Turnover-based sales tax surcharge upheld as a valid graded levy within State taxing power and constitutional limits.

Section 5-A of the Andhra Pradesh General Sales Tax Act was upheld as a valid tax on sales or purchases within entry 54 of List II because it did not create a separate levy, but only imposed an additional rate using turnover as the measure. The turnover-based classification was held to be a reasonable graded burden on dealers with larger business capacity, so it did not offend Article 14. The provision was also held not to apply to declared goods or conflict with section 15 of the Central Sales Tax Act, and it did not violate Article 19(1)(g) or Article 301, as it was merely a revenue measure.

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Issues: (i) whether section 5-A of the Andhra Pradesh General Sales Tax Act fell within the legislative competence of the State Legislature under entry 54 of List II; (ii) whether the levy under section 5-A was discriminatory and violated Article 14 of the Constitution; (iii) whether section 5-A was repugnant to section 15 of the Central Sales Tax Act and ultra vires Article 286(3) of the Constitution; and (iv) whether section 5-A violated Article 19(1)(g) and Article 301 of the Constitution.

Issue (i): Whether section 5-A of the Andhra Pradesh General Sales Tax Act fell within the legislative competence of the State Legislature under entry 54 of List II.

Analysis: The charging scheme of the Act treated sales and purchases as the taxable event. Section 5-A did not create a new and distinct subject of taxation; it merely imposed an additional rate on the same sales or purchases already taxable under section 5, with turnover used only as the measure for fixing the higher rate. The use of the word "turnover" in the marginal note did not alter the substance of the levy. Reading sections 5 and 5-A together, the tax retained the character of a tax on the sale or purchase of goods, which squarely fell within entry 54 of List II.

Conclusion: Section 5-A was within legislative competence and validly enacted under entry 54 of List II.

Issue (ii): Whether the levy under section 5-A was discriminatory and violated Article 14 of the Constitution.

Analysis: The classification adopted by section 5-A was based on turnover, which bore a rational relation to the legislative object of imposing a higher burden on dealers with larger business capacity. The same Act already differentiated between dealers below and above the basic turnover threshold under section 5. The higher rate under section 5-A was only a graded surcharge on dealers having higher turnover and did not create an invidious distinction between similarly situated dealers.

Conclusion: Section 5-A did not violate Article 14 of the Constitution.

Issue (iii): Whether section 5-A was repugnant to section 15 of the Central Sales Tax Act and ultra vires Article 286(3) of the Constitution.

Analysis: Section 6 of the State Act excluded declared goods from the operation of section 5, and section 5-A applied only to dealers liable under section 5. On that construction, section 5-A did not operate upon declared goods. Since the provision did not trench upon the field regulated by section 15 of the Central Sales Tax Act, there was no conflict or repugnancy.

Conclusion: Section 5-A was not repugnant to section 15 of the Central Sales Tax Act and did not offend Article 286(3) of the Constitution.

Issue (iv): Whether section 5-A violated Article 19(1)(g) and Article 301 of the Constitution.

Analysis: A sales tax law, or an ancillary surcharge on sales tax, is a measure for public revenue and does not by itself create a fundamental right to freedom from taxation. Nor did the levy directly and immediately restrict the flow of trade so as to attract Article 301. The additional tax merely increased the fiscal burden on a class of dealers and did not amount to a prohibited restraint on trade or commerce.

Conclusion: Section 5-A did not violate Article 19(1)(g) or Article 301 of the Constitution.

Final Conclusion: The challenge to section 5-A failed on all grounds, and the writ petitions were dismissed with costs.

Ratio Decidendi: An additional levy tied to the same sales or purchases already chargeable under a valid sales tax provision remains a tax on the sale or purchase of goods if turnover is used only as a measure of rate, and such graded taxation based on turnover is constitutionally permissible when it rests on reasonable classification and does not trench upon a separate taxing field.

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