Inter-State sale principle applied to levy rice supplies, displacing State VAT assessments for lack of jurisdiction.

Availability of an alternative statutory appeal did not bar the writ petitions, because an appellate remedy is only a relevant factor under Article 226 and the material facts were undisputed. The levy rice supplies from Yanam to FCI at Kakinada were inter-State sales under Section 3(a) of the Central Sales Tax Act, because the contractual and administrative arrangement required movement of goods from one territory to another as an integral part of the sale; subsequent weighment and appropriation at Kakinada did not change that character. As the transactions were inter-State, the Andhra Pradesh taxing authorities lacked jurisdiction under the State VAT law, and the assessment orders treating them as intra-State sales were unsustainable.

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Issues: (i) Whether the writ petitions were liable to be rejected for availability of an alternative statutory appeal; (ii) whether the sale of levy rice by Yanam rice millers to FCI at Kakinada was an inter-State sale falling under Section 3(a) of the Central Sales Tax Act, 1956, or an intra-State sale exigible to tax under the Andhra Pradesh Value Added Tax Act, 2005; (iii) whether the assessment orders treating those sales as intra-State sales were without jurisdiction.

Issue (i): Whether the writ petitions were liable to be rejected for availability of an alternative statutory appeal.

Analysis: The existence of an appellate remedy is only a relevant factor in the exercise of writ jurisdiction and does not oust jurisdiction under Article 226 of the Constitution of India. The facts necessary to decide the controversy were not in dispute, and the petitions had already remained pending beyond the period within which an appeal could effectively be pursued. The Court therefore proceeded to examine the merits.

Conclusion: The writ petitions were not rejected on the ground of alternative remedy.

Issue (ii): Whether the sale of levy rice by Yanam rice millers to FCI at Kakinada was an inter-State sale falling under Section 3(a) of the Central Sales Tax Act, 1956, or an intra-State sale exigible to tax under the Andhra Pradesh Value Added Tax Act, 2005.

Analysis: The memo dated 31.10.1983, read with the later administrative arrangement, obligated the Yanam rice millers to procure paddy, mill it at Yanam, and supply the prescribed levy rice to FCI at Kakinada. The movement of rice from Yanam to Kakinada was not a mere incident after an independent local sale; it was an integral part of the very obligation to deliver levy rice in satisfaction of the arrangement. The fact that weighment, quality verification, and appropriation occurred at Kakinada did not alter the character of the transaction, because property passing later is immaterial where the sale occasions movement of goods from one territory to another. The transaction bore the requisite conceivable link between the obligation to sell and the inter-State movement of goods.

Conclusion: The sales were inter-State sales under Section 3(a) of the Central Sales Tax Act, 1956.

Issue (iii): Whether the assessment orders treating those sales as intra-State sales were without jurisdiction.

Analysis: Since the levy rice sales were inter-State in character, the Andhra Pradesh taxing authorities lacked competence to bring them to tax under the State VAT enactment. The power to tax such sales lies within the inter-State sales regime under the central law, and consent or past payment of a tax component could not confer jurisdiction on the State authorities. Any excess payment retained by the petitioners did not validate the impugned assessments.

Conclusion: The assessment orders were without jurisdiction and liable to be set aside.

Final Conclusion: The Court held that the disputed levy rice transactions were inter-State sales and that the State VAT assessments on those transactions could not stand.

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