Judgment : GODA RAGHURAM, J. These writ petitions present an identical challenge and are therefore heard and disposed of by this common order. Heard Sri B. Chandrasekhar -learned counsel for the petitioners; the learned Standing Counsel for Central Government for Respondent No.1; and Sri B. Venkatadri -the learned Special Government Pleader for Commercial Taxes for other respondents. The challenge is to the circular of the Commissioner of Commercial Taxes, Andhra Pradesh, (the ‘Commissioner’), bearing Ref.No.AIII(1)/98/2010, dated 22-05-2010; on the ground that it is contrary to proceedings dated 21-11-2007, 21-10-2008 and 13-11-2009, issued by the 1st respondent. Apart from seeking invalidation of the Commissioner’s circular, distinct consequent reliefs are sought in the several writ petitions. In W.P.No.23547 of 2011 and W.P.No.27345 of 2011, a direction to Respondent Nos.3 to 6 not to take any coercive steps pursuant to the impugned circular including collection of tax is sought. In W.P.Nos.27312 & 27326 of 2011, a direction to the respondents (State Revenue Authorities) is sought, to direct them to adjust amounts already paid pursuant to the impugned circular in future tax liabilities of the petitioners. In W.P.No.23547 of 2011, there are forty-two petitioners; in W.P.No.27312 of 2011 nine petitioners; in W.P.No.27326 of 2011 eighteen petitioners; and in W.P.No.27345 of 2011, there are five petitioners, all rice millers operating in West Godavari District. The petitioners purchase paddy from farmers directly or from marketing committees, convert the same into rice by milling, for eventual sale. All the petitioners are VAT dealers registered with respective Commercial Tax Officers. Purchase of paddy, milling the same and sale of the resultant rice is pleaded to be a controlled activity, regulated by control orders issued from time to time under Section 3 of the Essential Commodities Act, 1955. According to the Petitioners, the State Government exercising powers under the 1955 Act and the relevant control orders thereunder, notified the procurement prices for paddy. In G.O.Ms.No.38, 40 & 56, dated 24-09-2007, 13-10-2008 and 30-10-2009, the State Government notified procurement policies for the Kharif Marketing Seasons (KMS) 2007-08, 2008-09 and 2009-10 respectively, whereunder the procurement price or the Minimum Support Price were fixed, for different grades of paddy. During these Khariff Marketing Seasons the Government also fixed a bonus of Rs.100/-, Rs.50/-respectively (for the three Khariff years), to be paid over and above the Minimum Support Prices fixed for these years. During these Khariff Marketing Seasons the Government also fixed a bonus of Rs.100/-, Rs.50/-respectively (for the three Khariff years), to be paid over and above the Minimum Support Prices fixed for these years. The Central Government – the 1st respondent, vide proceedings dated 21-11-2007, 21-10-2008 and 13-11-2009, for the KMS 2007-08, 2008-09 and 2009-10 respectively, addressed several State Governments including Andhra Pradesh informing that it has decided to give additional incentive bonus of Rs.50 per quintal (over and above the bonus of Rs.50 per quintal already announced) for procurement of paddy, subject to the condition that the State fully exempts this bonus amount from all State taxes and levies. According to the petitioners, pursuant to the 1st respondent’s letters referred to above, the State was notifying the bonus and petitioners were purchasing paddy from the farmers duly paying them the bonus amounts. The petitioners submitted their returns for the turnovers for the three years in question. In view of the letters of the 1st respondent referred to above they excluded the incentive bonus of Rs.50/-per quintal from computation of turnovers, on the assumption that no tax on this amount was leviable, being exempt. The petitioners admit that after converting the paddy into rice by milling operations, the same is supplied to the FCI to the extent of 75% of the converted rice and the remaining 25% is sold in the open market. The impugned circular: While so, the Deputy Commissioner, Commercial Taxes, Kakinada, sought clarification regarding tax exemptions on the turnover pertaining to the bonus component, in respect of registered (rice miller) VAT dealers, of that district. Pursuant to this query, the Commissioner issued the impugned circular. This circular reads : CCT’S Ref. No.AIII(1)/98/2010 Dt.22-05-2010 Sub : APVAT Act and CST Acts – Determination of taxable T.O’s – Rice Mills – Incentives bonus announced by the Central Govt. for procurement of Paddy – Exemption from payment of tax on the turnover pertaining to bonus – Certain clarification Requested – Issued – Reg. Ref : DC(CT) Kakinada Rc.No.G2/234/10, Dt.3-5-10. >>o<< In the reference cited the Dy. Commissioner (CT) Kakinada, sought for clarification on the admissibility of deductions of incentive bonus, given by FCI (GOI) from the taxable turnover of the rice millers. In this regard, it is informed that the Government of India through FCI sanctions incentive bonus of Rs.50/-per quintal of paddy for the benefit of farmers. >>o<< In the reference cited the Dy. Commissioner (CT) Kakinada, sought for clarification on the admissibility of deductions of incentive bonus, given by FCI (GOI) from the taxable turnover of the rice millers. In this regard, it is informed that the Government of India through FCI sanctions incentive bonus of Rs.50/-per quintal of paddy for the benefit of farmers. As per Rule 16 (c) of APVAT Rules, the amounts of incentives, sanctioned by GOI or GOAP for the benefit of the farmers, are eligible for deduction from the taxable turnover. Such deduction is admissible in the case of rice millers to the extent of the incentive bonus of Rs.50/-, sanctioned by the Government of India through FCI. But, it is reported by the Dy. Commissioner (CT), Kakinada that the rice millers have been deducting the amounts, corresponding not only to the supplies of levy rice to FCI but also to all other supplies or sales, made other than to the FCI. The procedure, adopted by the rice millers, is not correct in the sense that they are eligible for deduction of only such amounts of incentives, sanctioned by the Government of India in relation to the purchases of paddy, made by the millers for the purpose of fulfilling the levy of rice. The other amounts are not eligible for any deductions from the taxable turnover. After examining the issue, the following Clarification is issued on the points raised by the Dy. Commissioner (CT) Kakinada. 1) Whether the rice millers are eligible for VAT exemption on the bonus amount reimbursed by FCI on the paddy proportionate to the levy rice supplied? Ans : The rice millers are eligible for VAT exemption on the bonus amount, reimbursed by FCI on the paddy, purchased by the rice millers in proportionate to the levy rice, supplied by them. 2) Whether the rice millers are eligible to calculate bonus amount proportionate to the rice sold within the state in open market and claim VAT exemption on relevant turnover? Ans : The rice millers are NOT eligible to deduct any amount in respect of the rice, sold in the open market within the state and are not entitled to claim VAT exemption on such turnover. 3) Whether the rice millers, are eligible to calculate bonus amount proportionate to the interstate sales of rice turnover and claim CST exemption on the relevant turnover? 3) Whether the rice millers, are eligible to calculate bonus amount proportionate to the interstate sales of rice turnover and claim CST exemption on the relevant turnover? Ans : The rice millers are NOT to deduct any amount from the turnover of the interstate sales of rice and are not entitled to claim CST exemption on the relevant turnover. Therefore all the Deputy Commissioners (CT) are directed to verify this aspect and take appropriate action to assess the tax correctly by disallowing any irregular deductions from the taxable turnover under Rule 16 (c) of the APVAT rules. Sd/-G. Lakshmi Prasad Additional Commissioner (CT) (Policy) The petitioners contend that the circular issued by the Commissioner is unsustainable since: (a) the Commissioner being the executive agency of the State had no authority to issue a circular contrary to the conditions imposed by the Union of India; (b) the circular being contrary to the policy formulated by the Union of India is illegal; and (c) the circular could not have been issued without consulting the Central Government. The challenge and reliefs sought: In oral argument the contentions as pleaded are reiterated. In W.P.Nos.23547 and 27345 of 2011, a prophylactic relief is sought even before assessment proceedings were initiated in respect of the returns filed by the petitioners for the respective tax periods and only invalidation of the Commissioner’s circular is sought. In W.P.Nos.27312 and 27362 of 2011 however, on the basis of the impugned circular issued by the Commissioner, the concerned assessing authorities had issued notices to produce the relevant books of account pertaining to the tax periods in question and show-cause notices were issued calling upon the petitioners why CST @ 4% be not collected on the non-levy sale component for that particular crop season. The petitioners assert to have paid the additional taxes demanded and while challenging the validity of the circular sought adjustment of the “excess and illegal” taxes paid, towards future tax liability of the petitioners. The petitioners assert to have paid the additional taxes demanded and while challenging the validity of the circular sought adjustment of the “excess and illegal” taxes paid, towards future tax liability of the petitioners. The defense: In the counter filed by the Commissioner it is asserted that the impugned circular only pertains to the sale price of rice, i.e., the rice sold by the petitioners – rice millers; that the circular does not violate the policy of the Union set out in the letters dated 21-11-2007, 21-10-2008 and 13-11-2009; that para – 2 of the 1st respondent’s letter dated 21-10-2008 itself clearly enjoins that the State should ensure that the bonus amount is paid to farmers whose paddy is purchased by State Agencies during the entire Kharif Marketing Season 2008-09; that this is also reiterated in the State Government’s memo dated 27-09-2009. It is further pleaded that even the 1st respondent’s letter dated 21-11-2007 directs that the State should ensure that the entire incentive bonus has been paid to all farmers whose paddy was already procured by FCI/State Agencies and that in case of levy rice the State should ensure that the entire amount of bonus has been paid to the farmers; similarly, the 1st respondent’s letter dated 01-11-2009 enjoins that the State should ensure that the bonus amount is paid to farmers whose paddy is purchased by the FCI/State Agencies during KMS 2009-10 and that suitable instructions should be issued by the State under intimation to the FCI. The counter adopts the clear position that when rice is sold in the open market by rice millers there is no occasion for the FCI or State Agencies to pay incentive bonus to the rice millers and therefore the rice millers would not be entitled for exemption on any part of the turnovers pertaining to sales otherwise than to the FCI/State Agencies, since no incentive bonus is paid either by the FCI or State Agencies. The issues: In the context of the challenge and the response, the issue that falls for consideration is whether the impugned circular violates the letters issued by the 1st respondent for the three KMS’s in question; and if so, whether it is unsustainable. Analyses: Rule-16(2)(c) of the APVAT Rules, 2005, to the extent relevant and material reads : 16. The issues: In the context of the challenge and the response, the issue that falls for consideration is whether the impugned circular violates the letters issued by the 1st respondent for the three KMS’s in question; and if so, whether it is unsustainable. Analyses: Rule-16(2)(c) of the APVAT Rules, 2005, to the extent relevant and material reads : 16. Determination of Taxable Turnover : - (1) … (2) The following amounts shall not be included for the purpose of determining the taxable turnover, namely, - (a) … (b) … (c) all amounts, forming part of the sale price on account of any incentives, sanctioned or ordered specifically or in general by either the Government of Andhra Pradesh or the Government of India with a view to extend any specific benefit to the agricultural farmers, subject to the guidelines issued by the Commissioner thereof. The letters addressed by the 1st respondent (dated 21-11-2007, 21-10-2008 & 13-11-2009), pertain to additional incentive bonus for paddy procured towards levy rice. The letters set out the policy of the Union, of providing additional incentive bonus for the procurement of paddy; the exclusive purpose of procurement being, for augmenting the food security of the nation. The payment of incentive bonus to the rice millers by the Union is through the FCI or other State Agencies. Each of the letters unambiguously delineates the policy of the Union, by enjoining that State Governments should ensure that the entire incentive bonus has been paid to all farmers whose paddy had been procured by FCI/State Agencies. In fact, para -6 of the 1st respondent’s letter dated 13-11-2009 clearly exemplifies this policy by instructing that payment of incentive bonus to millers/dealers by FCI/State Agencies should only be made on production of proof of payment of such incentive bonus to the farmers. The nature of the proof required to be produced (to establish payment by the millers of the incentive bonus, to the farmers) is also clearly stipulated in this paragraph. While the letters addressed by the 1st respondent do incorporate the condition that the State must fully exempt the bonus amount from all State taxes and levies, the purpose of ensuring exemption of the bonus amount from levy of State taxes is to ensure that the incentive bonus paid by the Union reaches the farmers wholly without deductions towards State taxes and levies. None of the letters nor any other policy of the Union requires rice millers/dealers to pay a higher price for paddy including the component of incentive bonus, to the farmers. The incentive bonus payable by rice millers, in addition to the procurement/minimum support price, to farmers and reimbursement to the millers by the FCI/State Agencies (of the incentive component) is only for rice supplied towards levy. It is only the incentive bonus reimbursed by the Union through the FCI/State Agencies, which is enjoined by the Union to be exempt from State taxes and levies. The Conclusion: On the aforesaid analyses, as rightly pleaded in the Commissioner’s counter and clarified in the impugned circular, rice millers are not entitled to any exemption from liability to tax under the provisions of the APVAT Act, 2005 in respect of any part of turnovers of sales made otherwise than to FCI/State Agencies and no exemption on any part of the turnover of sales made in the open markets, otherwise than towards levy is comprehended in the policy of the Union of India exemplified by the letters dated 21-11-2007, 21-10-2008 and 13-11-2009. Even otherwise, value added tax is levied under the provisions of the APVAT Act, 2005, a legislation referable to the exclusive State legislative field enumerated in Entry-54 of List-2 of the 7th Schedule to the Constitution (the State List) which is subject only to the provisions of Entry-92A of the Union list. Entry-92A of the Union list covers the legislative field: Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. The clarifications in the impugned circular issued by the Commissioner constitute guidelines issued in exercise of powers under Rule-16(2)(c) of the APVAT Rules, 2005. These rules are made by the State Government in exercise of powers under Section-78 of the 2005 Act. In terms of Rule-16(2)(c) only those amounts forming part of the sale price on account of any incentives, sanctioned or ordered specifically or in general, by either the Government of Andhra Pradesh or the Government of India with a view to extend any specific benefit to agricultural farmers, shall not be included for the purpose of determining the taxable turnover, but subject to the guidelines issued by the Commissioner of Commercial Taxes. Since the policy of the Union (set out in the three letters issued by the 1st respondent) enjoin payment of incentive bonus by the rice millers/dealers to the farmers in respect of procurement of paddy meant for supply of rice towards levy and enjoin payment of the incentive bonus to the dealers/rice millers and through FCI/State Agencies, there is clear indication that payment by the FCI/State Agencies is only for rice supplied by the rice millers/dealers towards levy. It is thus clear that exclusion from computation of taxable turnover is limited only for incentive bonus paid for the rice supplied towards levy. The impugned circular of the Commissioner merely clarifies a position inherent and integral to the policy of the Union as set out in the three letters of the 1st respondent. On the aforesaid analyses, we find no illegality in the circular dated 22-05-2010 issued by the Commissioner of Commercial Taxes, Andhra Pradesh, nor in proceedings initiated by the concerned assessment authorities for levy of tax from the petitioners, warranting interference under Article 226 of the Constitution. The writ petitions are without merit and are accordingly dismissed. The interim orders granted in the respective writ petitions stand dissolved. There shall however be no order as to costs.