JUDGMENT
A. Sambasiva Rao, Ag. C. J.
1. Is entry 43 (which is now entry 44) in the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957, providing for a single point sales tax under Section 5(2)(a) on milk foods, powder and baby milk foods, but excluding fresh milk, discriminatory and, therefore, violative of Article 14 of the Constitution? This is the question that is canvassed in this writ petition.
2. The petitioner is a dealer in some commodities including milk powder. Sales tax is sought to be imposed on his sales of milk powder by virtue of the then entry 43 in Schedule I at a single point. The petitioner seeks a certiorari quashing this assessment order of the Principal Commercial Tax Officer, Second Circle, Narayanaguda, Hyderabad, for the assessment year 1972-73 to the extent that it imposes sales tax on the sales of milk powder. The argument of Sri Chennakesava Rao for the petitioner is this : The entry excludes fresh milk from taxation. In fact, the Government has issued G. O. Ms. No, 1091 dated 10th June, 1957, exempting milk from sales tax. But the entry makes milk foods, powder and baby milk foods exigible to sales tax at single point under Section 5(2)(a). There is no difference whatever between fresh milk and milk powder. If milk powder is mixed with water, it becomes milk. Likewise, milk foods also. In chemical substance also, there is no difference between milk powder and milk that is made of milk powder and fresh milk. While excluding fresh milk from taxation, the entry makes milk powder in foods liable to tax, though that is also essentially of the nature of milk. This is highly discriminatory and directly comes within the purview of Article 14. So, the entry itself is bad and no sales tax can be levied on the sales of milk powder.
3. The respondent in his counter avers that it is not correct to state that milk and milk powder are one and the same. They are in different forms and are altogether different commodities used for different purposes. They cannot be interchanged for each other. It is further pointed out in the counter affidavit, that even according to the petitioner, the milk powder is condensed milk obtained by physical and chemical process and, therefore, they are not the same commodities. Even condensed milk is not exempt, as only fresh milk is exempt. Thus, the respondent seeks to justify the classification made by the entry. He further submits that the legislature has got ample and wide powers to choose any commodities or goods for taxation or for exemption from taxation. So long as there is no discrimination among the dealers similarly situated, the imposition of tax cannot be questioned on the ground of hostile discrimination. G.O. Ms. No. 1091 is not applicable to the petitioner.
4. The first and the foremost feature that should be taken note of is that the legislature itself has made a distinction between fresh milk on the one side and milk foods, powder and baby milk foods on the other. It makes the latter category exigible to tax. The legislature in exercise of its power and its wisdom has chosen to make this distinction between the two categories. It is always recognised that the State has a wide discretion in selecting the persons or objects it will tax. A Statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when, within the range of its selection, the law operates unequally, and if that operation cannot be justified on the basis of any valid classification, it would be violativc of Article 14 : vide East India Tobacco Co. v. State of Andhra Pradesh [1962] 13 S.T.C. 529 (S.C.). As Willis has stated in his book on “Constitutional Law” “a State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably”. This power of the legislature is well-recognised. It cannot therefore be doubted that the State has wide latitude in choosing the items or objects for purposes of taxation. In Tungabhadra Industries Ltd. v. State of Andhra Pradesh [1966] 17 S.T.C. 366 (F.B.), Basi Reddy, J., speaking for the Full Bench expressed the same opinion. Once again the Supreme Court reiterated the same position in Venugopala Ravi Varma Rajah v. Union of India [1969] 74 I.T.R. 49 (S.C.). It said :
The courts accordingly admit, subject to adherence to the fundamental principles of the doctrine of equality, a larger play to legislative discretion in the matter of classification. The power to classify may be exercised so as to adjust the system of taxation in all proper and reasonable ways ; the legislature may select persons, properties, transactions and objects, and apply different methods and even rates for tax, if the legislature does so reasonably….If the classification is rational, the legislature is free to choose objects of taxation, impose different rates, exempt classes of property from taxation, subject different classes of property to tax in different ways and adopt different modes of assessment. A taxing statute may contravene Article 14 of the Constitution if it seeks to impose on the same class of property, persons, transactions, or occupations similarly situate, incidence of taxation which leads to obvious inequality.
5. Continuing, the Supreme Court observed :
It is for the legislature to determine the objects on which tax shall be levied, and the rates thereof. The courts will not strike down an Act as denying the equal protection of the laws merely because other objects could have been, but are not, taxed by the legislature.
6. This view has once again been stated by the Supreme Court in T. G. Venkataraman v. State of Madras [1970] 25 S T.C. 196 (S.C.). In view of this clear authority, it is not necessary for us to delve deeper into the power of the legislature to impose tax on certain items and objects and exclude others from such taxation.
7. Then, the next question would be: Whether the classification made under entry 43 is rational ? Even a statute will have to stand the test of scrutiny in the light of Article 14. When a classification made by an entry in a statute is tested, the language employed in it will have to be construed and understood as they are used on common parlance and not in their technical sense. It should not be forgotten that a statute is made by the legislature for imposing tax on the citizen, who is nothing more than a common man. At any rate, most of the citizens are common people. They are not expected to have a technical or scientific knowledge of the various terms and their meanings. It is always, therefore, desirable to understand the words expressed and the language of an entry as they are generally understood in common parlance. This is well-settled, vide the Supreme Court decision in Ramavatar Budhaiprasad v Assistant Sales Tax Officer [1961] 12 S.T.C. 286 (S.C.). Referring to the meaning of the word “vegetable”, the Supreme Court observed :
But this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance.
8. It is to be noted that the Andhra Pradesh General Sales Tax Act does not define the words “milk”, “fresh milk” or “milk powder”. So, the entry will have to be understood in the light of the meanings of the words used therein as they are generally understood in common parlance.
9. Now, is there any reasonable classification between “fresh milk” and “milk foods, powder and baby milk foods” ? In the counter-affidavit, the respondent has pointed out the distinguishing features between the two categories. As these items are understood in common parlance, they are different objects. It is also of common experience that the uses of these commodities also are somewhat different. Milk foods, powder and baby milk foods are not used exactly in the same way as fresh milk is used. For instance, milk that is made out of milk powder is not used for all purposes for which fresh milk is used. Even in the fat-content, there is difference between fresh milk and the milk that is made out of milk powder. Further, fresh milk is directly drawn from milching cattle, while milk powder is a substance which has been converted into powder from milk by chemical and mechanical process. It is then preserved, packed and despatched to various stations for being sold out to the customers. Milk powder can be preserved for quite a long time, but fresh milk cannot be kept for that length of time. It is obviously keeping in mind all these distinguishing features that the legislature thought it fit to differentiate fresh milk and milk powder. It cannot, therefore, be said that the classification is unreasonable.
10. Sri Chennakesava Rao, however, relies on Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 S.T.C. 827 (S.C.), and A.P. Dairy Development Corporation (P.) Ltd, v. Union of India, (1975) 2 A.P.L.J. Sh. N, 29. The Supreme Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 S.T.C. 827 (S.C.), was dealing with the question whether hydrogenated groundnut oil, commonly called “vanaspati” is groundnut oil within the meaning of Rule 18(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The Supreme Court held that simply because it was hydrogenated, the chief character of groundnut oil was not changed, and so it continued to be groundnut oil within the meaning of Rule 18(2). It was, therefore, held that hydrogenated groundunt oil also was covered by the expression “groundnut oil” in Rule 18(2). It must be noticed that Rule 18(2) did not itself keep any distinction between “groundnut oil” and “hydrogenated groundnut oil”. Therefore, the court had to consider, without the aid of the legislature’s view in the matter, whether hydrogenated groundnut oil also came within the category of groundnut oil. But such is not the case here. The legislature itself has made clear distinction between “fresh milk” and “milk powder”. As we have already pointed out, there is reasonable basis for that differentiation. Since the crucial legislative distinction did not exist in the Supreme Court decision, it does not apply or govern the present case. A Full Bench of this Court, which decided Tungabhadra Industries Ltd. v. State of Andhra Pradesh [1966] 17 S.T.C. 366 (F.B.), to which reference has already been made, was considering a similar case as the present one. The Government by notification added the words “other than refined groundnut oil” to the words “groundnut oil”. The Full Bench held that the effect of the addition was that the benefit of deduction of purchase price given to groundnut or kernel, which went into the manufacture of refined oil, was not available to refined groundnut oil. That distinction between groundnut kernel, groundnut oil and refined groundnut oil was held to be constitutional, as there was intelligible differentia between raw groundnut oil, refined oil and hydorgenated oil to form the basis of a reasonable classification for purposes of taxation. Reliance was placed before the Full Bench on the decision of the Supreme Court in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 S.T.C. 827 (S.C.). As we have pointed out above, the Full Bench also held at page 375 :
We are of opinion that there is no force in this contention as it overlooks the crucial fact that we are here dealing with a taxing statute. It is well-recognised that a wide latitude is given to the State to pick and choose objects for purposes of taxation, and what to tax and whom to tax are matters of policy with which courts have little concern.
11. Because there was reasonable differentia between refined oil and raw groundnut oil and groundnut kernel, the Full Bench held that the legislative distinction was constitutional. This decision is on all fours with the features of the present case. The legislature has a reasonable basis for different classification between fresh milk and milk powder. Therefore, the entry cannot be challenged as being opposed to Article 14 of the Constitution.
12. A. P. Dairy Development Corporation (P.) Ltd. v. Union of India (1975) 2 A.P.L.J. Sh. N. 29, is a decision of our learned brother, Jeevan Reddy, J., sitting singly. The learned Judge was construing the meaning of entry I-B in the Finance Act, 1969, While construing the language of that entry, the learned Judge opined that levy of excise duty on milk powder manufactured and stored in kraft paper bags for purposes of regeneration into fluid milk was not sustainable. It was clearly a case which was limited to the scope of entry I-B in the Finance Act, 1969, and cannot have any relevance to the understanding of the present entry.
13. What emerges from the above discussion is that the legislature has -power to decide what to tax and whom to tax. While taxing some objects and excluding certain others, it must make reasonable classification. In other words, that classification should not be violative of Article 14 of the Constitution. Entry 43 in this case stands the test of reasonable classification and the legislature has justifiable differentia between fresh milk and milk powder, etc. Therefore, entry 43, which is now entry 44, in the First Schedule to the Andhra Pradesh General Sales Tax Act, is not violative of, or repugnant to, Article 14 of the Constitution. That being the case, sales tax is leviable on the petitioner in respect of his sales of milk powder also.
14. In the result, the writ petition is dismissed. Since a liability to lax has been a matter of doubt, we direct the parties to bear their own costs in the writ petition. Advocate’s fee Rs. 150.
