Sales tax deduction at source follows the prescribed rule rate until the relevant rule is amended, not a higher statutory ceiling.

An amendment enlarging the maximum rate of sales tax deduction at source under section 5-H did not, by itself, change the operative deduction rate where rule 17-I(1) continued to prescribe the applicable rate. The deduction could not be increased to 4% until the relevant rule was amended. The document also notes that production of sales tax registration certificates could be required before passing contractors' bills as an administrative verification measure, and that such verification was not disapproved. The stated ratio is that a taxing provision referring to a rate to be prescribed or notified does not override the existing rule rate merely because the statute's maximum ceiling is enhanced.

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Issues: (i) Whether the enhanced maximum rate of sales tax deduction at source under section 5-H of the Andhra Pradesh General Sales Tax Act, 1957 could be applied at 4% merely because of the amendment, without amendment of the relevant rule prescribing the rate. (ii) Whether the respondents could insist on production of sales tax registration certificates before passing the contractors' bills.

Issue (i): Whether the enhanced maximum rate of sales tax deduction at source under section 5-H of the Andhra Pradesh General Sales Tax Act, 1957 could be applied at 4% merely because of the amendment, without amendment of the relevant rule prescribing the rate.

Analysis: Section 5-H authorises deduction of an amount calculated at such rate as may be prescribed. The statutory enhancement of the maximum percentage did not by itself alter the operative deduction rate. The applicable rate was already specified in rule 17-I(1) of the Andhra Pradesh General Sales Tax Rules, 1957, and the court treated that rule as governing the deduction until amended.

Conclusion: The deduction at source could not be raised to 4% merely on the basis of the amendment to section 5-H, and it had to continue at the rate prescribed in rule 17-I(1) until the rule was amended.

Issue (ii): Whether the respondents could insist on production of sales tax registration certificates before passing the contractors' bills.

Analysis: The direction permitting verification of registration certificates was treated as an administrative safeguard while processing the bills and was not disapproved.

Conclusion: The respondents were permitted to insist on production of sales tax registration certificates before passing the bills.

Final Conclusion: The challenge to the memo succeeded to the extent that tax deduction at source could not be enhanced beyond the prescribed rule rate, while the respondents retained the right to verify registration status before releasing payment.

Ratio Decidendi: Where a taxing provision prescribes deduction at such rate as may be notified or prescribed, an amendment enlarging the maximum rate does not operate by itself to change the deduction rate unless the relevant rule is correspondingly amended.

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