Full Judgment Text
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PETITIONER:
K.B. HANDICRAFTS EMPORIUM AND ORS. ETC.
Vs.
RESPONDENT:
STATE OF HARYANA AND ORS.
DATE OF JUDGMENT28/04/1993
BENCH:
JEEVAN REDDY, B.P. (J)
BENCH:
JEEVAN REDDY, B.P. (J)
VENKATACHALA N. (J)
CITATION:
1994 AIR 1220 1993 SCR (3) 454
1993 SCC Supl. (4) 589 JT 1993 (4) 545
1993 SCALE (2)675
ACT:
%
Haryana General Sales Tax Act 1973:
Sections 9. 24 read with Rule 21, ST Form- 15, the Haryana
General Sales Tax Rules and read with Section 5 (1) of the
Central Sales Tar Act and Form A of the General Sales Tax
Rules-Raw material purchased within Haryana-Sale of
manufactured goods out of such raw material to dealers at
Delhi, who exports them-Purchase tax whether leviable.
Constitution of India. 1950:
Article 32-Writ Petition-Whether a particular sale is intra-
state sale, inter-State sale or export sale-Supreme Court
cannot determine in writ jurisdiction.
W.P.(C) No. 983511983
HEADNOTE:
Petitioners-firms were registered sales tax dealers. They
manufactured and sold handicraft items. As they purchased
raw material within the State against declaration forms ST-
15 prescribed under Rule 21 of the Haryana general Sales Tax
Rules read with Section 24 of the Haryana General Sales tax
Act, purchase tax was not paid.
The petitioners sold the items of handicrafts to dealers in
Delhi who exported the same out of India. As the Delhi
dealers issued Form H, prescribed under the Cectral Sales
Tax Rules, they did not pay tax on the said sale/purchase.
Following the High court decision in M/s. Murli Manohar and
company,
Panipat & ors. v. State of Haryana & Ors. C.W. P. No. 1227
of 1980. The Sales Tax Authorities levied purchase tax u/s
9 of the Haryana General Sales Tax Act for the assessment
years in question on the purchase of raw material made by
the petitioners, computing the tax with reference’ to the
purchase value of the goods exported against Form H.
Hence the present writ petition before this Court was filed
challenging 454
155
the impugned order of levying purchase tax.
Meanwhile this court allowed the appeals preferred against
the decision of the High Court in Murli Manohar and
Company’s case, setting aside the judgment of the High
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Court.
As a common question arose in this batch of writ petitions,
all petitions heard together.
The petitioners contended that in view of the decision of
this Court in Murli Manohar 1991 [1] SCC 377, the writ
petitions were to be allowed.
Disposing of the writ petitions, this Court, S..
HELD: 1.1,. The decision in Murli Manohar says that
there can be only three types of sales, namely, intra-state
sales, inter-state sales and export sales a nd no other. A
sale to an exporter would be either at% intrastate sale or
an inter-state sale; in either case, the decision says, it
does not attract the purchase tax(on raw material) under
Section 9 of the Haryana General Sales Tax Act. However, in
the light of the decision in Hotel Balaji, it must be held
that there is one more category in addition to the three
categories mentioned above. The fourth category is where a
dealer in Haryana takes his goods (out of Haryana (without
effecting a sale, within the State), and effects the sale in
the other State. According to Section 9 of the Haryana Act,
as explained in Hotel Balaji, purchase tax can be levied and
collected on the raw material purchased by the manufacture
within Haryana, which was utilised for manufacturing the
goods so sold in the other State. (458-D-F)
Murli Manohar case. [1991] 1 S.C.C. 377, followed.
Good year India Lid. and Ors. v. State of Haryana and Anr.
[1990] 2 S.C.C. 71, referred to.
Hotel Balaji and Ors. etc. etc. v. State of Andhra Pradesh &
ors. etc. etc. J.T. (1992) 6 S.C. 182 explained
2.1. In a petition under article 32 of the Constitution it
is not the province of the Supreme Court to go into facts.
As repeatedly emphasised by this Court, the question whether
a particular sale is an intra-state sale, an inter state
sale, an export sale within the meaning of Section 5(1) or a
456
penultimate sale within the meaning of section 5(3), or
otherwise, is always a question of fact to be decided by the
appropriate authority in the light of the principles
enunciated by Courts. (459-C)
2.2. In these circumstances, it is directed that the matters
be disposed of by the authorities under the Act in the light
of the law declared by this Court in Murli Manohar, Hotel
Balaji and in this judgment. (459-D)
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition (c) Nos. 9835-38 of
1983.
(Under Article 32 of the Constitution of India)
WITH
W.P.(C)Nos.7468-7469/81,3838-39/83,5398/85,5435/85,386/84,
1489/ 86, 12691/85, 489-90/83, 81/83, 68/86 & 1065/87
Lakshmi Chandra Goyal, B.B. Sahni and Serve Mitter for the
Petitioners
D.P. Gupta, Solicitor General, Ms. Indu Malhotra, Ms. Aysha
Khatri, Ms. V. Mohana and Ms. Nisha Bagchi for the
Respondents.
The Judgment of the Court was delivered by
B.P. JEEVAN REDDY J. A common question arises in this batch
of writ petitions. We may take the facts in writ petition
(C) No. 9835 of 1983 filed by M/s K. B. Handicrafts Emporium
& Ors., as representative of the facts in all the cases.
The petitioners are firms engaged in the manufacture and
sale of handicrafts items. They are registered Sales Tax
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Dealers in the State of Haryana. They purchased raw
material within the State against declaration forms ST-15
prescribed under Rule 21 of the Haryana General Sales Tax
Rules read with Section 24 of the Act. By issuing Form ST.
15, the petitioners undertook that the goods manufactured by
them out of the said raw material would be sold by them
either within the State or in the course of inter-state
trade and commerce or in the course of export within the
meaning of Section 5(1) of the Central Sales Tax Act. A
dealer issuing the said Form need not pay the purchase tax
on such raw material. After manufacturing the items of
handicrafts, the petitioners say, they sold them to dealers
in Delhi who, in turn, exported them out of India. At the
time of sale of handicrafts to Delhi dealers, the Delhi
dealers issued Form-H, prescribed under the Central Sales
Tax Rules which means that the goods purchased were meant
for export. Neither party paid tax on the said
sale/purchase.
457
For the assessment years in question, the Sales Tax
Authorities of Haryana levied purchase tax on the purchase
of raw material made by the petitioner, following the
decision of the Punjab and Haryana High Court in M/s.
Murli. Manohar and Company Panipat & Ors. V. State of
Haryana & 0rs. (Civil Writ., Petition No. 1227 of 1980),
under section 9 of the Haryana General Sales Tax. Act,
1973. However, the assessing authority computed the tax
with reference to the purchase value of the goods exported
against Form-H. The petitioners. did not choose to file an
appeal but directly approached this Court by way of this
writ petition on the ground that in view of the decision of
the Punjab and Haryana. Hig h Court in Murli Manohar there
was no point in their pursuing the remedies under the Act in
that State.
Appeals were preferred in this court against the decision of
the Punjab and Haryana High Court in Murli manohar which
have been disposed of by this Court on October 25, 1990
(reported in [1991] 1 S.C.C. 377). This. Court allowed the
appeal and set aside the judgment of the High Court.
When these writ petitions came up for hearing, it was, urged
by the learned counsel for the petitioners that in view of
the decision of this Court- in Murli Manohar the writ
petitions must be allowed stria ghtway. This was demurred
to-by the learned Solicitor General appearing for the
respondent-State.
We are of the opinion that the decision of this Court in
Murli Manohardoes cover the point raised in these appeals
but it is necesary to add a clarification. Before we do
that, it is necessary to state a little background. Earlier
to the. rendering of the decision in Murli Manohar, a Bench
of this.Court comparising Sabyasachi Mukharji and
Ranganathan, JJ. held in Good year India Ltd. and Ors. v.
State ofHaryana and Anr. [1990] 2 S.C.C.71 that where the
goods manufactured are taken out of Haryana (without
effecting a sale) to the branch office or depot of the
Manufacturer or to the office or depot of his agent, no
purchase tax can be levied under section 9 of the Act on the
raw material purchased within the State and used in the
manufacture of such goods. It was held that imposing such
ta would amount to levying tax on consignment, which the
State Legislature was not’ competent to do. Section 9 as it
then stood, stated expressly that no such purchase tax on
raw material was leviable, if the goods manufactured out of
such raw material were sold either within the State or were
sold in the course of inter-state Trade and Commerce or were
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sold in the course of export within the meaning of Section
5(1) of the Central Sales Tax Act. MurliManohar was decided
in the light. of the law declared,in Goodyear. Later,
However, a Bench of three. Judges comprising S.Ran anathan,
v. Ramaswami, JJ. and one of us(B.P.Jeevan Reddy, J.) held
that.Goodyear does not lay down the correct law-vide Hotel
Balaji and
458
Ors. etc. etc. v. State of Andhra Pradesh & Ors. etc. etc.
JT (1992) 6 S.C. 182. It was held in Hotel Balaji that
having regard to the scheme of and the objective underlying
section 9 it was competent for the State Legislature to levy
purchase tax on raw material purchased within the State
where the goods manufactured out of such raw material are
taken out of the State (without effecting a sale within the
State or otherwise than by way of aninter-state sale or by
way of an export-sale within’the meaning of Section 5(1) of
the Central Sales Tax Act). It was held that such a tax
does not amount to consignment tax. It is this decision in
Balaji that calls for a certain clarification of the
principles enunciated in Murli Manohar.
The facts in Murli Manohar Were substantially similar to the
facts herein. The dealers within the State of Haryana
purchased raw material without paying tax, manufactured
goods out of the same and sold the manufactured goods to
dealers who in turn exported those goods out of India. On
these facts it was held by the Punjab and Haryana High Court
that inasmuch as the sale to exporters was a penultimate
sale falling under section 5(3) of the Central Sales Tax Act
and further inasmuch as Section 9 of the State Act exempted
only export sales within the meaning of section 5(1)-of the
Central Sales Tax Act but not the penultimate sale falling
under Section 5(3), tax under Section 9 was leviable. On
appeal, this court affirmed that Section 9 of the Haryana
Act (before it was amended by Haryana Act 1 of 1988) did not
exempt as sale falling under Section 5(3) but exempted only
a sale failing under section 5(1). Even so, the appeal was
allowed on the following reasoning "the sales made by the
assesses can only fall within one of the three categories.
They are either local sales or inter-state sales or export
sales............. We are unable to conceive of a fourth
category of sale which could, be neither a local sale nor an
interstate sale nor an export sale." In other words, the
decision says that there can be only three types of sales,
namely, intrastate sales, inter-:state sales,and export
sales and no other. A sale to an exporter would be either
an intrastate sale or an inter-state sale; in either case,
it does not attract the purchase tax (on raw material) under
Section 9 of the Haryana Act, says the decision: It is on
this reasoning that the appeals were allowed inspite of the
clear enunciation that the sales failing under Section 5(3)
of the Central Sales Tax Act were not exempt under Section 9
of the Haryana Act, as it then stood.
The above holding is evidently influenced by the decision in
Goodyear, which was good law at the time Murli Manohar was
decided. However, in the light of the decision of Hotel
Balaji, it must be held that there is one more category in
addition to the three categories mentioned above. The
fourth category is where a dealer in Haryana takes, his
goods out of the Haryana without effecting a sale. An
illustration would serve to highlight what we say: a Haryana
manufacturer takes his goods to Delhi without effecting a
sale. In Delhi. if he finds it more profitable,
459
he will sell it to a dealer in Delhi. Or if he finds it
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more profitable to sell it to an exporter in Delhi he will
sell the same to such exporter. These two sales are neither
intrastate sales nor inter-state sales, nor export sales
within the meaning of Section 5(1) of the Central Sales Tax
Act. In one Case, it is a sale in Delhi and. in. the other,
it is a punultimate sale within the meaning of Section 5(3)
of the Central Sales Tax Act. According to Section 9 of the
Haryapa Act, as explained in Hotel Balaji and Murli Manohar
purchase tax can be levied and collected on the raw.
material purchased by the manufacturer within Haryana, which
was utlised for manufacturing the goods so sold in these two
situations.
We must make it clear that in a petition under Article 32 of
the Constitution, it is not our province to go into facts.
As repeatedlly emphasised by this court, the. question
whether a particular sale is an intra-state sale,an inter-
state sale ,an export sale within the meaning of section
5(1) or a penultimate sale within the meaning of section
5(3), or otherwise, is always a question of fact to be
decided by the apporiate authority in the light of the
principles enunciated by Courts. In these circumstances, we
content ourselves by declaring the law and leave it to be
applied by the appropriate authorities. Counsel for the
petitioners says that all the sales effected by all the
petitioners are inter-State sales. May be,or may not be.
We leave the matters to be, disposed of by the authorities
under the Act in the light of the law declared by &.Is Court
in Murli Manohar, Hotel Balaji and in this judgment.
The writ petitions are disposed of with the aforementioned
clarification and, observations. No costs.
V.P.R.
Petitions disposed of.
460