1993 (4) TMI 280 - SC - VAT and Sales Tax

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 appropriate 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 this Court in Murli Manohar 1990 (10) TMI 329 - SUPREME COURT OF INDIA Hotel Balaji 1992 (10) TMI 240 - SUPREME COURT OF INDIA and in this judgment.

Summary

Issues:
Interpretation of purchase tax on raw material for manufacturing goods sold for export under Haryana General Sales Tax Act.

Analysis:
The judgment addressed a common question arising in a batch of writ petitions regarding the imposition of purchase tax on raw material by the sales tax authorities of Haryana for goods manufactured and sold for export. The petitioners, engaged in manufacturing and selling handicrafts items, purchased raw material within the State against prescribed declaration forms. After manufacturing, they sold the goods to Delhi dealers who exported them out of India without paying tax. The Haryana authorities levied purchase tax based on a previous decision by the Punjab and Haryana High Court. The petitioners directly approached the Supreme Court, bypassing the state remedies, citing a previous decision by the Supreme Court that overturned the High Court judgment.

The Supreme Court referred to previous judgments to clarify the legal position. Initially, a decision by a Bench held that no purchase tax was leviable if goods manufactured were taken out of the State without a sale within the State. However, a subsequent decision by a different Bench held that the State Legislature could levy purchase tax on such raw material if goods were taken out of the State without a sale within the State. The Court noted that the earlier decision influenced by the subsequent judgment required clarification. The Court highlighted that sales to exporters could be categorized as intra-State, inter-State, or export sales, and no other category existed. However, a new category was introduced where goods were taken out of the State without a sale, leading to potential purchase tax liability on the raw material used for manufacturing.

The Court emphasized that determining the nature of sales (intra-State, inter-State, export, or penultimate sale) was a factual issue to be decided by the appropriate authority. The judgment clarified the legal principles but left the factual determination to the relevant authorities under the Act. The Court concluded the writ petitions with clarifications and observations, without awarding costs to any party.