Important point
In the specified circumstances in which charge of purchase tax on the raw material is imposed, Section 9(1)(b) of Haryana General Sales Tax Act, 1973 and the exemptions provided therein would apply. The law declared by Apex Court in 1991(1) SCC 377 and 1993 Suppl. (4) SCC 589 holds the field.

Headnote:Haryana General Sales Tax Act, 1973—Sections 2(p), 9(1)(b), 6, 15, 15-A—Punjab General Sales Tax Act, 1948—Section 4B—Interpretation in the light of Article 286 of the Constitution—Restrictions as to imposition of tax on the sale or purchase of goods—And Central Sales Tax Act, 1956—Section 15—Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State—Whether retrospective amendments of Sections 2(p), 6, 15, 15A of Haryana Act make any difference in regard to levy of purchase tax on paddy?—(No)—Whether adjustment of purchase tax paid on (raw material) permissible u/s 15-A? (Yes)—Section 4B of Punjab Act in pari materia to Section 9(1)(b) of Haryana Act—Whether still assessee is liable to pay tax on paddy and not exempt? (Yes)—Case law discussed.
       Held : Having referred to the provisions of Article 286 of the Constitution and Section 15(c) of the CST Act, we have pointed out that clause (1) of Article 286 protects sale or purchase which takes place (a) outside the State or (b) in the course of import of goods into or export of the goods out of the territory of India, from a State Law imposing or authorising imposition of a tax. We have also indicated that clause (c) of Section 15 of the CST Act directs that where in respect of sale or purchase of paddy, tax has been levied in a State, then the tax leviable on the rice procured out of such paddy shall be reduced by the amount of tax levied on such paddy. This is to ensure that paddy and rice, being declared goods, considered to be of special importance in the inter-State trade or commerce, be relieved of so much burden of tax on rice as has been on the paddy from which rice has been procured. It appears to us that clause (iii) of the proviso to sub-section (1) of Section 15 reflects the intendment of clause (c) of Section 15 of the CST Act. It is not possible to accept that Section 15-A denies adjustment in regard to the tax paid on the purchase of paddy, as it is clear that in view of the opening words of Section 15-A, inserted by the amendment referred to above, it is subject to clause (iii) of the proviso to sub-section (1) of Section 15. Consequently, applying the principle of harmonious construction Section 15-A cannot be so interpreted as to override the provisions of either Section 15(c) of the CST Act or clause (iii) of the proviso to sub-section (1) of Section 15 of the Haryana Act so as to deny the benefit of adjustment. It, therefore, follows that the assessees are entitled to adjustment of purchase tax paid on paddy when the rice procured therefrom is taxed. (Para 46)
       Held further : It is true that Section 15A does not permit refund of purchase tax paid on paddy, cotton and oil seeds by an assessee though such a relief is available in regard to other goods. In the light of the above discussion, the challenge to Section 15A on the ground of violation of Section 15(c) of the CST Act or Article 286(1)(b) of the Constitution cannot be sustained because the only relief that is granted by Section 15(c) is reduction of tax leviable on the sale of rice procured from out of paddy, where tax has been levied on sale or purchase of such paddy inside the State. This relief is incorporated by the Haryana Act in clause (iii) of the proviso to sub-section (1) of Section 15. Even clause (b) of sub-article (1) of Article 286 does not provide for exemption of tax on the purchase of paddy. There is no other provision either in Article 286 or in the CST Act which bars a State from levying tax on the sale or purchase of paddy which is not exported out of the territory of India. Section 15A proceeds on the premise that purchase tax is payable, inter alia, on paddy. From the above discussion, it is clear that before the omission of Section 9 from the Haryana Act, no purchase tax was payable on paddy under Section 6 of the Act, therefore, during the aforesaid period, the assessee cannot complain of the denial of the benefit of adjustment and refund of purchase tax on the basis of Section 15-A of the Haryana Act. The position would, however, be different after April 1, 1991, when Section 9 was omitted from the Act. (Para 47)
       In the instant case, having regard to the provisions of Section 40 of the Haryana Act, the authorities can not revise the assessment for period beyond five years. Further, even though Section 15-A was given retrospectivity with effect from May 27, 1971, it would hardly be effective between May 27, 1971 and April 1, 1991 when the benefit of exemption under Section 9(1)(b) ceased to exist, as such none of contentions that giving Section 15-A retrospectivity of 21 years could be harsh, arbitrary and illegal would be devoid of merit. (Para 54)
       Held finally : To sum up :
        (1) In the specified circumstances in which charge of purchase tax on the raw material is imposed, clause (b) of sub-section (1) of Section 9 of the Haryana Act and the exemptions provided therein would apply; the law declared by this Court in Murli Manohar & Co.; Hotel Balaji and K.B. Handicrafts (supra) holds the field;
        (2) while Section 9 remained on the Statute till April 1, 1991, retrospective amendments of Sections 2(p), 6, 15 and 15-A of the Haryana Act would make no difference in regard to levy of purchase tax on paddy;
        (3) adjustment of purchase tax paid on paddy (raw material) is permissible under Section 15-A of the Haryana Act during the relevant period;
        (4) by virtue of Section 15-A of the Haryana Act, denial of refund of purchase tax, if any, paid by a dealer is not illegal much less unconstitutional; and
        (5) mere similarity between Section 9(1)(b) of the Haryana Act and Section 4-B of the Punjab Act would not relieve a dealer of the liability to pay purchase tax on paddy as the scope of charging sections under the said Acts are different. (Para 59)
       Held consequently : In view of the above discussion, the appeals filed by the assessees under the Haryana Act are allowed in part and the appeals filed by the assessees under the Punjab Act are dismissed. The writ petitions are disposed of accordingly. No costs. (Paras 60 and 61)
       Held, however : Insofar as the question of payment of interest, if any, is concerned, it is left open to be adjudicated in the connected cases. (Para 62)

Judgment

Syed Shah Mohammed Quadri, J.—Leave is granted in the special leave petitions.

2. The solution to the questions raised in this batch of cases turns on a true interpretation of the provisions of the Haryana General Sales Tax, 1973 (for short, "the Haryana Act")/ the Punjab General Sales Tax Act, 1948 (for short, "the Punjab Act") in the light of the provisions of Article 286 of the Constitution and the Central Sales Tax Act, 1956 (for short, "the CST Act") .

3. For the sake of convenience, these cases can be divided into two groups. (A) The first consists of two categories of cases arising under the Haryana Act in respect of assessments for the period : (i) ending with October 14, 1990 and (ii) between October 15, 1990 and September 28, 1996; and (B) The second takes in cases arising under the Punjab Act.

4. Mr. P. Chidambaram, the learned senior counsel appearing for the appellants, has piloted the arguments in the batch, which were adopted by other learned counsel appearing for the appellants in different appeals/writ petitions. The contentions of the learned counsel are two fold. The first being, Section 9 of the Haryana Act imposes charge of purchase tax on paddy and clause (b) of sub-section (1) of the said section exempts the same as the rice procured therefrom is exported. The second is that the High Court committed error in holding that with omission of Section 9 from the Statute, amendment of Section 6 and inclusion of Section 15A with retrospective effect from 27.5.1971, the liability to pay purchase tax is regulated by Section 6 read with Section 15 and adjustments, if any, could be made under Section 15-A of the Haryana Act. The case of the State of Haryana, as projected by the learned senior counsel, Mr. Mahendra Anand, is that the Haryana Act contains more charging sections than one, viz., Sections 6, 9 and 17; as Section 9 has been omitted and Sections 2(p), 6, 15 and 15-A have been amended retrospectively, the assessee is liable to pay tax on purchase of raw material.

4A. For appreciating the contentions, we shall take up the cases falling under groups (A)(i) and (B), which go together. It would suffice to refer to the facts giving rise to Civil Appeal Nos.11175-11178 of 1995. The assessee is a miller-exporter who purchases paddy in the State of Haryana, mills the same and exports the rice procured therefrom to places outside the territory of India. For the Assessment Years 1982-83, 1983-84, 1988-89 and 1989-90, on the ground that the transactions of purchase of paddy by the assessee were for export of rice procured therefrom, the assessing authority granted benefit of Section 9(1)(b) of the Haryana Act and completed assessments raising Nil demand. However, the Deputy Excise and Taxation Commissioner (Inspection)-cum-Revisional Authority, Karnal, (for short, "Dy. Commissioner") issued show cause notice under Section 40 of the Haryana Act and, after giving due opportunity of being heard to the assessee, revised the assessment for the said years in view of the retrospective amendment of Sections 6, 15, 15A and 17 and omission of Section 9 thereof holding that the assessee was liable to pay the purchase tax on the paddy. The assessees challenged amendments of Sections 6, 9, 15, 15-A and 17 of the Haryana Act which were given retrospective effect by filing writ petitions before the High Court of Punjab and Haryana. A Full Bench of the High Court upheld the validity of the impugned provisions of the Haryana Act and the orders of the Dy. Commissioner revising the assessments and, thus, dismissed the writ petitions. The appellants are in appeal, by special leave, before this Court challenging the legality of the judgment and order of the Full Bench of the High Court.

4B. It needs to be noticed, at the outset, that in view of the provisions of sub-section (3) of Article 246 read with Entry 54 of List II of the Seventh Schedule to the Constitution, a State is competent to legislate authorising impositi

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2002 Supreme(SC) 1055

Cases Referred (21)