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PUNJAB & HARYANA HIGH COURT
G.S.Singhvi and Iqbal Singh JJ.
Nipha Exports Pvt.Limited
Versus
State Of Haryana
Civil Writ Petition No. 456 of 1990,
Decided On : JANUARY 30, 1997
PURCHASE TAX - Levy of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973 on goods purchased for export out of the country - Whether justified - Held, no.
Fact of the Case:
The petitioner, a company registered under the Companies Act, 1956, with its registered office at Calcutta and a branch office at Faridabad, Haryana, was engaged in the manufacture and purchase of machinery and machinery parts exclusively for export out of India. During the assessment year 1973-74, the branch office purchased ginning machinery and spare components from registered dealers in Haryana and dispatched them to the head office for export out of India. The Assessing Authority levied purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973, on the goods purchased by the petitioner. The petitioner challenged the levy of purchase tax, arguing that it was not authorized under Article 286 of the Constitution of India and Section 5 of the Central Sales Tax Act, 1956.
Finding of the Court:
The court held that the levy of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973, on the goods purchased by the petitioner for export out of the country was not justified. The court relied on Article 286 of the Constitution of India and Section 5 of the Central Sales Tax Act, 1956, which provide that no tax can be levied on the sale or purchase of goods where such sale or purchase takes place in the course of export of the goods out of the territory of India.
Issues: Whether the levy of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973, on the goods purchased by the petitioner for export out of the country was justified.
Ratio Decidendi: The court held that the levy of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973, on the goods purchased by the petitioner for export out of the country was not justified because: * Article 286 of the Constitution of India and Section 5 of the Central Sales Tax Act, 1956, provide that no tax can be levied on the sale or purchase of goods where such sale or purchase takes place in the course of export of the goods out of the territory of India. * The petitioner had produced evidence to show that the goods purchased by the branch office were sent to the head office for export out of India and were, in fact, exported.
Final Decision: The court allowed the writ petition, quashed the orders of the Assessing Authority, the Appellate Authority, and the Tribunal, and directed the parties to bear their own costs.
G.S.Singhvi, J.
1. Levy of purchase-tax Under Section 9 of the Haryana General Sales Tax Act. 1973 on the goods purchased by the petitioner for the purpose of export out of country has been questioned in this writ petition. The petitioner has prayed for quashing the orders Annexure P-1 to P-3 passed respectively by the Assessing Authority Faridabad, Deputy Excise and Taxation Commissioner (Appeals), Rohtak Circle and the Sales Tax Tribunal, Haryana.
2. The Petitioner is a company registered under the Companies Act, 1956. Its registered office is at Calcutta and a branch office and factory at Faridabad in the State of Haryana, it is engaged in the manufacture and purchase of machinery and machinery parts exclusively for the purpose of export out of the territory of India.
3. During the assessment year 1973-74, the branch office of the petitioner purchased ginning machinery and spare components from registered dealers in the State of Haryana and despatched the same to its head office for export out of India in execution of the orders booked from the foreign buyers. The consignments were sent from Faridabad to Calcutta through train. It is said that no octroi was paid at Calcutta because under the local laws no octroi is payable on the goods which are exclusively meant for export.
4. After the petitioner had filed its return, the Assessing Authority issued a notice for levy of purchase tax. The petitioner produced records of the head office and the branch office and filed an affidavit of Mr. R.K. Sarawagi, Director of the Company, to show that the goods purchased at Faridabad were meant for export out of India. After hearing the representative of the petitioner, the Assessing Authority held that purchase tax amounting to Rs. 43,802.36 was payable by the petitioner. The appeal filed by the petitioner came to be dismissed by the Appellate Authority. The second appeal preferred by the petitioner has been dismissed by the Sales Tax Tribunal, Haryana.
5. Mr. B.K. Jhingan, learned counsel for the petitioner, argued that the respondent have no authority to levy purchase tax on the petitioner in respect of the goods which were purchased by it for the purpose of export out of the territory of India. The learned counsel relied on Section 5(1) of the Central Sales Tax Act, 1956 and the judgments of this Court in international Cotton (Waste) Corporation, Bombay v. The Assessing Authority, Bhatinda, and Ors., (1965) 16 S.T.C. 1045; New Rajasthan Mineral Syndicate v. State of Punjab and Ors., (1965) 16 S.T.C. 534; Janki Dass Bhagat Ram v. The Excise and Taxation Officer, Ludhiana, and Anr., (1965) 16 S.T.C. 542; State of Punjab v. International Cotton (Waste) Corporation, Bombay, and Ors., (1970) 25 S.T. C. 496 and of the apex Court English Electric Company of India Ltd. v. The Deputy Commercial Tax Officer and Ors., (1976) 38 S.T.C. 475.
6. Mr. H.S. Hooda,learned Advocate General, Haryana, argued that the levy of purchase tax Under Section 9 of the Haryana General Sales Tax Act, 1973 , is fully justified in view of the fact that the goods purchased by the petitioner at Faridabad did not result in the export thereof. The learned Advocate General strongly relied on the observations made by the Supreme Court in Mohd. Rajuddin v. The State of Orissa, (1975) 36 S.T.C. 136. The learned Advocate General argued that the Assessing Authority had no jurisdiction to rely on the affidavit of Mr. R.K. Sarawagi and as the petitioner had not produced any material to show that it was a unit of M/s Nipha Exports Private Limited, Calcutta and no evidence was produced by the petitioner to establish any nexus between the agreement entered into by the Company at Calcutta and the purchase of goods by the petitioner at Faridabad, the provisions of Section 5 of the Central Sales Tax Act, 1956 cannot be invoked by the petitioner.
7. We have thoughtfully considered the rival submissions and have carefully perused the impugned orders.
8. At the outset, it must b
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