Purchase tax classification upheld as rational; levy remained valid because the taxable event was purchase, not later use.

Section 6-A of the Andhra Pradesh General Sales Tax Act was upheld as a valid purchase tax measure: the classification between purchases from registered dealers and from unregistered persons was held rational and not violative of article 14. The taxable event was the purchase itself, so later use, consumption, or processing of the goods did not turn the levy into an impermissible use tax. Exemptions under section 9 and the turnover definition did not exclude the transactions from the charge, and section 5-A was construed as inapplicable to section 6-A. The provision was treated as a remedial charging section intended to plug leakage and prevent evasion.

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Issues: (i) Whether section 6-A of the Andhra Pradesh General Sales Tax Act offended article 14 of the Constitution of India by making a discriminatory classification between purchases from registered dealers and purchases from persons other than registered dealers; (ii) whether section 6-A was in substance a levy on use or consumption rather than on purchase and was therefore beyond the legislative competence of the State; (iii) whether exemptions under section 9 of the Act and the definition of turnover excluded the purchases in question from tax; (iv) whether section 5-A of the Act applied to transactions covered by section 6-A and whether section 6-A created a redundant or impermissible multi-point levy.

Issue (i): Whether section 6-A of the Andhra Pradesh General Sales Tax Act offended article 14 of the Constitution of India by making a discriminatory classification between purchases from registered dealers and purchases from persons other than registered dealers.

Analysis: The classification between purchases from registered dealers and purchases from persons other than registered dealers was held to be rational and connected with the object of the levy. In tax legislation, the legislature has a wide discretion to select the subjects and modes of taxation, and differential treatment does not become unconstitutional merely because other classifications could also have been adopted. The provision operated on a clear and intelligible basis and did not create arbitrary inequality.

Conclusion: The challenge under article 14 failed and section 6-A was upheld on this ground.

Issue (ii): Whether section 6-A was in substance a levy on use or consumption rather than on purchase and was therefore beyond the legislative competence of the State.

Analysis: The taxable event under section 6-A was the purchase itself, and the later use, processing, or conversion of the goods did not alter the character of the levy. The Court treated the provision as a purchase tax falling within the State's power to tax sale or purchase of goods. The fact that the goods were later consumed in manufacture or otherwise dealt with after purchase did not convert the levy into a use tax.

Conclusion: Section 6-A was intra vires and not invalid as a tax on use or consumption.

Issue (iii): Whether exemptions under section 9 of the Act and the definition of turnover excluded the purchases in question from tax.

Analysis: Section 9 was treated as a provision for partial or qualified exemption, unlike section 8 which granted total exemption in respect of specified goods. A general exemption under section 9 did not automatically exempt the purchase transactions brought to tax by section 6-A unless the goods or the transaction were specifically taken out of the levy. The definition of turnover was construed to include the consideration for sale or purchase even where the immediate seller was not a dealer in the commercial sense, and therefore the purchase base was sufficient for the levy.

Conclusion: The reliance on section 9 and the turnover definition did not defeat the levy under section 6-A.

Issue (iv): Whether section 5-A applied to transactions covered by section 6-A and whether section 6-A created a redundant or impermissible multi-point levy.

Analysis: Section 5-A was confined to dealers liable to tax under section 5, and its language did not extend to section 6-A. Reading section 6-A with section 5-A so as to include the new purchase tax within the additional tax provision would have required words the legislature had not used. The two clauses of section 6-A were held to operate distinctly, with section 6-A designed to plug leakage and prevent evasion, not to create redundancy. The provision was construed as a remedial charging provision preserving efficacy rather than defeating the scheme of the Act.

Conclusion: Section 5-A did not apply to section 6-A, and the challenge based on redundancy or multi-point taxation failed.

Final Conclusion: The principal constitutional and statutory challenges to section 6-A were rejected, but the writ petitions were disposed of only partly in the petitioners' favour, leaving the extent of the levy in individual cases to be examined before the appropriate authorities.

Ratio Decidendi: A purchase tax enacted as a remedial measure to plug tax leakage is valid if the taxable event is the purchase itself, the classification adopted is rational, and the provision is construed according to its plain language without extending related charging provisions beyond their text.

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