Total turnover definition upheld where inter-State sales were counted only for liability classification, not taxed directly.

The amended definition of total turnover in section 2(r) of the Andhra Pradesh General Sales Tax Act, 1957 was upheld because it was used only to compute liability to additional tax on local sales taxable under the State Act, not to tax inter-State sales as such. The State Legislature could take inter-State sales turnover into account for classification, rate, or liability within its competence under entry 54 of List II, provided such sales were not themselves taxed. Section 38 and article 286 did not bar this limited use of turnover, so the challenge to legislative competence and constitutionality failed.

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Issues: Whether the amended definition of total turnover in section 2(r) of the Andhra Pradesh General Sales Tax Act, 1957, which takes into account inter-State sales turnover for the purpose of computing liability to additional tax under section 5-A, is unconstitutional or beyond the legislative competence of the State.

Analysis: The impugned levy was not on inter-State sales as such, but only on local sales taxable under the State Act. The amended definition was used for determining the quantum of business and for classifying dealers for additional tax. A State Legislature, while legislating within its field under entry 54 of List II, may take the dealer's total turnover into account for classification or for determining rate or liability, so long as sales in the course of inter-State trade or commerce are not themselves taxed. Section 38 and article 286 did not prohibit the turnover of inter-State sales from being considered for this limited purpose.

Conclusion: The amended definition in section 2(r) was upheld and the challenge based on lack of legislative competence and unconstitutionality failed.

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