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PUNJAB & HARYANA HIGH COURT
R.P.Sethi Gupta and N.K.Kapoor JJ.
United Receland Limited And Anr.
Versus
State Of Haryana And Ors.
Civil Writ Petition No. 6071 of 1993,
Decided On : AUGUST 17, 1995
The issue in this case is whether the petitioners, who are rice exporters, are liable to pay purchase tax on the paddy used for extracting rice for the purpose of export. The petitioners claim exemption from payment of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973 (the Act), which was omitted by Ordinance No. 2 of 1990 and subsequently by Act No. 4 of 1991. The respondents contend that the petitioners are liable to pay purchase tax under Section 15-A of the Act, which was substituted by Act No. 9 of 1993.
Fact of the Case:
The petitioners are rice exporters who purchase paddy from various states for the purpose of dehusking it and exporting the rice outside India. They claim exemption from payment of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973 (the Act), which was omitted by Ordinance No. 2 of 1990 and subsequently by Act No. 4 of 1991. The respondents contend that the petitioners are liable to pay purchase tax under Section 15-A of the Act, which was substituted by Act No. 9 of 1993.
Finding of the Court:
The Court held that the provisions of Haryana Act No. 4 of 1991 are legal, valid and constitutional; the provisions of Section 15-A of the Act as substituted by Act No. 9 of 1993 is intra-vires of the provisions of the Constitution rightly imposing the liability upon the petitioners to pay the purchase tax retrospectively; Section 9 of the Act was validly omitted and this Section had not granted any exemption to the petitioners from payment of the tax demanded; the petitioners are liable to pay the purchase tax on the paddy used by them for husking paddy which was ultimately exported out of the country; Annexure P/1, the notice under Section 49 of the Act, is legal, valid and according to law; the impugned notice of assessment and demand under Sections 28, 29, 31 and 33 of the Act in so far as it directs the payments of the purchase tax is legal, valid and according to law. However, the petitioners are held not liable to pay the amount of interest as specified in the said notice of assessment and demand.
Issues: 1. Whether the petitioners are liable to pay purchase tax on the paddy used for extracting rice for the purpose of export? 2. Whether Section 9 of the Haryana General Sales Tax Act, 1973 (the Act), which was omitted by Ordinance No. 2 of 1990 and subsequently by Act No. 4 of 1991, granted exemption to the petitioners from payment of purchase tax? 3. Whether the petitioners are liable to pay purchase tax under Section 15-A of the Act, which was substituted by Act No. 9 of 1993?
Ratio Decidendi: 1. The Court held that the petitioners are liable to pay purchase tax on the paddy used for extracting rice for the purpose of export because: * The provisions of Haryana Act No. 4 of 1991 are legal, valid and constitutional. * The provisions of Section 15-A of the Act as substituted by Act No. 9 of 1993 is intra-vires of the provisions of the Constitution rightly imposing the liability upon the petitioners to pay the purchase tax retrospectively. * Section 9 of the Act was validly omitted and this Section had not granted any exemption to the petitioners from payment of the tax demanded. 2. The Court held that Section 9 of the Act did not grant exemption to the petitioners from payment of purchase tax because: * Section 9 of the Act was validly omitted. * Section 9 of the Act did not provide any specific exemption to the petitioners. 3. The Court held that the petitioners are liable to pay purchase tax under Section 15-A of the Act because: * The provisions of Section 15-A of the Act as substituted by Act No. 9 of 1993 is intra-vires of the provisions of the Constitution. * Section 15-A of the Act imposes a liability on the petitioners to pay purchase tax.
Final Decision: The Court held that the petitioners are liable to pay purchase tax on the paddy used for extracting rice for the purpose of export. The Court also held that the petitioners are not liable to pay the amount of interest as specified in the notice of assessment and demand.
R.P.Sethi, J.
1. The concept of imposition of tax is as old as the human civilisation is. Tax in one form or the other was collected by all forms of Government for providing protection, security and other amenities to the citizens. It is compulsory acquisition of property by the State ostensibly on behalf of the assessee, for the purpose of providing amenities and looking for the vital interests of the society. Even in primitive times the process of compulsory acquisition of the property of the subjects was reserved to if not in cash positively in kind. However, with the development of the concept of the State ways and means of acquisition of the property for the benefit of the State have undergone a sea change. Human instinct has always been at work to avoid the payment of the tax compulsorily resorted to by legal and other means with antagonistic approach adopted both by the State and the assussee of levy and collection of tax which is in existence in all the countries of the world from the days of the known history. In India also, the existence and inception of system of taxation is referred to by Manu in his Manusmriti which prescribes how a duty is to be imposed on the transaction of sales. Manu even acknowledged the existence of sales tax as did Kautilya also. Meagasthenu a renowned traveler to India has also referred to the existence of such a tax. After the first world war, the sales tax was first visualised in the report of the Taxation Enquiry Committee (1924-25). In this background and with the development of concept of sales tax in the rest of the world, entry in Government of India Act No. 48 was made proposing the imposition of sales tax. However relevant provisions were made for the imposition of sales tax in the Constitution of India, 1950.
2. It is unfortunate that tax laws in our country are technically couched making its interpretation difficult. The language used in the fiscal laws in such the wriggling out of which is left to the wisdom of few. It has been acknowledged by all concerned that the most difficult law in the country to be interpreted is the law dealing with the taxation. The difficult language and phrases used in such enactments may be intentional giving a vast field to the evaders of the tax of fighting and providing ample opportunities to the wilful defaulters and evadors to resort to such technicalities with oblique motive of avoiding taxation intended and declared to have been imposed for the purposes of the general masses. The time has come which necessitates not only the restructuring of the taxation law system but to also provide a plain and capable and smooth interpretation reflecting and demonstrating the object sought to be achieved by the Legislature. It is also acknowledged that our law makers are admittedly not the law framers. The law framers are the constituents of bureaucracy apparently not committed in securing the goal as enshrined in the Preamble of the Constitution adopted on January 26, 1950. The time and necessity to take appropriate action is desired to be taken note of by resorting to remedial measures by making taxation law simple and easily understandable.
3. The facts giving rise to the filing of the present petition and Constitution of this Bench for adjudication of the scope of Sections 9, and 15-A of the Haryana General Sales Tax Act, 1973 (for short the State Act) are extracted form C.W.P. No. 6071 of 1993. The liability to pay purchase tax on the paddy used for extracting rice for the purpose of export is the pivotal question required to be adjudicated by us.
4. The petitioners are admittedly exporters of rice outside India. They purchase paddy form the States of Punjab and Haryana and also from other States for the purposes of dehusking it for export of rice outside India. The petitioners have claimed to be earning valuable foreign exchange for the Country. The paddy is declared commodity under Section 14 of the Central Sales Tax Act (for short the Centr
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