Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4
CASE NO.:
Appeal (civil) 3751-3760 of 1999
PETITIONER:
GOODYEAR INDIA LTD. APPELLANT
Vs.
RESPONDENT:
STATE OF HARYANA & ORS. RESPONDENTS
DATE OF JUDGMENT: 20/07/2001
BENCH:
S.P. Bharucha, N. Santosh Hegde & Y.K. Sabharwal
JUDGMENT:
Y.K. Sabharwal, J.
The question for decision in these appeals is whether the sales
tax authorities can raise demands on the assessee on the basis of
reassessment orders when the original assessment orders for the same
assessment years and for the same turnover have been held to be valid.
The facts relevant for the appeals are:
The assessing authority under the Haryana General Sales Tax
Act, 1973 (for short ‘the Act’) passed assessment orders levying on the
appellant purchase tax under Section 9 of the Act for the assessment
years 1973-74 to 1977-78 on the dispatches made by the appellant of its
manufactured goods to various depots outside the State. The assessment
orders were made between the year 1979 and 1981.
The assessment orders were made under Section 9 of the Act read
with a notification dated 19th July, 1974. Section 9 of the Act
provided that where a dealer purchased goods within the State and used
them in the manufacture of other goods which were then exported from
the State otherwise than by way of interstate sale, in circumstances in
which no tax was payable under the provisions of the Act, there would
be levied a tax on purchase of such goods at such rate as may be
notified under Section 15. In exercise of the powers conferred by
Section 9 and sub-section (1) of Section 15 of the Act, a notification
dated 19th July, 1974 was issued prescribing the rate of purchase tax.
The assessment orders and also the constitutional validity of the
notification dated 19th July, 1974 were challenged by the appellant in
several writ petitions filed in the High Court. The writ petitions in
respect of assessment years 1976-77 and 1977-78 were allowed by the
High Court of Punjab and Haryana by judgment dated 4th December, 1982
reported in Goodyear India Ltd. v. The State of Haryana & Anr. [53 STC
163]. The High Court held the impugned notification to be ultra vires.
As a consequence of the quashing of the notification, the assessment
orders were also set aside. The High Court, however, observed that the
judgment will not preclude the assessing authority to pass orders of
reassessment ignoring altogether the provisions of the impugned
notification. The operative portion of the judgment reads thus :
"As a necessary consequence of the quashing of
the notification, the assessment orders are
also set aside. This, however, would in no way
preclude the Assessing Authority to reassess
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4
the matter ignoring altogether the provisions
of the impugned notification."
This judgment was challenged by the State of Haryana by filing a
special leave petition in this Court. At the same time, on 13th January,
1983, the Haryana Legislature also enacted the Haryana General Sales
Tax (Amendment and Validation) Act, 1983 amending Section 9 of the Act
and retrospectively validating the notification dated 19th July, 1974.
These amendments were challenged in the writ petitions filed in the
High Court by M/s.Bata India Ltd. The High Court upheld its earlier
view in the case of Goodyear India Ltd. and held that the retrospective
validation of the notification and the consequential validation of all
actions taken thereunder were liable to be quashed. The decision of
the High Court is reported in Bata India Ltd. & Anr. v. The State of
Haryana & Anr. [54 STC 226]. The writ petitions of the appellant
challenging the assessment orders for the assessment years 1973-74 to
1975-76 and 1980-81 were also allowed and these assessment orders were
quashed. This Court while granting special leave petitions, by an
interim order, directed the State Government to refund the tax
collected by it in four equal instalments. Further, during the
pendency of the appeals in this Court, a Full Bench comprising of three
Judges of the Punjab and Haryana High Court in the case of Des Raj
Pushp Kumar Gulati v. State of Punjab [58 STC 393] considered the
correctness of the view taken in the case of Bata India Ltd. and by
judgment dated 24th June, 1985 setting aside the said view held that the
levy of the purchase tax was constitutional and valid.
On 20th October, 1986, the assessing authority passed reassessment
orders for the assessment years 1973-74 to 1977-78 charging purchase
tax without giving effect to the notification dated 19th July, 1974 on
the basis that the said notification has been quashed by the High Court
in the aforenoticed case reported in Goodyear India Ltd. v. State of
Haryana & Anr. [53 STC 163]. These orders of reassessment were
challenged by the appellant by filing writ petition Nos.6646, 6664 to
6667 of 1986 in the High Court of Punjab and Haryana. These writ
petitions were admitted and recovery of tax pursuant to reassessment
orders was stayed.
This Court by judgment dated 19th October, 1989 reported in
Goodyear India Ltd. v. State of Haryana & Anr. etc. [76 STC 71=(1990) 2
SCC 71] affirmed the view taken in Goodyear’s case and Bata India
Ltd.’s case by the Punjab and Haryana High Court and held that the levy
of purchase tax was unconstitutional, further holding that the view
expressed in Des Raj Pushp Kumar’s case was not correct.
The correctness of the view expressed in the aforesaid decision
in Goodyear’s case came to be examined by a three Judges Bench of this
Court in the case of Hotel Balaji & Ors. v. State of Andhra Pradesh &
Ors. [(1983) 88 STC 98] and the view taken therein was departed. It
was held that Goodyear’s case was not correctly decided.
As a result of the decision in Hotel Balaji’s case, the State of
Haryana filed Review Petition (C) No.185-91 of 1993 seeking review of
the aforenoticed judgment dated 19th October, 1989 in Goodyear’s case.
The review petition was allowed by this Court on 17th November, 1994 and
the judgment under review was set aside. The result was that the
judgment of the High Court quashing the notification dated 19th July,
1974 as also the assessment orders was reversed.
The High Court by judgment dated 11th December, 1996 dismissed
writ petition Nos.6646, 6664-67 of 1986 and upheld the reassessment
orders for the assessment years 1973-74 to 1977-78. The review
petition filed by the appellant was also dismissed by the High Court on
29th January, 1999.
In these appeals the appellant has challenged the correctness of
the judgments of the High Court dated 11th December, 1996 and 29th
January, 1999.
The effect of what has been noticed above is that now there are
two sets of assessment orders for same assessment years. One - the
original orders of assessment validity whereof has been upheld on
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4
review petition of State of Haryana being allowed by this Court on 17th
November, 1994. Second - the reassessment orders as a result of the
impugned judgment of the High Court whereby the challenge of the
appellant to the reassessment orders has failed despite original
orders of assessments for same years having been held to be valid.
For the same assessment year with same turnover there cannot be
two sets of assessment orders - the original assessment order as also
the reassessment order. It is neither disputed for the respondents nor
can it be disputed that under these circumstances, two orders of
assessment cannot stand - either the original orders of assessment
would stand or the reassessment orders.
It is no doubt true that the orders for reassessment were passed
by the assessing authority in view of the declaration of invalidity of
original orders of assessment and the liberty given to the revenue to
reassess the matter ignoring the provisions of the notification in
terms of the decision dated 4th December, 1982 setting aside the
assessment orders and quashing the notification. The contention on
behalf of the appellant, however, is that as a result of the review
petition filed by the State being allowed by this Court the original
assessment orders stand restored and revived. We find force in the
argument. As a consequence of the revival and restoration of the
original orders of assessment, the authorities cannot base their demand
on the orders of reassessment. The reassessment orders may have been
valid when made but on restoration and revival of the original orders
of assessment, in the circumstances as aforesaid, the State can recover
tax calculated on the basis only of the original orders of assessment
and is precluded from raising any demand of tax based upon the
reassessment orders. The respondents cannot now rely upon the orders of
reassessment.
In the aforesaid situation, learned counsel for the respondents
contends that the State is entitled to recover from the appellant the
amounts that were refunded pursuant to the order of this Court on the
special leave petitions. There necessarily will have to be a process
of accounting and the appellant will have to pay what is found to be
due thereafter. Learned counsel for the respondents also seeks
interest for the period the amounts remained with the appellant. We
need not go into this question. The question of interest is a matter of
accounting between the parties which aspect will be gone into and
decided by the assessing authority in the light of this decision and
according to law.
For the foregoing reasons, the appeals are allowed and the
impugned judgments of the High Court dated 11th December, 1996 and 29th
January, 1999 are set aside and the orders of reassessment are quashed.
In the facts and circumstances of the case, parties are left to bear
their own costs.
.....................J.
[S.P. Bharucha ]
.....................J.
[N. Santosh Hegde]
.....................J.
[Y.K. Sabharwal]
New Delhi;
July 20, 2001.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4
7