1997 (2) TMI 499 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the term 'goods purchased by him' in section 10 of the Haryana General Sales Tax Act, 1973.
2. Justification of quashing the levy of tax on unsold bricks.

Analysis:

The case involved questions referred by the Haryana Sales Tax Tribunal under section 42 of the Haryana General Sales Tax Act, 1973. The first issue was whether the term 'goods purchased by him' in section 10 of the Act includes products manufactured from such goods. The second issue was whether the Tribunal was justified in quashing the levy of tax on unsold bricks valued at Rs. 8,000. The brick-kiln owner had closed down the business and applied for cancellation of registration certificate. The Assessing Authority added the value of unsold bricks to the turnover for tax assessment. The Joint Excise and Taxation Commissioner reduced the amount to Rs. 8,000 but upheld the tax levy. The Sales Tax Tribunal later allowed the appeal, leading to the State of Haryana seeking reference to the High Court for adjudication.

The High Court analyzed section 10 of the Haryana General Sales Tax Act, 1973, which states that tax is payable on goods purchased by a dealer in the State after registration and remaining unsold at the time of cancellation of registration. The State argued that since the assessee purchased coal used in manufacturing bricks, the products should be included in the tax liability. However, the Court disagreed, stating that the tax is specifically on goods purchased by the assessee, not on products manufactured from those goods. As the bricks were not purchased but manufactured using coal, they were not subject to tax under section 10. The Court emphasized that stretching the interpretation to include manufactured products would go against the statute's language.

Consequently, the Court ruled in favor of the assessee on both issues. The first question regarding the interpretation of 'goods purchased by him' was answered in favor of the assessee, leading to the second question being resolved in the same manner. The reference was disposed of accordingly, with the judgment favoring the assessee and rejecting the Revenue's claims.