Single-point levy on declared goods upheld, but only within Parliament's ceiling and incidence restrictions.

A State levy on declared goods was upheld where the charging entry fixed a single taxable stage and was read consistently with Parliament's restrictions under Article 286(3) and section 15(a) of the Central Sales Tax Act. Item 6 of Schedule III was treated as a one-point levy for each dealer class, not as authorising multiple taxation, and the millers/other dealers classification was held to rest on an intelligible differentia with a rational link to the statutory purpose. The levy could operate only subject to the Central ceiling and incidence limits, so taxation on declared goods could not exceed the permitted 3 per cent at a single stage.

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Issues: (i) Whether item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957, infringed section 15(a) of the Central Sales Tax Act, 1956, by permitting levy at more than one stage and by operating beyond the statutory ceiling of 3 per cent.; (ii) Whether the classification of dealers into millers and other dealers under item 6 offended Article 14 of the Constitution of India; (iii) Whether, if item 6 was otherwise valid, the levy had to be confined to the maximum permitted under section 15(a) of the Central Sales Tax Act, 1956.

Issue (i): Whether item 6 of Schedule III of the Andhra Pradesh General Sales Tax Act, 1957, infringed section 15(a) of the Central Sales Tax Act, 1956, by permitting levy at more than one stage and by operating beyond the statutory ceiling of 3 per cent.

Analysis: Article 286(3) of the Constitution of India subjects State taxation on declared goods to Parliament's restrictions on levy, rate, and other incidents. The Central Sales Tax Act, 1956 declares oil-seeds to be goods of special importance and restricts the State levy to one stage and to 3 per cent. Item 6 fixes the point of levy at purchase: for millers, at the point of purchase by the miller, and in all other cases at the point of purchase by the last dealer who buys in the State. The provision was read as fixing a single taxable stage for each class and not as authorising multiple levy at different stages. The earlier interpretation of the item was treated as consistent with this reading, and the later Supreme Court decision on Punjab legislation was distinguished because the Andhra Pradesh provision itself fixes a definite stage.

Conclusion: Item 6 did not fail merely because it was framed with two limbs; it was upheld as a single-point levy provision, but its operation had to remain within the ceiling imposed by section 15(a).

Issue (ii): Whether the classification of dealers into millers and other dealers under item 6 offended Article 14 of the Constitution of India.

Analysis: The classification was tested on the settled principle that a valid classification must rest on an intelligible differentia and have a rational relation to the object of the legislation. The object was to tax declared goods at one point before they ceased to be exigible by crushing into oil or by leaving the State. Millers were treated as a distinct class because, in the legislative scheme, they were assumed to purchase for crushing, while other dealers were taxed at the point of purchase by the last dealer in the State. The distinction was therefore neither arbitrary nor unrelated to the statutory purpose.

Conclusion: The classification under item 6 was not discriminatory and did not violate Article 14.

Issue (iii): Whether, if item 6 was otherwise valid, the levy had to be confined to the maximum permitted under section 15(a) of the Central Sales Tax Act, 1956.

Analysis: Section 15(a) controls the State levy on declared goods by imposing both a ceiling of 3 per cent and the one-stage restriction. The Court held that although the State definition of turnover could in some situations produce a levy exceeding the Central standard, the charging provision need not be struck down in entirety. Article 286(3) requires the State law to stand modified to the extent of the Central restriction. The correct approach was to read the State levy down so that the tax on declared goods would not exceed the maximum permitted under the Central Act, rather than to invalidate the entry altogether.

Conclusion: The levy under item 6 was sustainable only to the extent that it did not exceed 3 per cent of the sale or purchase price as understood under the Central Act.

Final Conclusion: The petitions failed, but the State authorities were directed to apply item 6 subject to the Central statutory ceiling, so that declared goods within the State were taxed at no more than 3 per cent at a single permissible stage.

Ratio Decidendi: A State levy on declared goods is valid if the charging entry fixes a definite single stage of taxation and is read, under Article 286(3), as modified to conform to the ceiling and incidence restrictions imposed by Parliament.

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