be allowed shall not exceed 20% of the income by way of royalty or fees for technical service received.
Section 194C provides that any person responsible for paying any sum to any resident (contractor) for carrying out any work in pursuance of a contact, shall "at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 2% of such sum as income-tax on income comprised therein". Section 195 provides for similar deduction in case of amount paid to non-residents. The deduction is to be made at the rates of income-tax for the time being in force. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-31 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Of course, sections 44B, 44BB, and 44BBA as also 44D are confined to non-residents carrying on business in India. Since their total world income cannot be assessed under our Act, their earnings in India are taken into account and tax is levied at a particular flat percentage without following the normal procedure applicable to ascertainment of such income. Section 194C applies to residents only. Its validity was assailed but upheld by a Bench of his court, of which one of us (Jeevan Reddy J.) was a member, in CIT v. Superintending Engineer [1985] 152 ITR 753, mainly on the ground that the said deduction is only provisional and is liable to be adjusted in the final assessment to be made in accordance with the provisions of the Act. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-32 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Yet another objection relating to the competence of Parliament to make the impugned provisions is based on the following reasoning : The Income-tax Act levies tax on income. Income arises only when the assessee sells the goods i.e., carries on business in the goods purchased by him. Tax can be levied on the profit earned by him from such sale or business, as the case may be. Levying that tax on purchase price, it is argued, cannot be characterised as tax on income and, therefore, is beyond the competence of Parliament. It is suggested that after arrack is purchased, it may be spilt, destroyed, or lost on the way; it may never be sold; the assessee may never carry on any trade or business in that commodity. More particularly, in the case of forest produce, it is argued, the timber purchased in a particular pervious year may not be sold in that year at all, with the result that no income arises from the trade or business in the said goods. In one case, the timber or other forest produce purchased in one year may be sold several years later. In another case, the goods purchased in one year may besold over several subsequent years. But, according to section 44AC, income is presumed in the year of purchase and not in the year or years of sale. This, it is argued, is contrary to the entire scheme of the Income-tax Act. Under the Income-tax Act, each assessment year is a unit by itself. Several assessment years cannot be clubbed into one unit, nor can a comprehensive or single assessment be made in respect of several assessment years, it is argued. In our opinion, this argument lacks substance. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-33 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Section 44AC clearly indicates that the profits and gains meant by it rate the profits and gains of the business of trading in specified goods. This is evident not only from the marginal note given to the section, but also from the words "from the business of trading in such goods", occurring in clauses (a) and (b) of sub-section (1) thereof. Tax is undoubtedly on the business income. For the sake of convenience and also having regard to the difficulty in making a normal assessment in the case of such assesses, it adopts the purchase price as the measure of tax. As laid done by several decisions of the Federal court and the supreme court in case arising under central excise laws, "while the levy in our country has the status of a constitutional concept, the point of collection is located where the statute declares it will be" (see paragraph 14 in Union of India v. Bombay Tyre International Ltd. [1986] 59 Comp Cas 460). The following observations in the said decision are apposite (at p. 474); | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-34 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | "Section 3 of the Central Excises and salt Act provides for the levy of the duty of excise. It creates the charge, and defines the nature or the charge. That it is a levy on excisable goods, produced or manufactured in India, is mentioned in terms in the section Itself. Section 4 of the Act provides the measure by reference to which the charge is to be levied. The duty of excise is chargeable with reference to the value of the excissable goods and the value is defined in express terms by that section. It has long been recognized that the measure employed for assessing a tax must not be confused with the nature of the tax. In Ralla Ram v. Province of East Punjab [1948] FCR 207; AIR 1949 FC 81, the Federal court held that a tax on buildings under section 3 of the Punjab Urban Immovable Property Tax Act, 1940, measured by a percentage of the annual value of such building remained a tax on building under that Act even though the measure of annual value of a building also adopted as a measure for determining income from property under the Income-tax Act. It was pointed out that although the same standard was adopted as a measure for the two levies the levies remained separate and distinct imposts by virtue of their nature, In other words, the measure adopted could not be identified with the nature of the Tax. the distinction was observed by a special Bench of the Patna High Court in Atma Ram Budhia v, state of Bihar, , where a tax on passengers and goods was assessed as a rate on the fares and friehts payable by the owners of the motor vehicles. Atma Ram Budhiya AIR 1952 was referred to with approval by this court in Sainik Motors v. State of Rajasthan . This court, in the case repelled the contention that the levy was a though the measure of the tax is furnished by | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-35 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | the case repelled the contention that the levy was a though the measure of the tax is furnished by the fairs and freights, it does not cease to be a tx on a passengers and goods. The points considered by this court again in D. G. Gouse and Co. (Agents) P. Ltd. v. State of Kerala where reference was made to the measure adopted for the purpose of the levy tax of in building under the Kerala Building Tax Act. The court examined the different modes available to the Legislature for measuring the levy, and upheld the action of the Legislature in linking the levy with the annual value of the building and prescribing a the uniform formula for determining its capital value and for a calculating the tax. In the course of its judgment the court cited with approval a passage from Seervai's Constitutional Law of India, second Edition, Vol. 2, at page 1258 : | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-36 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | 'Another principle for reconciling apparently conflicting tax entries follows from the fact that a tax has two elements : the person thing or activity on which the tax is imposed and the amount of the tax. The amount may be measured in many ways; but decided cases establish a clear distinction between the subject-matter of a tax and the standard by which the amount of tax is measured. These two elements are described as the subject of a tax and the measure of a tax.' It is, therefore, clear that the levy of a tax is defined by its nature while the measure of the tax may be assessed by its own standard. It is a true that the standard adopted as the measure of the levy may indicate the nature of the tax but it does not necessarily determine is. The relationship was aptly expressed by the Privy Council in RE : A Reference under the Government of Ireland Act, 1920 and Section 3 of the Finance Act (Northern Ireland), 1934 [1936] AC 352, when it said : | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-37 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | '........ It is the essential characteristics of the particular tax charged that is to be regarded and the nature the for machinery - often complicated - by which the tax is to be assessed is not of assistance, except in so far as it any throw light not the general character of the tax.' ....... It is apparent, therefore, that when a enacting a measure to serve as a standard for assessing the levy the Legislature need not contour it along lines which spell out the character of the levy itself. Viewed from this standpoint it is not possible to accept the contention that because the levy of excise is a levy on goods manufactured or produced the value of an accessible article must be limited to the manufacturing cost plus the manufacturing profit we are of opinion that a broader-based a standard of reference may be adopted for the purpose of determining the measure of the levy. Any standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis of for assessing the measure of the levy. In our opinion the original section 4 and the new section 4 of the Central Excises and salts act satisfy this test.............."
Applying the principle aforsaid, we are of the opinion that merely because profits and gains are assessed adopting the purchases price as the measure the tax imposed does not cease to be a tax on income. It is none the less an assessment of the profits and gains of the business carried on by the assessee in the specified goods and cannot be termed as a tax on purchased of goods. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-38 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Now, coming to the other aspect of the argument no such problem can arise in the case of alcoholic liquors other than Indian-made foreign liquors). The goods purchased in an year have to be sold in that year only. All the unsold goods have to be surrendered to the Government at he end of the year. Of course, in the case of timber and other forts produce such a situation may arise. But in our opinion the date or year of sale is irrelevant - whether it is alcoholic liquors timebr or other forts produce - for the purpose money is permissible for levying income-tax it follows that tax will be levied in the years the goods are purchased. But that as it may this aspect becomes academic in view of our conclusion (being recorded hereinafter) that section 44AC does not bar a regular assessment of the business income of the assessee in accordance with sections 28 to 43C. There is no violation of the principle that teach year of assessment is a unit by itself. The only departure is that the tax collected under section 206C(1) at the time of the purchased of goods will be given credit for in the year in which those goods are sold. Until such sale the tax collected will be held over. This is what sub-section (4) of section 206C says and we seen on illegality insaying so. It must be remembered that this is an anti-evasion measure. It is a specific provision designed to meet a secifical situations. So long as the assessee trades in or does business in the goods purchased, tax can be levied and in the circumstances it will be levied in the year in which the goods are sold. It is on this principle that section 16(3)(a)(i) and (ii) section 12(1B) and section 23A of the Income-tax Act, 1922, were sustained in Balaji's case , and Baldev | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-39 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | the Income-tax Act, 1922, were sustained in Balaji's case , and Baldev Singh's case . The reasoning underlying the said judgment is equally relevant here and sustains section 44AC section 206C. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-40 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Whether section 44AC and section 206C violate Art. 14 and art. 19 (1) (g) : Article 14 : It is well sellted that while the application of aritcl 14 is not excluded in the case of tax laws, a large elbow-room ought to be conceded to the Legislature in the matter of classification, selection and rate of tax/. As explained by the Supreme Court in V. Venugopala Ravi Varma Rajah v. Union of India [1969] 74 ITR 49, the equal protection clause enshrined in article 14 is not an abstract proposition. Quite often laws are enacted with a view to solve specific problems or to achive define objectives buy specific remedies. |in such a situation, absolute quality or uniformity of treatment is impposible of achiuevemnt. "Tax laws are aimed at dealing with complex problem of infinte variety necessitating adustment of several disparate elements. The court accordingly admit subject to and herence to the fundamental principle of the doctrine of equality a larger play to legislative discretion in the matter of classification. The power to classify may be exercised so as to and just the system of taxation in all proper and reasonable ways; the legislature may select persons rate for tax if the legislature does so reasonably. Protection if the equality case clauses does not predicate a mathematically precise or logically complete of sysmmetrical classification; it is not a condition of the guarantee of equal protection that all transactions properties object or person of the same genus must be affected by it or none at all. If the classification is rational the Legislature is free to chooses object of taxation, impose different rates, exempt classes of property to tax in different ways and adopt different modes of assessment. A taxing stature may contravenes article 14 of the Constitution if it seeks to impose on the same class of property, persons transaction or occupations similarly situate incidence of taxation which lead | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-41 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | impose on the same class of property, persons transaction or occupations similarly situate incidence of taxation which lead to obvious in equlaity. A taxing statue is not therefore exposed to attack not he ground of discrimination merely because different rates of taxation are perscribed fro different categories of persons, transactions occupations or objects. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-42 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | It is for the Legislature to determine the objects on which tax a shall be levied, a and the rates thereof. The courts will not strike down an act as denying the equal protection of laws merely because other object could have been but are not, taxed by the Legislature............" This statement of law in our opinion encapsules the law on the subject. It is unnecessary to multiply the authorities.
Learned counsel for the petitioners, however, placed strong reliance upon the decision of the Supreme Courts in K. T. Moopil Nair v. State of Kerala, . Accroding to them the principle of the a said decision squarely governs the present case. It is, therefore, necessary to notice the facts and principle of this case in a little more detail. The Travancore-Cochin Land Tax Act, 1955, was enacted by the Kerala Legislature "to provide for the levy of a low and unifrom rate of basic tax on all lands in the State of Travancore-Cochin". Section 4 the charging section, read thus :
"Subject to the provision of this Act, there shall be charged and levied in respect of a lands in the State, of whatever description and held under whatever tenure, a uniform rate of tax of to be called the basic tax." | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-43 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | The basic tax, which was prescribed at Rs. 2 per acre was payable on all lands nothwithstandffing any other law, contract, or agreement. Section 5A provided for a provisional assessment to be made later. The Act did not contain a provision for issuing notice or opportunity to he concerned landholder to make his submission before determining the tax. A uniform tax was imposed a on all lands. There was no provision for appeal. Indeed, there was no assessment of tax as such. The tax levied was payable irrespective of the quality of the land or its productive capacity and irrespective of the fact as to whether thee land yield any income or not. The petitioner who challenged the validity of the Act were governed by a Madras act which continued to govern them even after reorganization, until the impugned act come into force. The Madras act provided that the forests shall not be cut not the right in the forest produced sold, or otherwise alienated without the permission of the District Collector. A particular petitioner whose case was taken as representative of others, was deriving an income of Rs. 3,100 per year by lease of forest. The forest was assessed provisionally under section 5A of the impugned act to a tax of Rs. 50,000 per annum. Since it was na unsurveyed forest the District Collector conjectured the area of forest at 25,000 acres and on that bias determined the tax payable at Rs. 50,000. These petitioner's case was that he was being given permission to cut the forest only in instalments that this annual income was only Rs. 3,100, where as he was called upon to pay a tax of Rs. 50,000 per annum. It was also submitted that this forest had large areas of arid rocks, rivulets, a and gorges. The Supreme Court observed that ordinarily a tax on land or land revenue is assessed on the actual or potential | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-44 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | The Supreme Court observed that ordinarily a tax on land or land revenue is assessed on the actual or potential productivity of the land sought to be taxed, and that the tax has reference to the income actually made or which could have been made with due diligence. but the impugned Act, it pointe out, makes no such distinction. There may be sereval types of land; a particular alnd may be arid desertcapable of yielding an income by raising a crop after a dsiproportionately large investment of labor and capital. A third type of land yields just enough to pay for the incidenatla expenses labor charges and taxes, while the fourth type of land may be making large profit because it is every fertile and capable of yieding good crops. While the fourth category it a was pointed out, would easily be able to meet the burden of tax the third one might be just able to bear the tax burden. Because the tax is not paid the very land may be so, d for realizing the demand which would make the Act confiscator in nature. It was observed (at p. 558), "there is no attempt at classification in the provisions of the Act............. It is one of those cases where the lack of classification creates inequality. It is, therefore, clearly hit by the prohibition to deny eqality before the law a contained in article 14 of the Constitution...............". It was also observed that the act constitutes an unreasonable restriction upon the right to hold property, guaranteed by article 19(1)(f), a and being a disproportionate and unreasonable imposition was not saved by clauses (6) thereof. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-45 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | It is argued by learned counsel forth petitioners that section 44 A C suffers form the same vice as the Kerala act impugned in K. T. Moopil Nair's case . It is contended that a parson dealing in arrack may incur loses because of various reasons including competition illicit distillation and disturbance to law and order. Another person may make profits but it many be a small one and yet, another person may make a large the profit may be 20 %, 40 % or 60 %. There may be case where a person may be making even higher profit. Clubbing all the persons dealing in arrack all over the country into one class and determining their profit from the said business at 40 % is nothing but arbitrary, discriminatory and unreasonable. It is case where the absence of classification results in unequla treatment. It is pointed out that in the case of Khammam and Cuddapah districts for the excise years 1987-88, the Government had fixed both the purchased price as will as the selling price. While the purchased price was Rs. 35 per litre, the selling price was fixed at Rs. 38. The profit margin works out to less than 10 %. It is true that the selling price is not fixed for any of the districts for the current excise years 1987-88, nor is it fixed for any of the districts for the current excise year (1988-89), still, it is contended the determination of profit uniformly at 40 % is totally unreasonable and is confiscator in nature. Unable to bear the said additional burden, it is submitted, several contractors have already gone out of business. (The learned Government Pleader for excise too stated that during the current excise year, already about 10 % of the shops in the State have been resold on account of the inability of the original licensees to pay the rentals. He suggest that one | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-46 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | on account of the inability of the original licensees to pay the rentals. He suggest that one of the reasons for such large scale failure may be the provision contained in section 206 C). The grievance is that section 44 A C does not provide for a regular assessment, dispendsing sad it does, with all the provisions in sections 28 to 43 C. If an assessment is made according to law, it is argued the assessee can establish that his profits is very much less than 40 % or that he has actually suffered losses. Even if the said provisions are based upon the premise that these contractors are, what may be called 'fly-by-night' operators, not easy to locate, the provision contained in section 206 C is sufficient to nerve the purpose. Fifteen per cent. of the purchase price is collected in the case of arrack contractors. This amount would be lying with the Government. A regular assessment can always be made in the normal cores. It was not necessary it is argued to go further and make a harsh and confiscator provisions of the mature contained in section 44 A C. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-47 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Article 19 (1 (g); It is argued by the petitioners that they have a fundamental right to carry on the business - whether in arrack or in forts produce; at any ate the petitioners' fundamental right to trade in timber and other forest produce cannot be denied. The provision made in section 44 A C determining the profit of business in these goods arbitrarily at a particular percentage to thee purchased price of is wholly unreasonable. Even if it is assumed that the said provision a were conceived in the interest of public revenue and were designed to eradicate an evil (the evasion of tax by contracts dealing the in these goods) it is raged further that the avowed purpose is achieved by section 206 C and that section 44 A C is totally unwarranted and uncalled for. Having collected the tax in advance the Department can always made a regular assessment in accordance with the relevant provisions. The tax already collected would in a overwhelming majority of cases, satisfy the tax assessed. Only in a very few cases, probably, the tax assessed may be more than the tax already collected at source. Indeed, in many of the cases, the Department may be liable to refund the tax.
The law in this behalf's well-stated the celebrated case State of Madras v. V. G. Row, . The following observations of Patanjali Sastri C.J. have acquired the status of a classic statement (at page 200) : | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-48 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | "... the court should consider not only factors such as the duration and the extent of the restrictions, but also the circumstances under which and the manner in which their imposition has been athorised. It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract, standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should pay an important part, and the limit to their interference with legislative judgment in such cases can only be dictated by their senses of responsibility and self-restraint and the sobering reflection that the Constitution if meant not only for people of their way of thinking but for all, and that the majority of the selected representatives of the people have, in authorising the imposition of the restrictions, considered them to be reasonable." | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-49 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | We find it difficult to say that the submissions of learned counsel for the petitioners based upon articles 14 and 19(1)(g) are without substance. Literally read, section 44Ac brings about a legislative assessment of the profits and gains of persons trading in specified goods. The normally applicable provisions, sections 28 to 43C, are dispensed with altogether. It is declared that the profits and gains of every person from the said business, irrespective of his circusmstances, volume of business,, finance, expenditure or other attendant matters, shall be deemed to be the specified percentage of the purchase price. All that remains to be done thereafter is to find out whether any of the deductions provided by Chapter VI-A are to be allowed and then make an assessment. We may agree with the respondents that the person trading in the specified goods form a class, inasmuch as they are difficult to trace once the contract period is over. We accept their submission that very often these contracts are taken in the names, of dummies, in facetious, names, or in the names of faceless person, or persons, of little means. We will also accept the respondents' submission that because of the above factors, the State was losing a good amount of revenue and the there was large scale evasion by these persons. We agree fully that this situation had to be remedied. Loss of revenue had to be plugged. But the remedy should be proportionate to the evil. It should be reasonable. It should not assume the character of a confiscatory measure. It would have been enought if section 206C had been enacted and it was provided that such collection shall be subject to a regular assessment of assessment of profits and gains of business as has been done by section 44AC. The percentages referred to in section 44AC (1) could have been indicated as merely explaining and justifying the level of collection in section 206C. Once the tax is collected, bases | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-50 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | and justifying the level of collection in section 206C. Once the tax is collected, bases upon the purchase price of the specified goods, it is really immaterial whether the business is carried on in the names of dummies, in fictitious names, or in the names of faceless persons, or persons of on means. The tax collected is already with the State. An assessment can be made in accordance with the provisions of law. If the tax assessed is more than the tax already collected, may be there is little likelihood of such collection; but, even with these provisions, the situation is the same. There is no reason behind saying that even where a person actually less profit than the specified one, or incurs loss,, even then his profits and gains should be arbitrarily fixed at 40% of the purchase price, or that he should not be allowed to establish his real income from the said business or trade. May be these persons do not maintain the books properly; but that is not an insuperable difficulty. If the books are not properly maintained, or are suspicious or unacceptable otherwise, they can away be rejected and a best judgment assessment made. The level or profits in such trade in a given area, region or State can always be kept in mind while making a best judgment assessment and /or while determining the truth or genuineness of accounts. The existence of some honest traders even in the specified good cannot be ruled out. It is in these circumstances that we called upon Sri. M. Suryanarayana Murthy, learned standing counsel appearing for the Union of India, to place before us the material on the basis of which the percentages referred to in the Bill and the various percentages referred to in the sections as enacted, are determined. This was done, inasmuch as, in the counter-affidavit filed by the Union of India, it was not explained on what basis the profits and gains of business in the specified goods were assessed at | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-51 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | it was not explained on what basis the profits and gains of business in the specified goods were assessed at 60% uniformly at the stage of the Bill, nor was it clear on what basis this percentage was altered to the several different percentages mentioned in section 44AC. It may be remembered that at the stage of the Bill, the percentage of profits and gains from the business was fixed at 60% of the purchase price and 20% of the purchase price was sought to be collected at the time of sale of these goods. The sections as enacted, however, prescribe different and lower percentages in both the sections. We also wanted to know on what basis the distinction between persons trading in arrack, persons trading in timber, persons, trading in other forest produce, and so on was made. In pursuance of our observation, learned standing counsel has placed before us certain material, to which we must now refer. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-52 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Before, however, we refer to the material, we may mention that the said material was produced before us along with a letter of the Commissioner of Income-tax, Andhra Pradesh-II, dated February 13, 1989, addressed to Sri. M. Suryanarayana Murthy, Advocate. The letter requested counsel to place the enclosed material before the court with a request not to quote them in our judgment, nor to reveal it in court. The ground upon which such a request was made was that they are "part of the budget documents." It was stated that the said material was being furnished only to show that there was proper application of mind before the deemed rates of profit were prescribed. It was mentioned that a similar procedure was adopted in respect of the writs filed in the Kerala High Court and that the non'ble judges of the Kerala High Court had accepted this position and the procedure requested was followed. When this letter was brought to our notice, we intimated counsel that is may not be possible for us to accept the said request. If we are not be possible for us to accept the said request. If we not to refer to the said material in our judgment, there was no point in producing the said material. It is not enough that we are subjectively satisfied. It was also not brought to our notice as to in what manner the said request was acceded to by the Kerala High Court - except the statement in the letter to that effect. We, therefore, gave a choice to learned counsel either to place the material before us without such pre-condition or request or to withdraw the said material. After obtaining further instructions, Sri, M. Suryanarayana Murthy, placed before us another letter of the Commissioner of Income-tax dated February 14, 1989, agreeing to place the material before the High Court with the only request for not reading out the names of the person mentioned in the material, in court, nor to refer to | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-53 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | not reading out the names of the person mentioned in the material, in court, nor to refer to the names in the judgment. This restraint, it was stated, was imposed upon the Department by the provisions of section 138 of the Income-tax Act. We agreed to this course. We informed learned standing counsel that we would not disclose the names in the court, nor would we mention those names in the judgment. Instead of names, we would refer to them as A, B, C, D, and so on. Now, we may refer to the material. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-54 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | There annexures are furnished to us. Annexure-I mentions "cases relating to country liquor". Annexure-I is in two parts. The first part mentions the names of five assessee, whom we shall refer to us A, B, C, D, and E, respectively. A and B are from Madras. C is form Hyderabad; D from Vijayawada and E from Raipur (Madhya Pradesh). The following figures are given :
------------------------------------------------------------------------
SI. Name and Assessment Purchase Income Remarks
No. address of year assessed
the assessee
------------------------------------------------------------------------
Rs. Rs.
1 A 1984-85 13,05,039 6,07,980 The net profit
works out to
46% of the
purchase
price.
2 B 1984-85 80,87,371 87,58,150
3 C 1985-86 3,22,513 1,00,000 Assessed under
section 143
(1) at Rs.
20,470. After
search, disc
losed income
or Rs. 1,00,000
. 31% of
the purchase
price.
4 D 1985-86 74,52,925 37,97,219 44% of the
purchase price
5 E 1984-85 1,28,25,000 55,88,830 The assessed
figure of Rs.
55,88,830 has
been accepted
by the
assessee.
Net profit
is 43% of
the licence | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-55 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Net profit
is 43% of
the licence
fees. Norma
lly, amount
of purchase
is less than
the license
fees. Perc
entage of
profit
will be
therefore
higher than
43%.
------------------------------------------------------------------------ | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-56 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Section 2 of annexure-I mentions three cases where undisclosed profits
have been surrendered/ detected. These three persons may be referred to
as F,G and H. Their particulars are as follows :
------------------------------------------------------------------------
Sl. Name of Concealment Remarks
No. assessee detected
------------------------------------------------------------------------
Rs.
1 F 1,78,56,000 Addition of Rs. 1,67,80,000
has been accepted by the
assessee.
2 G 17,98,950 Commissioner of
Income-tax (Appeals) has c onfirmed the addition. (1987-88) 3 H 15,97,030 These additions are in two
different assessment
years.
------------------------------------------------------------------------>
Annexure-II mentions three cases relating to timber obtained by any
mode other than under a forest lease. We shall refer to these three
assessee as I,J and K. Their particulars are as follows :
------------------------------------------------------------------------
Sl. Name and Assessment Purchase Income Remarks
No. address of year price assessed
the assessee
---------------------------------------------------------------------
Rs. Rs.
1 I 1987-88 3,17,450 91,270 Net
profit
28.75%
of
purchases.
2 J 1986-87 22,17,741 3,38,019 Net profit
15.24% of
purchases.
3 K 1985-86 15,86,061 1,92,270 Net
profit
12.12% of
purchase
price
------------------------------------------------------------------------ | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-57 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Annexure-III mentions three cases relating to "any other forest produce not being timber". We shall refer to three assessee as L, M and N. Their particulars are as follows :
------------------------------------------------------------------------
Sl. Name and Assessment Purchase Income Remarks
No. address of year price assessed
the assessee
------------------------------------------------------------------------
1 L 1983-84 14,26,360 10,06,887 Net
profit
comes to
70% of
purchase
price.
The assessee's
business is
purchase of
tendu leaves
from
Madhya
Pradesh and
Maharashtra
and sale
there of.
2 M 1987-88 9,15,700 3,81,481 Net
profit is
41% of
purchase
price.
3 N 1987-88 11,72,181 3,59,458 Net
profits
is 30% of
purchase.
------------------------------------------------------------------------ | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-58 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | This is all the material placed before us in response to our query. We are afraid, the material placed before us is too support a measure like section 44AC. Picking out eight cases of liquor contractors from all over the country, that too of major contractors, cannot be said to be a sufficient basis for such a harsh and unusual provisions. We are aware that we are not dealing with an executive act, but with a parliamentary enactment. We are equally aware of the limitations of this court. But the fact yet remains that we must be satisfied about the reasonableness of the measure - and this can be done only by placing the relevant material before us upon which the percentages referred to in section 44AC were fixed. One would have expected a more detailed enquiry and verification. Conditions may vary from State to State; indeed, even from one area of the State to another Even in the cases referred to in annexure-I, the net profit works out to 46% in the case of assessee 'C', 44% in the case of assessee 'D' and 43% in the case of assessee 'E'. The material hardly shows that all these persons made uniform profits. The material placed before us by the petitioners discloses that for the excise year 1987-88, the Government had fixed, in the case of two districts, Khammam and Cuddapah, not only the purchases price, but also the minimum selling price. In a case where the purchase price was Rs. 35, the minimum selling price was fixed at Rs. 38. Even this margin of Rs. 3 a cannot be said to be the net profit, it is only the gross profit. Arrack licences are given by auction or tender, at the case may be Particularly, for the current excise year, it is brought to our notice, the shops were not auctioned groupwise as was being done in the privious years. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-59 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | notice, the shops were not auctioned groupwise as was being done in the privious years. All the shops are stated to have been sold individual-shop-wise only. This was done with a view to eliminate and reduce the influence of big contractors, and to encourage the small dealers. Every shop was sold as a single shop. It is stated that this method of auctioning has resulted in a substantial accretion to the excise revenue of the State for this year. Can it indeed their number may run into a couple of lakhs - uniformly make profit at 40% or thereabout ? There may be some who may make profit at that rate; but is is difficult to believe that all of them would be earning at the rate of 40% or near about. If there were material to show that the profits of these persons generally range between, say, 35% to 45% or even 30% to 50% the fixation at 40% could have been said to be reasonable. Firstly, there is no adequate verification; secondly, even the material placed before us show that the profit ranges between 31% and 110% in the case of arrack. In the case of purchase of timber, other than under a forest lease, only three cases are looked into. Here the profits range from 12% to 28%; (Section 44AC fixes the profits in such a case at 15%). In the case of forest produce other than timber again only three cases are taken, and the profits range from 30% to 70% (Section 44AC fixes the profits in this category at 35%). It is true that none of the petitioners have disclosed their precise profits for the preceding year, if any. But, in our opinion, discrimination is writ large on the very fact of section 44AC. In any event, we have the material relating to excise year 1987-88 for two of the districts in | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-60 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | we have the material relating to excise year 1987-88 for two of the districts in this State, i.e., Cuddapah and Khammam, where the selling price was fixed at Rs. 3 higher than the purchase price, i.e., Rs. 38 and Rs. 35, respectively, which works out to less than 10% and that too gross profit. In our opinion, these facts bring these cases squarely within the principle of the decision in K. T. Moopil Nair, . We are also of the opinion that the imposition is likely to be characterized as disproportionate and, therefore, an unreasonable restriction upon the fundamental right guaranteed by article 19 (1) (g). | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-61 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | In such a situation we are left with the two options. One is to strike down section 44 A C and the other is to read it down t make it consistent with the guarantees in articles 14 and 19 (1) (g). We have considered the pros and cons of both courses and have cone to the conclusion, keeping in view the overall object underlying the provisions and the language in sub-section (4) of section 206 C, that it would serve the public interest more and further the intendment of Parliament if we read down the provision of section 44 A C instead of striking it down. A syndicated hereinbefore, section 206 C serves the purpose underlying these provisions. once the tax is collected the contractor cannot run away probably, only in case where the profit is far higher than 40 % would he make himself scarce. In all other case, he would come to the Department for an assessment of his income and the re is on reason why a regular assessment should not made in his cases. In others words we would read section 44 A C as on adjunct to and as explanatory to section 206 C. On this construction, section 44 A C does not dispense with sections 28 to 43 C absolutely. The non obstante clause in section 44 A C (1), "notwithstanding anything to the contrary contained in section 28 to 43 C" would be confined to the limited purpose of sustaining the deductions provided for in sections 206 C. The level of profits and gains would be relevant only for explaining and juistitying the level of deductions provided for in section 206 C. Collection will be made at the rates specified in section 206 C and then a regular assessment will be be made like in the case of any other assessee. So far as the percentages of collection at source mentioned in section 206 C are concerned we are of the opinion that they cannot be said to be unreasonable or excessive since according | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-62 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | C are concerned we are of the opinion that they cannot be said to be unreasonable or excessive since according to our construction, they would be only tentative collections, subject, to a final assessment. In such a situation, the reasoning given by this court in CIT v. Superintending Engineer would squarely balance would be refunded to the assessee. The excess collection, if any in such a case would be only temporary and for a short period, and would be refunded. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-63 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | We may mention that the theory of reading down is a rule of interpretation resorted to be courts where a provisions read literally, seems to offend a fundamental right or falls outside the competence of the particular Legislature. This was resorted to as far back as 1941 in In re Hindu Women's Right to Property Act, AIR 1941 FC 72. The expression "property" we capable of taking in agricultural lands a s will in which case it would trench a upon the field reserved or Provincial Legislature Exclusively (List II). The court referred to the presumption that a legislature must be presumed to be aware of its limitations and must also be attributed with an intention not to overstep its limits, and held accordingly that the act was never intended to and did not in fact apply to agriculatural lands. In All Saints' High School v. Govt. of A. P., , certain provisions of the A. P. Recongnised Private Educational Institution Control Act, 1975 were challenged as violating article 30. Dealing with the challenge, Kailasam J. (majority opinion) observed (at p. 1083) :
"It is a well settled rule that in interpreting the provisions of a statute, the court will presume that the legislation was intended to be intra varies and also reasonable. The rule followed is that he section ought to be interpreted consistent with the presumption which imputes to the Legislature an intention of limiting the direct direct operation of its enactment to the extent that is permissible. Marwell on the Interpretation of Statutes, Twelfth Edition, p. 109 under the caption "Restriction of Operation" States :- | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-64 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | 'Sometimes to keep the / Act within the limited of its scope and not to disturb the existing law beyond what he object requires, it is constured as operative between certain person, or in certain circumstance, or for certain proposes only, even though in language expresses on such circumscription of the field of operation.' ............ According to Holmes J. in Towne v. Eigner [1971] 245 US 418 ; 62 L Ed. 372, 376, a word is not crystal, transparent and unchanged; it is the skin of living though and may vary a greatly in colour and content accroding to the circumstances and the time in which it is used. Gwyer J. in Central Provinces and Berar Act [1939] FCR 18 at p. 42 held :
'A grant of the power in general terms, standing by itself, would no doubt be construed in the wider sense; but it may be qualified by other express provisions in the same enactment, by the implication of the context, and even by the considerations arising out of what appears to be the general scheme of the Act.' To the same effect are the observation of this court in Kedar Nath Singh v. State of Bihar [1962] Supp (2) SCR 769 : | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-65 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | 'It is well settled that in interperting an anactment the court should have regard not merely to the literal manning of the words used, but also take into consideration the antecedent history of the legislation, its purpose and the mischief it seeks to suppress. (Bengal Immunity Co. Ltd. v. State of Bihar and R. M. D. Chamarbaugwalla v. Union of India [1975] SCR 930 cited with approval).' This court has, in sereval cases, adopted the principle of reading sown the provision of the statute. The reading down of a provision of a statute puts into operation the principle that so far as it is reasonable possible to do so, the legislation should be constured as being within tits power. It is has the principle effect that where an Act is expressed in language of a generality which makes it capable, if read literally, of applying to matters beyond the relevant legislative power, the court will construe it in a more limited a 'sense so as to deep it within power."
To the same effect are the observation of Krihna lYER J. Bhim Singhji v. Union of India :
".............. reading down meaning of words with loses lexical amplitude is permissible as part of the judicial process. To sustain of a law by interpretation is the rule. To be trigger-happy in shooting at sight every suspect law is judicial legicide. Court can and must intrepret word and read their meaning so that public good is promoted and power misuse is interdicted. As Lord-Denning said : 'A judge should not be a servant of the word used. He should not be a mere mechanic in the power house of semantics.................." | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-66 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | This rule of reading down was applied to ataxing statute in CST v. Radhakishan . We a recongnise at the same time that this rule cannot be employed to sustain a patently void provision.
On this aspect, we a may as well refer to the words "in the assessment made under this Act" sub-section (4) of section 206C. These words show that an assessment under the Act is still to be made even where tax is collected under section 206C. This in our opinion, is a strong indication suppoting our construction of section 44AC.
At one stage, some significance was sought to be read into the wording of the non obstancte clause in section 44AC (1). While in some sections preceding section 44 AC, the non obstance clause reads "notwithstanding anything contained in any other provisions of this Act" (see sections 43A and 43B) the non obstance clause insection 44AC (1) and certain other sections (see sections 44B, 44BB, and 44C) reads "notwithstanding anything to the contrary contained in section 28 to 43C". However on a fuller consideration, we find it difficult to deduce any significance therefrom relevant to our purpose. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-67 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | For the above reasons, we uphold the validity of section 206C. We also hold that section 44 A C is a valid piece of legislation, read in the manner indicated by us. Section 44 A C is not to be read as an independent provisions but as an adjunet to and as explanotrory to section 206 C. It does not dispense with a regular assessment altogether. After the tax is collect in the manner provided by section 206 C, a regular assessment will be made where the profits and gains of business in specified goods will be ascertained in accordance with sections 28 to 43 C.
Meaning of the expression "Purchase price" :
This question becomes relevant only in the case of arrack. So far as other specified goods are concerned, there is no room for any doubt about the meaning of the expression "purchase price"; it means the price at which timber or any forest produce is purchased. Indeed, in the case of timber obtained under a forest lease, the price paid for obtaining the said right is also expressly treated as purchase price. Now the controversy arises this way; Until the previous excise year 1987-88, these licenses in the state of Andhra Pradesh were auctioned in public. Before putting the shop or group of shops to auction, the minimum a quota of arrack which the licensee will have to lift during that year, was specified. Even if he failed to lift a part of the quota or whole of the quota he would still be liable to pay the issue price of the said minimum guaranteed quota. The person who offered to pay the highest rental for the month / year was given the license. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-68 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | There was also a small license fee. In short, the consideration comprised three components viz : (i) the annual rental. (ii) the issue price of the MGQ, and (iii) the license fee. However for the fist time a different system was tried out in tow districts for the previous excise year (1987-88). In Khammam and Cuddapah districts, for the said excise year, the licenses of shop were auctioned to the person who offerd to purchased the highest quantity of arrack of the year. But he had to purchase arrack at a price which was far higher than the issue price in the case of other districts. While the issue price in the case of other districts was RS. 8.50, the price of arrack in these districts was 30 or Rs. 35, as the case may be. |Now this figure of Rs. 30 or RS. 35, wa arrived at by aggrgatting the three previous years' rental and adding the same to the price of liquor. In short, though devised differently in effect the price of arrack in the case of the said two districts also took in the rental component. So far as the current excise year (1988-89) is concerned an altogether different system had been followed. The shops have been auctioned individaully and licenses granted to person who offered to purchased the highest quantity of arrack fro the shop the year. The issue price of arrack is fixed at Rs. 8.50 per liter. But, in addition to purchasing the quantity agreed to be purchased by him, he has also got to pay the privilege fee every month. This privilege fee is determined on the basis of the aggregate of rentals fetched for the shop for the previous three years. A small increase is effected upon the said increase and the privilege fee is fixed per litre again. There is also license fee in addition thereto. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-69 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | and the privilege fee is fixed per litre again. There is also license fee in addition thereto. It would thus be evident that the system remains the same in substance. Previously; the auction was in terms of rental and now it is in terms of the quantity of arrck. But the components remain the a same,. though under a different name. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-70 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | The contention of counsel forth petitioner is that the expression 'purchase price' means only the issue price and said not include the privilege fee or license fee. We find it difficult to agree. It is well settled that t' all right in regard to manufacture and sale of intoxicants vest in the State. It is open to the State to part with those right fro a consideration. The consideration for parting with the privilege of the State is neither excise duty nor license fee, but it is the price of the privilege.............. Thus reading section 17 and 23 the A. PO. Excise Act, together with the A P Excise (Lease of Right to Sell Liquor in Retail) Rules 1969, and the A P Excise (Retail Vend Special Conditions of Licensees) Rules the picture which emerges is that the privilege of selling liquor which includes the lease of the shop for an area and the license to sell liquor therein may be granted by the State by Public auction, subject to (i) payment of rental being the highest bid at the auction (it is to be noted here that rental is the rent payable in consideration of grant of lease for the said of liquor, but it is not the sole or exclusive consideration for the lease); (ii) the requirment that he licensee shall purchase arrack at the issue price; and (iii) the further requirements that the licensee shall purchase the minimum guaranteed quantity of arrack which he has to make good in cases of shortfall. The consideration for the grant of the privilege to sell liquor is not merely the rental to be paid by the lesses but also the issue price of arrck supplied, or treated a supplied in case of a shortfall which also to be paid by the lessee/licensee "(vide paragraph 8 in the decision of Supreme Court in State of A. P. v. Y. Prabhakar Reddy ). We are of the opinion that the expression" purchase price' occurring in section | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-71 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Reddy ). We are of the opinion that the expression" purchase price' occurring in section 44AC and 206C should be understood in its ordinary and natural sense, uninfluenced by the particular system in force in a given state and / or a in a given year. In a given state, the excise revenue may be collected in a particular manner and in a different, manner in another state. The expression "purchase price' is not defend in these two sections or in the Act. The said expression means nothing but what is referred to a consideration for the grant of the privilege to sell liquor in the decision of the supreme court aforesaid. The present system of deriving the excise revenue may be changed fro the next year. Indeed, for the previous excise year, two for districts in the state, the system was altogether different. There was one single integrated price fro arrack i.e., RS. 30 or Rs. 35 per litre. Now how can it be said that while the purchase price in the case of Khammam and Cuddapah districts for the excise year 1987-88 is Rs. 30 or Rs. 35 per litre, as the case may be, in case of all other districts it is Rs. 8.50 ? Learned standing counsel for the Revenue, appearing for the Union of India who supported the stand of the petitioner in this behalf could not explain this inconsistency and illogicality in the stand taken by the Department. (As we shall presently point out, the Income-tax Department is supporting the petitioners in this behalf). If "purchased price" means only the issue price then it should be equally so in the case of Khammam and Cuddapah districts for the excise year 1987-88. We are of the opinion that the expressions used or method "purchased price" should not depend upon the expression used or method devised for raising excise revenue | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-72 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | "purchased price" should not depend upon the expression used or method devised for raising excise revenue by a State Government from time to time. These sections are meant not only for Andhar Pradesh, but for the entire country. The expression cannot be understood in a different manner in each state. having regard to the excise revenue deriving system in force in that State. It must be understood in a uniform sense and the at can be done only by holding that purchase price means the consideration for the grant of privilege to sell liquor, which consideration in the State today comprises of three components namely, (i) issue price, (ii) privilege fee / annual rental and (iii) license fee. But, we are put in a strange position where both the petitioners and the respondents are at one in saying that purchased price in the case of arrack means the issue price only. ( Issue price includes cost price, excise duty and other inidental charges and is notified by the Government from time to time). A clarification issued by the Central Board of Direct Taxes, Communicated by the Commissioner of Income-tax to the petitioners, is placed before us, which reads as follows : | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-73 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | "GOVERNMENT OF INDIA OFFICE OF THE CHIEF COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH, HYDERABAD.
Ref. No. CC/LC(Tech)/27(2)/88-89d/-21-9-1988.
To The Secretary, Andhra Pradesh Arrack Contractors' Association, Hyderabad, 3-6-369 / A 71, Himayat Nagar, Hyderabad-500 029.
Sir, Sub : Collection of income-tax under section 206 C.
Kindly refer to your letter dated 19-8-1988 addressed to the Chief Commissioner of Income-tax, Andhra Pradesh, Hyderabad.
I have been directed to inform you that the provisions of section 206 C would be applicable only to the issue price and for this purpose, the privilege fee is not to be included.
Yours faithfully, sd./-
(P. Agarwal), Deputy Commissioner of Income-tax (Tech), O/o Chief Commissioner of Income-tax, Andhra Pradesh, Hyderabad........"
This letter, it may be remembered, was written in continuation of the letter dated August 19, 1988, wherein the Chief Commissioner of Income-tax stated that he query put by the Secretary, A.P. Arrack Contractors' Association has been referred to the Central Board of Direct Taxes. Evidently, the clarification contained in the letter dated September 21, 1988, was supplied after receiving the clarification form the Central Board of Direct Taxes. Learned standing counsel for the Revenue says that the respondents are standing by the said clarification.
Even in the counter-affidavit filed in W.P. No. 11636 of 1988 (sworn to by Sri M. V. R. Prasad, Commissioner of \Income-tax Andhra Pradesh-II), the following statement occurs : | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-74 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | "In the Press Not issued by the Central Board of Direct Taxes it has been clarified that the purchase price will be the cost of commodity inculsive of any excise duty, Sales tax or any other levy, whatever its nomenclature may be, paid by the buyer for obtaining the goods. In case of buyer of liquor the purchase price will also include the cost of bottle, label,, sealing charges, etc., However the purchase price will not inculde any consideration for the grant of exclusive privilege to vend from a particular point or points and any freight or transport charges. In the instant case, the petitioner has through auction, acquired the right to vend form a particular point or points and paid a certain amount as rent. The amounts paid as rental charges does not contain the element of profits' and also will not be taken into account for the purpose of determination of profits under section 44 A C. However any amount paid to acquire the right to receive a minimum guaranteed quantity fixed by the Excise Commissioner and guaranteed by the auction-purchaser to be lifted by him will have the element of profit embedded in it, and so will be taken into account for the purpose of determination of profits in accordance with the provisions of section 44 A.C."
So far as the Government of Andhra Pradesh in the Excise Department is concerned, they say that they are merely agents to collect the tax on behalf of the Income-tax Departments and that they will collect such amounts as they are asked to do. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-75 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Though it is not clear form the material placed before us as to whether the clarification issued by the Central Board of Direct Taxes can be treated as an order,, instruction or direction, within the meaning of section 119 of the Income-tax Act, we direct that so long as the said clarification issued by the Central Board of Direct Taxes stands the purchased price in the case of arrack shall be taken into account in determining the purchase price. We make it clear that we are giving the is direction not because we are satisfied about the correctness of the interpretation placed upon the expression 'purchase price' by the Central Board of Direct Taxes or by parties before us but because of the clarification issued by the Central Board of Direst Taxes and also because of the contesting parties are at one that the clarification issued by the Central Board of Direct Taxes should be followed.
we must also a say that in the case of Khammmam and Cuddapah districts fro the excise year 1987-88, purchase price shall be taken to be the 'issued price' as in the case of other districts for the said year. This direction is necessary to ensure equal treatment to similarly laced persons. Indeed, the respondent are guilty of inconsistency when they say that while in the case of other districts, "purchase price" means only the issue price in the case of khammama Cuddapah districts for the said excise year it means the total sale price which includes issue price and rentals.
The extent of collection at sources under section 206 C : | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-76 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | Section 206 C says that the seller of specified goods shall at the time of recipe of the purchase price from the purchaser collect, in addition to purchase price, a sum equal to the percentage specified in the corresponding entry in column 3 of the Table by way of income-tax For example in the case of alcoholic liquor (for human consumption) (other than Indian made foreign liquor), the collection at source is specified at 15 %. The contention of the petitioners is that this 15 % is of the amount specified as profit and gains of the said business in section 44 A C. To be more precise, the collection at source, according to the petitioners ought to be 15 % of the 40 % of the purchase price in the case of arrack. On the other hand the contention of the respondents is that the collection at source is 15 % of the purchase price. Though at he stage of interim orders we were inmpressed by the argument of the petitioner's we are of the opinion on a fuller consideration that the construction placed by the respondents is the correct one. The relevant words in section 206 C (1) are "collect form the buyer of any goods of the nature specified in column 2 of the Table below. a sum equal to the percentage specified in the corresponding entry in column 3 of the said Table of such amount as income-tax on income comprised therein." The words underlined by us are relied upon by the petitioner to say that 15 % referred to in column 3 of the Table is 15% of the income comprised in the purchase price. We are not prepared to agree In our opinion the words "on income comprised therein" are merely descriptive in nature and do not convey the meaning sought to be ascribed to them by the petitioners. We may mention that identical words occur in the other provisions as well, and attributing such a restricted meaning to them would make those provisions unworkable. By way of illustration, we | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-77 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | such a restricted meaning to them would make those provisions unworkable. By way of illustration, we may refer to section 194 C. Sub-section (1) of section 194 C in so far as it is relevant reads, : "any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work............ in pursuance of a contract ........ shall at the time of credit of such sum of the account of the contractor or at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier deduct an amount equal to 2 % of such sum as income-tax on income comprised therein..............." It would be evident that at the time of making payments to the contractor the person, paying the sum cannot say or visualise how much of the said sum constitutes income in the hands of the contractor. it is indeed impossible for him to say so, it is thus clear that the said words are merely descriptive in nature. Moreover, the percentages referred to in section 206 C (1) would be intelligible only of they are related to the purchase price. If they are related to the percentage of profits and gains specified in sections 44 A C, the level of collection of at source provided by section 206 C (1) would be becomes practically meaningless. the collection would be at such a low level that it would not serve the object underlying the provision. We are, therefore, of the opinion the that percentages mentioned in column 3 and of the Table in sub-section (1) of section 206 C are relatable to the purchase price and not to the income component of the purchase price. | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-78 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | We may now summarise our conclusions :
(i) Parliament was perfectly competent to enact sections 44 A C and 206 C;
(ii) section 206 C does not suffer form any a constitutional infirmity and is perfectly valid;
(iii) section 44 A C is not an independents provision It does not dispense with a regular assessment inaccordancde with the provisions of the Income-tax Act, Section 44 A C is merely an adjunt to and explains the provisions in section 206 C. A regular assessment has to be made in respect of an assessee dealing in specified goods in accordance with section 28 to 43 C. Read down in this manner, section 44 A C also does not suffer from any constitutional infirmity;
(iv) It is competent for parliament to adopt the purchase price as a measure for determining the income-tax. In this case the purchase price is taken as a measure for the limited purpose of determining the quantum of tax to be collected under section 206 C. Tax collected on specified goods will be given credit for in the year in which those goods are sold;
(v) In view of the clarification the Central Board of Direct Taxes; communicated by the Chief Commissioner of Income-tax, Andhra Pradesh, Hyderabad, and also in view of the concession made by the income-tax Department, it is directed that the expression "purchase price 'in section 44 A C and sectarian 206 C shall mean, in the state of Andhra Pradesh in respect of arrack, only the 'issue price" as understood in the Andhra Pradesh Excise act and the rules made the under now, in force in this state. The true meaning and content of the expression" purchase price' is, however, different, as explained hereinbefore; | https://indiankanoon.org/doc/171368/ |
f9d7282d0aa7-79 | A. Sanyasi Rao And Anr. vs Government Of Andhra Pradesh And ... on 7 March, 1989 | (vi) The collection at source provided by section 206 C is relatable to the purchase price and not to the income component of the purchase price.
The wirt petitioners are, accordingly, disposed of in the above terms. There shall be no order is as to costs. Ineach wirt petition, advocate's fee is fixed at Rs. 75 for learned standing counsel for the Revenue and at Rs. 50 fro the learned Government Pleader for Excise.
Learned counsel for the petitioners makes an oral request for grant of leave to appeal tot the supreme court undrsrticle 132 of the constitution on the question of competence of parliament to encat the provision in questions. Since these case involve a substantial question of law as to intrepertation of the constitution and also because it is stated that identical matters are pending before the supreme court. we are inclined to grant a certificate as prayed for. A certificate shall accordingly issued under article 132 of the Constitution.
Learned standing counsel for the Revenue also makes as similar request, aggrived with the construction placed by us on section 44 A C. For the reasons recorded hereinabovee. a certificated shall also issue to the Revenue. | https://indiankanoon.org/doc/171368/ |
e35d88e3fb10-0 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | ORDER | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-1 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 1. The Government of Andhra pradesh introduced a scheme to supply rice to poorer sections of the society, at the rate of Rs. 2/- per Kilogram and in the interest of that scheme, issued certain orders restricting the export of rice outside the state and also calling upon the rice-millers and dealers in the state to sell a certain quantity of foodgrains with them, to the Andhra pradesh state civil supplies corporation. These orders are questioned in these writ pwtitions. The points raised in the batch of writ petitions are common. Though the prayer in the writ petitions calls in question the valdiity of Cls. 4-A 4-B and 4-c of the Andhra pradesh Rice procurement (Levy) and restriction of sale order, 1967 (hereinafter referred to as the "Levy order), the said aspect was not urged before me. The arguments centred roung the interpretation of the various clauses, and the validity of the Government orders. In the light of the said Rules. For the sake of convenience I will set out the facts in W.P. No. 5445/83. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-2 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 2. The petitioners in W.P. No. 5445 of 1983 are licensed foodgrain dealers millers in krishna district who purchase paddy and mill the same in their mills. Under Cl. 3 of the levy order, they are obliged to supply the specified percentage of rice. So derived by them by way of levy to the state at the notified price. Currently, the levy quota is 50% for all the districts in the state the petitioners say that the remaining 50% they are entitled to sell whereever they like and at whatever price they can get and that no restriction can be placed by the state thereon. Their case is that for the Kharif season 1982-83, they have satisfied the levy quota targets fixed for them and that when they applied for permits for transport and sale of the remaining 50% of rice, the appropriate authorities have been denying and deliberately delaying the issuance of permits purporting to Act under the instructions of the Government impugned herein which permit export of only half of levy-free rice outside the state and whih instructions provide further that permits for sale of rice outside the state shall be issued only after the rice meant for sale inside the state is released. It is submitted that the petitioners are entitled in law to sell the entire levy -free rice (remaining 50%) outside the state if they so wish and that as and when they apply for such permits, the respondents are bound to issue the same. It is submitted that the petitioners cannot be compelled to sell the whole of it or any portion thereof, within the state. It is complained that under the impugned orders to which I shall presently refer - the Government has been compelling them to sell half the levy-free rice within the state. And following the export of only the other half without any authority of law. It is complained further that they are being compelled to sell the levyfree rice to the A.P. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-3 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | It is complained further that they are being compelled to sell the levyfree rice to the A.P. state civil supplies corporation at the price fixed by the Government which is resulting in huge losses to the petitioners. Even for the current Rabi season it is complained the authorities are compelling the rice-millers to deliver 2,50,000 tonnes over and above the levy quota and that such compulsion is equally unsustainable in law. This is short is the gravamen of the petitioners' complaint. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-4 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | The legal aspect.
3. The essential commodities Act has been enacted in the interest of general public for the control of production, supply and distribution of and trade and commerce in certain commodities, declared as essential commodities S. 3 (1) empowers the Central Government to provide by order for regulating or prohibiting the production, supply and distribution of any essential commodity and trade and commerce therein if in its opinion it is necessary or expedient so to do for maintainin or increasing or f or securing thier equality distribution and availability at fair prices. Subsec. (2) provides that without prejudice to the generality of the powers conferred by sub-sec (1) order made under S. 3 (1) may provide among others-
(a) to (c) xx xx xx | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-5 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (d) for regulating by licences permits or otherwise the storage transport distribudisposal acquisition use or consumption of any essential commodity:
(e) xx xx xx xx
(f) for requiring any person holding in stock or engaged in the production or in the business of buying or selling of any essential commodity:-
(a) to sell the whole or a specified part of the quantity held in stock or produced or recived by him or
(b) in the case of any such commodity which is likely to be produced or received by him to sell the whole or a specified part of such commodity when produced or received by him,
To the Central Government or a state Government or to an officer or agent of such Government or to a corporation owned or controlled by such Government or to such other person or class of persons and in such circumstances as may be specified in the order".
Clause (c) of sub-sec. (2) empowers the central Government to control the price at which any essential commodity may be bought or sold. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-6 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 4. Section 5 of the Act empowers the central Government to direct by a notified order that the power to make orders or issue notifications under S. 3 shall in relation to such matter. And subject to such conditions if any as may be specified in the direction be exercisable by the state Government among other authorities.
By its order dated 24-7-1967 contained in G.S. R. 1111 published in the Gazette of India, extraordinary, dated 24-7-1967 the central Government directed that 'the powers conferred on it by sub-sec. (1) of S. 3 of the said Act to make orders to provide for the matters specified in Cls. (A) (b) (c) (d) (e) (f) (h) (I) (ii) and (j) of sub sec. (2) thereof shall, in relation to food-stuffs be exercisable also by a state Government subject to the conditions-
'(1) that such powers shall be exercised by a state Government subject to such directions if any as may be issued by the central Government in this behalf: and | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-7 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (2) that before making an order relating to any matter specified in the said cls. (A) and (c) or in regard to regulation of transport of any food-stuffs under the said cl. (D) the state Government shall also obtain the prior concurrence of the central Government .........'
Condition No. 2 was modified by an other order contained in G.s. r. 1508 dated 30-9-1967 condition No. 2 substituted by this order, reads:- | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-8 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | "(2) that before making an order relating to any matter specified in the said cls. (A) (c) or (f) or in regard to distribution or disposal of food-stuffs to places outside the state or in regard to regulation of transport of any foodstuff under the said cl. (D) the state Government shall also obtain the prior concurrence of the central Government". Yet another order has been issued in G.S. R. 800 dated 9-6-1978: but since the terms thereof in so far as they are relevant are identical with the earlier orders, it is not necessary to refer to the 1978 order.
5. On 17-11-1967 the Government of Andhra pradesh made the "Andhra pradesh Rice procurement (Levy) and Restriction on sale order. 1967" which was published in the Gazette on 18th November 1967 This order purports to have been made under section 3 (2) (f) of the essential commodities Act read with sub-secs. (3) (3-B) and (5) of section 3, and the order of the Government of India contained in G. S. R. 1111 dated 24-7-1967 and also with the prior concurrence of the central Government clause 2 of this order defines certain expressions used in the order clause 3 provides for the levy. Sub-clauses (1) to (4) of Cl. 3, read as follows:-
"3. Levy on rice: (1) Every miller carrying on rice milling operations shall sell to the agent or an officer duly authorised by the Government in this behalf at the notified price and at such percentage of the total quantity of each variety of rice produced or manufactured by him in his rice mill every day as is specified for each district in the schedule. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-9 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (2) Every dealer shall sell to the agent or an officer duly authorised by the Government in this behalf at the notified price and at such percentage of the total quantity of:
(a) each variety of rice milled by him every day out of his stocks of paddy and | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-10 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (b) each variety of rice purcahsed or otherwise acquired by him for the purpose of sale from persons other than millers or dealers as is specified for each district in the schedule I:
(provisos omitted) (3) every miller or dealer in a district who holds stock of rice on behalf of any person shall deliver to the agent or an officer authorised by the Government in this behalf such percentage of each variety of rice specified for the district in schedule -I on behalf of the person on whose behalf the miller or dealer holds the stock.
(4) any person whose stock of rice is delivered to the agent or officer authorised by the Government under subcl. (3) shall not be entitled to recover from the miller or dealer on account of value of the stock so delivered notwithstanding any contract or instrument to the contrary. He shall forthwith approach the agent and state why such rice should not be levied from him by Government at the notified price and in case of such levy he shall be entitled to receive the payment of the cost of the rice taken by Government at notified price.............."
It is not necessary to refer to Cls 3-A and 3-b which deal with levy of paddy and the price to be paid to the producer/agriculturist. Clause 4 places certain restrictions upon the sale and movement of rice. It reads as follows:-
"4. (1) No miller or delaer shall sell or agree to sell or otherwise dispose of the rice recovered by milling other than the quantity specified in Cl. 3 except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-11 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (2) Save as otherwise provided in sub-cl. (1). No person shall transport rice for sale from the premises of any rice mill except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf".
It is not necessary to refer to Cls. 4-A and 4-B which provide for certain restrictions on sale and movement of paddy and broken-rice.
6. Clause 4-C empowers the Government to issue directions which shall govern the permits granted under cl. 4 and cl. 4-A It reads as follows:-
"4-C. Permits issued shall be subject to directions of Government Any permit issued under cl. 4 or cl. 4-A shall however be subject to such directions as the Government may give in this behalf".
It may be stated that Cl. 4-C was added by the state Government after obtaining the prior concurrence of the central Government in its telegram dated 6-10-1981. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-12 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 7. A reading of the above provisions makes the following position clear: section 3 of the Essential commodities Act empowers the central Government or its delegate to make orders for regulating the supply distribution trade and commerce in any essential commodity in the interest of maintaining or increasing the supply of such essential commodity or for securing its equitable distribution and availability at fair prices. Clause (d) of sub-sec. (2) empowers the central Government /State Government to make orders regulating, by permits inter alia, the disposal and acquisition of any essential commodity: while Cl. (F) empowers them to make an order directing any person holding instock any essential commodity to sell the same to the state or a state controlled corportation. The price at which such essential commodity is to be sold can also be fixed under an order made under Sec. 3 The levy order has been made under sec. 3 (2) (f) of the Act. When orginally made it did not contain Cl. 4 in the present form cl. 4 in the present form was introduced only in 1972 Cls. 4-A and 4-b were introduced in 1974 and Cl. 4-C in october 1981 Cl. 3 obliges every miller and dealer to deliver 50% of the rice milled by him or got milled by him on any day by way of levy to the state. The percentage of levy now in force is 50% cl. 4 restricts the sale and movement of levy-free rice, the heading of cl. 4 is relevant It is "restriction on sale and movement of rice". Cl. 4 expressly declared that no miller or dealer shall sell or agree to sell or otherwise dispose of the rice recovered by milling other than the quantity specified in Cl. 3 except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf", While | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-13 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | accordance with the permit issued by the collector or any officer authorised by the Government in this behalf", While subcl. (2) of Cl. 4 declares that "save asotherwise provided in sub-cl (1), no person shall transport rice for sale from the premises of any rice mill except in accordance with the permit issued by the collector or any officer authorised by the Government in this behalf." In disputably. Therefore even the sale of levy-free rice is not free at the volition of the miller/dealer but subject to regulation. It can be sold or disposed of only in accordance with the permits issued by the collector. Or other authorised officer. In this connection the following circumstances deserve notice: Clause 4 in the present form was introduced by G.O. Ms. 1533 F & A (C.S. 1) dated 30-10-1972 published in the rules suplement to part II (Extraordinary) page 1. Of the Andhra pradesh gazette dated 31-10-1972 the preamble to this amendment order does not refer or recite cl. (F) of sec. 3 (2) of the Act, as is done by the original order made in 1967. It purports to have been made in exercise of the powers conferred by section 3 of the essential commodities Act". In my opinion this was advisedly done for cl. 4 of the levy order is referable to cl. (D) in sec. 3 (2) secondly. I find that this amendment order has been issued with the prior concurrence of the central Government as recited in its preamble. Thus the requirement of G.s. R. 1508 dated 30-9-1967 and in particular of condition no. 2 thereof has also been satisfied Indeed the validity of cl. 4 was not challenged either in the writ petitions or in the arguments before me Now the avowed purpose of the | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-14 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | not challenged either in the writ petitions or in the arguments before me Now the avowed purpose of the amendment order is also found stated in the preamble. It reads Whereas the state Government is of the opinion that it is necessary and expedient so to do for maintaining supplies of rice produced in the state of Andhra pradesh and for securing equitable distribution and availability thereof at fair prices in the state of Andhra pradesh". It is thus clear that cl. (4) is neither a formal provision nor an empty one. It is made with a definite purpose and must be understood and interpreted accordingly. The sale of rice produced in this state is sought to be regulated by means of permits in the interest of maintenance of supplies for securing their equitable distribution and for ensuring their availability at fair prices in this state The Rule-making authority could not have made its intention clearer than this over and above this, Cl. 4-C expressly declares that the permits issued under Cl. 4 shall be subject to such directions as the Government may give it is of course that the directions that the Government can give under Cl. 4-C must be warranted by the levy order and must be meant for and designed to further and advance its objects (see Laker Airway's case (1977) 2 All ER 182). | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-15 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | The orders of the Government impugned:-
8. Since cl. 3 of the levy order provides for collection of levy out of the rice milled or purchased every day by the millers/dealers the Government has for the sake of convenience of both the administration as well as the traders been following the practice of fixing a target for each district and the collector, in turn fixes the target for each rice-mill or dealer, as the case may be the Millers dealers are first required to fulfil the levy quota and only thereafter are they permitted to sell the levy-free rice. This system dispenses with the governmental supervision on every ricemiller's/dealer's business. Every day. The very fact that the millers/dealers never complained of such practice all these years is proof positive of the fact that the said practice is not in any way prejudicial to the interests of the millers/dealers Again for the sake of convenience the Government divides each year into two halves. Viz Kharif and Rabi the Kharif season begins with Ist of october and ends with the 31st of March while the Rabi season begins with 1st of April and ends with 30th of September the levy targets are fixed separately for both kharif and Rabi. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-16 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 9. In the begining of the Kharif season, 1982-83. The collector. Krishna District. Issued proceedings dated 23-10-1982. Contained in Rc. No. A 341/82,in pursuance of the Government memo dated 8-10-1982 referred to therein fixing the target for each rice-mill for the Kharif season and also stating further that (5) millers and dealers delivering levy will be eligible to sell levy-free stocks in proportion to mill levy delivered. Since the percentage of levy is 50 the millers and dealers will be eligible to sell levyfree stocks at 1:1 ratio". This was of course, subject to revision if there are any changes in the policy of the Government | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-17 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 10. On 12-2-1983 the Government revised its procurement policy for 1982-83 in its circular No. P1/2896/83, wherein the state Government directed that with a view to ensure supplies to the people within the state and also to ensure against the rise in prices of rice the district administrations shall not allow any rice or paddy to go outside that state without the authority of the collector with a view to make the rice available to the people of this state in the first instance, the collectors of the surplus and deficit districts were directed to stop unauthorised movement of any kind across their districts. Among the instructions given the follwing instruction is relevant for the present purpose:-
(1) In all the surplus districts not more that 50% of the levy-free rice only should be permitted to be transported outside the state. The other half shall be reserved for consumption within the state. Every collector shall make out a budget for releasing these permits for local sales in a controlled fashion till the end of November monthwise............In other words the levy-free eligibilty earned to the extent of 50% and which would be required in the open market will have to be released through permits in a controlled fashion taking care to release larger quantities in the lean months. This method is advocated so that we may not only ensure overall availability of rice but also help hold the price line......." | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-18 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 11. In pursuance of the above circular the commissioner of civil supplies issued instructions in his Memo dated 16-2-1983 by way of clarification stating that out of the levy free eligibility accrued the millers may be permitted to transport rice outside the state to the extent of hald of their eligibility the balance half has to be offered for sale in the domestic market as per the guidelines issued in the reference second cited; (circular dated 12-2-1983). Where such rice is not purchased for sale in the domestic market in a given month that also may be permitted to be sold outside the state as instructed in the reference second cited......Surplus district collectors are requested kindly to watch closely the price of paddy in this connection to ensure that prices of paddy do not go below suppor t price........under all circumstances paddy prices should be kept well above the notified prices. To this extent collectors should exercise their own discretion, but keep the commissioner informed immediately thereafter..........."
12. Consequential instructions were issued to all the millers in Krishna district by the collector Krishna.
13. Now coming to the Rabi season 1982-83. The Government announced its Rabi procurement policy in Government memo No. 19844/A/CSI/83, dated 25-4-1983. In this memo it was stated:-
"The Rice Milling Industry shall pay an amount of not less than Rs. 20/- per quintal of paddy above the minimum support prices fixed by the Government of India during the Rabi season In other words the minimum price payable for Fair Average Quality paddy by the millers and dealers may be:- | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-19 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (i) common ......Rs. 142/- Quintal
(ii) fine..............Rs. 146/- Quintal
(iii) superfine....Rs. 150/-Quintal
During Rabi 1982-83 the mill levy percentage shall be 50% and the entire levy free eligibility earned by the millers or dealers can be sold anywhere in the country..........."
It was further directed that the millers and dealers shall also make available and sell an aggregate quantity of 2.50 lakh tonnes of rice for internal consumption within the state during Rabi 1982-83, in the open market at a price not exceeding Rs. 265/- per quintal of fair average quality rice. The mill -wise apportionment of this aggregate quantity will be made by the collectors in pro portion to the levy procured from each mill....." Another direction related to the unutilized stock of kharif season it was in the following words:-
"In respect of the Unutilized stocks of Kharif levy-free rice meant for sale within the state i.e, out of the 50% levy free eligibility of 1982-83 Kharif, and the 2.50 lakh tonnes of rice to be sold within the state by the millers during Rabi 1982-83 which comes to a total of 6,81.500 tonnes for the state as a whole, the month-wise budgeting of releases into the open market for the entire state shall be as follows:-
April 1983 ..... 20,000 Tonnes
May 1983 .. 70,0000 ,,
June 1983 ..... 1.10,000 ,, | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-20 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | June 1983 ..... 1.10,000 ,,
July, 1983 ...... 1.10,000 ,,
August 1983 ....... 1,10,000 ,,
September 1983 ...... 1,10,000 ,,
October 1983 ......1,04.500 ,,
November 1983 ..... 47.000 ,,
_______________
Total 6.81.500 Tonnes
.........These quantities shall be sold by the millers at a price not exceeding Rs. 265/- per quintal. As had been agreed to by them. The entire quantity shall be sold within the state of andhra pradesh only and the collectors shall ensure this by having these stocks lifted as laid down in the circular of the commissioner (C.S.) Ref. P1/2896/ 82 dated 12-2-1983, fifth cited........."
With respect to the export of rice outside the state it was stated:- | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-21 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | "Permits for transport and sale of rice eligible to be sold outside the state i.e, the 25% levy free eligibility out of the Kharif levy deliveries and the quantity of rice equal to the levy delivered in the Rabi season shall be issued only after the state's internal requirements are released first. This shall be done by the collectors, on a week to week basis, where however a miller would deliver his share of rice meant for internal consumption within the state of andhra pradesh in full he may be given a permit for transport and sale outside the state ensuring that the ration between internal sales and outside the state by him is not disturbed".
14. On 25-5-1983 the Government issued certain further orders with respect to its procurement policy for rabi 1982-83 in this memo the Government issued the following instructions:-
"In order to meet the increasing demand for rice at Rs. 2/- per kg., from the green card holders, Government have decided to purchase through a.P. state Civil supplies corporation Limited levy-free rice budgeted to be sold by the mills in the months from April 1983 to November 1983 at the following rates as agreed to by the millers and distribute the same to the green card holders at Rs. 2/- per Kg.
Purchase rate by the
____________________
APSCSCL from the Mills: | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-22 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | Purchase rate by the
____________________
APSCSCL from the Mills:
(1) All first crop common Varities: Rs. 250/- per Qtl.
(2) All first crop fine and superfine varieties : Rs. 260/- ,,
(3) second crop fine varieties eo. G. Hamsa: Rs. 245/- ,,
(4) Second crop superfine varities like BPT 1235 etc. Rs. 255/- ,, | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-23 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | The prices fixed above shall be forfair average quality rice. The A.P. State civil supplies corporation Ltd., shall purchase fair average quality rice from the levy free stocks available with the mills in the districts and move the stocks to the deficit districts as per the allotment made by the commissioner of civil supplies. The rice shall be delivered at the fair price shops at Rs. 200/- per quintal minus the retailer's margin as in the case of the Food corporation of India rice.
Collectors shall issue permits for sale of levy free rice to the millers to enable them to sell the rice of the A.P. State civil cupplies corporation limited. Permits for movement outside the state shall be issued only after the stocks for sale within the state are released or an undertaking in writing is given to the effect that the concerned mills would release rice for local sales in full as and when it is demanded.
The collectors shall ensure that the millers deliver to the maximum extent possible Kharif varieties towards Kharif eligibility.
Collectors shall issue levy free permits against deliveries made for movement outside the state from Rabi crop varieties only and no Kharif variety shall be allowed to move outside the state on levy free permits......." | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-24 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 15. The various order referred to above disclose the following position: In the begining of the kharif season 1982-83, the only obligation of the millers/dealers was to deliver 50% of the levy under Cl. 3 of the levy order and then they were free to sell the levy-free rice whereever they liked and the Government was to issue permits for the sale of such levy-free rice at the request of the Millers/dealers who satisfied the levy target fixed for them. However after the new Government came into office in january 1983 this policy underwent a change with a view to ensure domestic supplies and also to arrest the rise in prices the Government directed that only half the levy-free rice should be allowed to be transported outside the state which means that the remaining half should be sold only within the state. Further with the same object in view it was directed that the permits for sale to be issued under Cl. 4 of the Levy order should be phased. In other words permits for the entire levy-free rice would not be issued at once even it faked for These permits were to be issued in a phased manner over several months. This was undoubtedly a policy. Change to the prejudice of the millers/ dealers for the reason that the prices of rice outside the state are far higher than the | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-25 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | the prices of rice outside the state are far higher than the prices of rice prevailing in this state. Another prejudice to them was that they were not to be issued permits for the entire levy-free rice as and when they asked for the same but that they were to be issued in a controlled fashion the millers complain that such a policy has the effect of locking up their capital over an unduly long period the submission is that they have to raise substantial loans from their financiers for purchasing paddy and that if they are not allowed to sell the levy-free rice also soon after satisfying their levyquota they will be obliged to pay large amounts by way of interest to their lenders the submission is that there is no legal authority for both these types of restrictions viz the restriction on sale of levy-free quota outside the state and also the refusal to issue permits for sale of levy-free quota as and when asked for . it is submitted that by enforcing these instructions the millers/ dealers were disabled and prevented from selling huge quantities of levy-free rice of kharif season outside the state, and which quantity is now being tagged on to the Rabi quota. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-26 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 16. Now coming to the Rabi season the policy for this season is slightly different from the policy followed for the kharif. The mill levy is 50% and the millers/dealers are held entitled to sell the levy free rice any where in the country but subject to their making available an aggregate quantity of 2.5 lakhs tonnes of rice for internal consumption in the state at a price not exceeding Rs. 265/- per quintal. This 2.5 lakh tonnes of rice is added to the held over stocks of levy free rice meant for sale within the state and the total quantity of 6.81.510 tonnes is proposed to be released into the market in specified quantities every month permits for sale out side the state are to be issued only after the state's internal requirements are released first. The price at which the A.P. state civil supplies corporation was to purchase levy-free rice meant for domestic market from the millers/ dealers was fixed at Rs. 250/- per quintal for all first crop common varieties, and Rs. 260/- for all first crop fine and duperfine varities, similarly for second crop the prices were fixed at Rs. 245/- and Rs. 255/- per quintal respectively the permits for sale of levy free rice outside the states | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-27 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | respectively the permits for sale of levy free rice outside the states were to be issued only after the stocks meant for sale within the state are released indeed in its memo dated 25-5-1983 the Government directed that no Kharif variety shall be allowed to move outside the state on levy-free permits". The facility given in the circular dated 12-2-1983 to sell the rice remaining unsold within the state in a given month outside the state was also withdrawn. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-28 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 17. The petitioner's complaint with respect to the Rabi procurement policy is that not only the millers/dealers are made liable to supply 2.5 lakh tonnes of rice for internal consumption over and above the levy-quota but that they are obliged to sell the same as also the held -over stocks from the Kharif season to the state (A.P. state civil supplies corporation) at certain fixed prices which are far below the market prices. The petitioners contend that there was no such agreement between the millers and the Government as is recited in the Government memo dated 25-5-1983 and that in any event. There was no such agreement between the dealers (I. E. Dealers who are not millers) and the Government the said price has not been fixed or determined under any order made under S. 3 (2) of the Essential commodities Act. The avowed policy of issuing export permits only after the quotas meant for internal sale are satisfied and the altogether banning of export of rice of the Kharif season is complained to be totally without any authority of law and arbitrary contentions: | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-29 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 18. The first question is whether the state Government is empowered in law to direct that the millers/dealers shall sell half the levy free rice shall be granted only with respect to half the quota of levy-free rice I have dicussed hereinbefore extensively the object and purpose behind cl. 4 of the levy Order and also pointed out that it primarily deals with sale and disposal of levyfree rice and not with mere movement or transport as such Sub-cl. (2) of cl. 4 No doubt deals with transport of rice but it is not every transport that is governed by it but only 'transport of rice for sale from the premises of any rice mill". In other words Cl. 4 of the the Levy order regulates the sale and disposal of rice in accordance with the permits issued by the collector or other officer authorised in that behalf as the case may be now, Cl. 4-C expressly declares that a permit issued under cl. 4 shall be subject to such directions as the Government may give in that behalf. Reading Cls. 4 and 4-c together. It is evident that the Government does have the undoubted power to regulate the sale and disposal of levy free rice for the purpose of maintainaing the supplies and securing equitable distribution and availability at fair prices, of essential commodites. Merely because the original levy order purports to have been made under section 3 (2) (f) of the Act, it does not mean that Cl. 4 is not referable to cl. (D) of S. 3 (2) as pointed out supra Cl. 4 as introduced in 1972 was made under S. 3 as such without specifying any particular clause in sub-sec (2) of S. 3 sub-sec (1) of S. 3 is very wide in its sweep and sub-section (2) of s ection 3 is merely and elucidation of sub-section (1) | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-30 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (2) of s ection 3 is merely and elucidation of sub-section (1) of section 3. Therefore so long as the directions made or issued by the state Government under clause 4-c of the levy order are designed to achieve the objects asmentioned in sections 3 (1) of the Act and are underlying clause 4 of Levy order they would be perfectly waranted and unobjectionable in law. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-31 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 19. The main thrust of the petitioners' argument is that the Levy order is made under section 3 (2) (f0 of the Act and is designed and meant for compelling the millers/dealers to sell as portion of rice towards levy and once that purpose is achieved ther is no further purpose to be served by the said order. This in my opinion is an unwarranted interpretation of the scope and sweep of the levy order. As its title itself suggests the said order provides not only for levy but also for restriction on sale and trasnport of rice In other words the entire rice produced or acquired by a Milller/dealer is subject to control. Helf of its has to be delivered as levy at the notified price and the remaining half has to be sold in accordance with the permits issued by the specified authorities which permits shall however be subject to such directions as the state Government may issue in the interests of maintaining the supplies and securring equitable distribution and control of price. The levy order has to be releated no only to clause (f) of section 3 (2), but also to clause (d) of section 3 (2), as stated above. In other words while clause 3 is relatable to sec. 3 (2) (f) Cl. 4 is relatable to section 3 (2) (d). Once this is so the Government power to regulate the disposal and sale of rice in the interests of matters stated in subsection (10 of section 3 of the Act is unquestionalbe. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-32 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 20. The second question is whether the Government is empowered to direct that the permits for sale of levy-free rice shall be issued only in a phased and controlled manner In other words whether the petitioners are not entitled to permits for saleof levy-free rice as and when they ask for the same. This power to issue permits in a phased and controlled manner is again implicit in Cls. 4 and 4-c read together it is well known that one means of arresting the rise of prices is by regulating and maintaining the supplies at a sustained and certain level keeping in view the requirements of the populace. For this purpose; the state has been treated as a unit and it is so for the purpose of the levy order. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-33 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 21. The next complaint is that the policy of the Government not to issue permits for export until and unless the stocks for export until and unless the stocks of levy-free meant for in ternal consumption are released is arbitrary and incompetent it is contended that the millers have to raise huge sums by way of loans from financing agencies and that in the first instance they have to supply rice towards the levy quota; and if now they are required to sell half the levy-free quota within the state first and only thereafter to export it would result in subjecting the millers/ dealers to heavy financial burden and losses. It is complained that the held over Kharif quota (half the levy-free rice meant for sale within the state) is now directed to be sold to the A.P. state civil supplies corporation at a fixed price which is far below the price obtained outside the state. The learned Government pleader counters this arguments by saying that the price at which the held-over Kharif stocks are being asked to be sold to the A.P. state civil supplies corporation is still sufficiently remunerative to the millers /Dealers in the state though it may be that it is not as profitable as the pice obtained out side the state. It is contended that in the interest of maintaining the supplies and for preventing the price-rise within the state the Government orders in this behalf are perfectly competent and justified. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-34 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 22. Now there can be little doubt about the proposition that every power, including a statutory power has to be exercised reasnably. It should not be oppressive in its application. The power to give directions under Cl. 4-C of the levy order is also subject tot he above rider. So long as the state's requirements are being met there will be no reason to impose any other or further restriction upon the dealers' right to sell rice outside the state. Now the Government has a rough estimate of the levy-freerice available with the millers/ dealers. The very fact that the Government memo dated 25-4-1983 says that 4.31.500 tonnes of levy-free stock, pertainin to Kharif season meant for internal consumption is still available shows that the Government has already worked out the quantity available with the millers dealers on account of levy-free quota also. Part of it had already been sold by 25-4-1983, and still 4,31,500 tonnes was remaining to be sold within the state. It is indeed only after the issuance of the said memo that the Government directed the A.P. state civil supplies corporation to come forward and make purchases of this quantity as well as the quantity of 2.5 lakhs tonnes agreed to be delivered to the millers/dealers for the Rabi season. This would also mean that large stocks of levy-free rice are lying with the millers/dealers which they propose to sell outside the state. So long as the export of rice from this state is not altogether banned. The millers/dealers must be permitted to sell half the levyfree quota outside the state. The interests of the public of this state which the state Government is seeking to safeguard will not be jeopardized if the state Government maintains a parity in the matter of issuance of permits for sale both within the state and outside the state. In other words if a miller/dealer supplied 10 | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-35 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | within the state and outside the state. In other words if a miller/dealer supplied 10 tonnes of rice to the A.P. state civil supplies corporation or sells the said quantity within the state as the case may be he should be given permit for export of 10 tonnes of rice. Indeed the position today apppears to be that a fair proportion of the stock proposed to be procured by the state Government from the levyfree quota has already been procured. In the circumstances. The direction given herein shall operate only prospectively the proportion of 1:1 as between the sale within the state and sale outside the state shall be implemented with respect to the supplies made hereinafter and once the internal quota as stated in its memo dated 25-4-1983 is satisfied, export permits shall be issued freely. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-36 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 23. Another major complaint appears to be about the price at which the held over stock of Kharif season and the 2.5 lakhs tonnes of Rabi season are directed to be sold to the A.P. state civil cupplies corporation as also the compulsion to sell to the A. P. State civil supplies corporation the complaint is that this price has not been fixed under any statutory order issued under the A.P. Paddy procurement (prices) order 1980 or any other order in that behalf. It is also denied that there is any agreement between the millers/dealers and the state Government as recited in the Government memo dated 25-4-1983, or Memo dated 25-5-1983 for that matter. Particularly, so far as the dealers are concerned it is contended, even the aforesaid memos do not recite that there is any such agreement between them and the state Government with respect to the price. It is also submitted that the direction to sell within the state does not mean and cannot empower the state Government to compel them to sell the rice to the A.P. state civil supplies corporation the further submission is that even if the Government does have the power to direct the millers/dealers to sell a particular quantity of rice within the state or to the A.P. State civil cupplies corporation they are entitled to be paid the market rate. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-37 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 24. Now so far as the argument relating to compulsion being exercised upon the millers/dealers to sell half the levy-free rice to the A.P. State civil supplies corporation is concerned I am unable to see any such compulsion the only Government Memo that refers to purchases by the A.P. state civil supplies corporation is the one dated 25-5-1983 and this Memo puts it on the ground of an agreement by millers/ dealers. Obviously sufficinet number of purchasers within the state are not coming forward for purchasing the entire quota meant for internal consumption: this may be for various reasons which cannot be gone into herein. It was therefore agreed that the A.P. state Civil supplies corporation shall purchase those stocks at a particular price, which both the Government and the millers/dealers agreed was a fair price. This is really a matter of agreemetn and not a case of compulsion it is always open to the petitioners if they do not a case of compulsion. It is always open to the petitioners if they do not want to sell the stocks meant for internal consumption to the A.P. State civil supplies corporation to sell the same anywhere within the state and at such price as they can procure the fact remains that the levyfree rice meant for internal consumption has to be sold within the state only whether to the corporation or to others. The prices mentioned in the Government memo dated 25-5-1983 are only the prices at which the Government has directed the corporation to purchase: because the corporation cannot negotiate the price with each individual or each day As I said it is really a matter of agreement and not a matter of any statutory obligation or compulsion. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-38 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 25. Now coming to the rabi season, the Government has agreed to permit the millers/dealers to sell rice in the proportion of 1:1 anywhere in the country. In other words if they deliver 10 tonnes of levy rice. They will be entitled to the issuance of sale permits for 10 tonnes anywhere in the country, they like but this is subject to their making available 2.5 lakhs tonnes of rice out of the levy-free rice for internal consumption In other words for the Rabi season the proportion of 50: 25: 25 applicable for Kharif season is not being followed it si 50:50 the latter 50 being subject to the supply of 2.5 lakhs tonnes for consumption within the state. Though the proportion is different essentially the position in law is the same. Instead of saying that they must supply half the levy-free rice fro sale within the state the state is now satisfied if the millers/dealers sell only 2.5 lakhs tonnes in this season withint he state and the A.P. state civil supplies corporation is prepared to purchase at the price said to have been agreed between the Government and the millers/dealers. The argument of compulsory purchase, or compulsory purchase at a fixed price is. Therefore equally untenable with respect to the Rabi season as well | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-39 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 26. So far as the petitioners' contention that there was no agreement between the millers/dealers and the Government at which the millers/ dealers should supply the held-over stock of Kharif season and 2.5 lakh tonnes of rabi season to the A.P. state civil supplies corporation is concerned the learned Government pleader has placed before me the relevant record. Though there does not appear to be any formal agreement to the above effect. I find a number of letters given by the president and other office-bearers of the Rice Millers' Associations agreeing to supply rice at the aforesaid rates. The learned Government pleader has indeed stated that a large part of the stock agreed to be sold to the corporation, his already been sold to it . be that as it may, it is not necessary fo me to pursue this enquiry further inasmuch as I have already clarified hereinbefore that such of the petitioners who say they are not bound by the said agreement are intitled to sell their rice any where within the state at such price as they can get. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-40 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 27. Another contention of Mr. P. Ramachandra Reddy is that Cl. 4 of the levy order must be deemed to have been rescinded by virtue of the central Government order contained in S. O 696 (E) dated sept 30, 1977. The said order was issued by the central Government under S. 3 of the Essential commodities Act by the said order, the Central Government rescinded with effect from 1-10-1977, "(1) the orders issued by it as specified in schedule -a (2) the orders issued by the state Government as specified in schedule-b; and (3) any other order issued by ht e state Government and in force in relation to matters concerning regulation of or restriction/prohibition on movement or price of paddy, Neither the Levy order Nor Cl. 4 is mentioned either in Schedule A, or schedule-b. The contention is that it stands rescinded and repealed by virtue of cl. 3 of the said order. The reasoning in support as Cl. 4 concerns the regulation of and restriction on movement of rice it stands rescinded by virtue of Cl. 3 I am unable to agree I have repeatedly pointed out hereinbefore that Cl. 4 deals primarily no with the movement of rice, but with the sale of rice. Clause 4 regulates the sale of rice by permits as contemplated By S. 3 (2) (d) of the Essential commodities Act. Only sub-cl. (2) of Cl. 4 speaks of movement viz., transport but that too is not transport by itself, but transport of rice for sale from the premises of any ricemill. The real object or cl. 4 (2) is to regulate and restrict the transport of rice from the premises of any rice-mill for sale. It is therefore not possible to agree with Mr. Ramachandra Reddy that Cl. 4 of the Levy order stand s rescinded | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-41 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | Mr. Ramachandra Reddy that Cl. 4 of the Levy order stand s rescinded for the reasons suggested. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-42 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 28. A contention is urged by Mr. P krishna Reddy that the fixing of target is not wattanted either by the Act or the Levy order. I have already dealt with the said argument and I need not repeat the same here.
29. Mr. V. Rajagopal Reddy raised another contention that the circulars do not recite the power under which they are issued. And further that they are also not published in the Gazette as required by the Act. It is true that the circulars issued by the Government do not expressly recite that they are issued under clause 4-C of the Levy order but at the same time it cannot be denied that so long as the said circulars are referable to and can be sustained with reference to power vesting in the state Government they should be sustained. The learned Government pleader has clearly sought to sustain them with reference to clause 4-c, and I see no reason not to accede to the said argument.
30. Now so far as the contention that the said circulars were not published in the Gazette is concerned there is no doubt about the desirability of such publication: but the question with which I am now concerned is whether such non-publication leads to the said circulars becoming un-enforceable. The expressions "notified order" and "order" are defined by clauses (c) and (cc) respectively in section 2 of the Act. The definitions read as follows:
"(c) 'notified order' means an order notified in the official Gazette;
(cc) order' includes a cirection issued thereunder". | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-43 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | (cc) order' includes a cirection issued thereunder".
Now the circulars issued by the state Government are the directions issued under a notified order viz., under the Levy order and therefore there is no obligation to publich them in the official gazette. Moreover they are directions issued to the permit-issuing authorities. Of course, as I have stated above since the circulars are of general application the desirability of their publication in the gazette or by some other popular means is undeniable. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-44 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 31. Mr. Vedula jagannadha rao raised yet another contention viz that so far as the kharif season is concerned, the ratio of 50:50 was prevaling until 12-2-1983 when the ratio of 50:25: 25 was introduced. He submits that in cases where the millers/dealers have already acquired eligibility for permits (for sale of levy-free rice) by virtue of their delivering the levy quota, they should be given permits for sale of the Levy-free rice outside the state inasmuch as the directions issued on 12-2-1983 do not and cannot have retrospective operation. It may firstly be seen that thought the restrictions were imposed on 12-2-1983 the petitioners have not chosen to question the same during the Kharif season, but have come forward only now i.e. in July 1983 raising the said contention. In the circumstances of the case. Where targets are fixed for each season. This delay certainly amounts to laches disentitling the petitioners to any relief. Secondly there is no question of any restrospective operation here inasmuch as the power under clause 4-C is the power to give directions which shall govern the permits issued on 12-2-1983 pertain to kharif season as such and are applicable to all the permits to be issued for that season. This is not a case of retrospective operation but one of a partial restriction being placed upon the sale of rice outside the state. | https://indiankanoon.org/doc/1548644/ |
e35d88e3fb10-45 | Sri Rama Krishna Rice & Groundnut ... vs State Of Andhra Pradesh And Ors. on 8 August, 1983 | 32. For above reasons the writ petitions fail and are accordingly. Dismissed subject to the following clarifications and directions that (I) those of the petitioners who do not wish to sell the levyfree rice at the prescribed price to the A.P. state civil supplies corporation, cannot be compelled to do so: but that they have to sell the same within the state: they are entitled to sell the same at such price as they can get: and (ii) that herafter the issuance of permits for sale of rice pertaining to Kharif season outside the state shall be in the ratio of 1:1 as between the levy-free rice sold within the state and the levy-free to be exported outside the state. It is directed herewith that if and when the millers/dealers apply for permission for export of rice in terms of this clarification, they shall be issued forthwith the state being satisfied (iii) so faras Rabi season is concerned, export permits will be issued as soon as the quota of 2.5 lakh tonnes prescribed by the state is satisfied and procured. There shall be no order as to costs. Advocates' fee: Rs. 150/- in each.
33. Order accordingly. | https://indiankanoon.org/doc/1548644/ |
2b0591e9e0cb-0 | T. Venkata Krishnaiah And Co. vs Commissioner Of Income-Tax on 10 September, 1971 | JUDGMENT Kondaiah, J.
1. This is a reference made by the Income-tax Appellate Tribunal, Hyderabad Bench, at the instance of M/s. T, Venkata Krishnayya & Co., Guntur (hereinafter called " the assessee "), under Section 256(1) of the Income-tax Act, 1961 (hereinafter called " the Act"), for the opinion of this court on the following four questions :
" (1) Whether, on the facts and in the circumstances of the case, the Income-tax Officer should be deemed to have granted extension of time for filing the return when he did not pass any orders on the assessee's application dated September 16, 1963 ?
(2) Whether, on the facts and in the circumstances of the case, by the levy of interest calculated under Clause (iii) of the proviso to Section 139(1) of the Income-tax Act, 1961, the Income-tax Officer must be deemed to have condoned the delay in filing the return of income ?
(3) Whether, on the facts and in the circumstances of the case, the Income-tax Officer had the power to levy a penalty under Section 271(1)(a) of the Act when he had already levied interest under Section 139 ? and (4) Whether, on the facts and in the circumstances of the case, the Income-tax Officer had jurisdiction to levy penalty under Section 271(1)(a) of the Act where a return was filed under Section 139(4) and penal interest was also levied under the provisions of this latter section ? " | https://indiankanoon.org/doc/516144/ |
2b0591e9e0cb-1 | T. Venkata Krishnaiah And Co. vs Commissioner Of Income-Tax on 10 September, 1971 | 2. In order to appreciate the scope of the questions it is necessary to refer briefly to the material facts that gave rise to them. For the assessment year 1963-64, relevant to the accounting year ending on December 31, 1962, the assessee, a registered firm of six partners carrying on business in tobacco, had to file its return of income under Section 139(1) of the Act oa or before June 30, 1963. As the assessee did not file its return before the due date, a notice under Sub-section (2) of Section 139 issued by the Income-tax Officer was served on the assessee on August 16, 1963, calling upon it to file the return of its income for that year on or before September 16, 1963. No return of income was filed before September 16, 1963, but however an application for extension of time for the filing of the return till October 16, 1963, was filed before the Income-tax Officer on that day. That application was in fact received by the Income-tax Officer on September 18, 1963. No order thereon either rejecting or granting the extension prayed for by the assessee was passed by the Income-tax Officer. Nor had the assessee filed the return of its income on October 16, 1963, up to which date the extension was prayed for, in its application dated September 16, 1963. In fact the return of the assessee's income for the assessment year 1963-64 was filed only on August 3, 1964. The Income-tax Officer completed the assessment by his order dated September 15, 1964, under Section 143(3) of the Act determining its net income at Rs. 1,24,580. In the order of assessment, a sum of Rs. 3,908.48 towards interest under Section, | https://indiankanoon.org/doc/516144/ |
2b0591e9e0cb-2 | T. Venkata Krishnaiah And Co. vs Commissioner Of Income-Tax on 10 September, 1971 | order of assessment, a sum of Rs. 3,908.48 towards interest under Section, 139 of the Act was added to the total demand raised thereon. | https://indiankanoon.org/doc/516144/ |