1996 (12) TMI 363 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the impugned orders/demand notices.
2. Constitutional validity of the Haryana General Sales Tax (Amendment and Validation) Act, 1984.
3. Levy of purchase tax under Section 9 of the Haryana General Sales Tax Act.
4. Violation of Article 301 of the Constitution.
5. Period of limitation under Section 31 of the Haryana General Sales Tax Act.
6. Jurisdiction of the Assessing Authority.

Issue-Wise Detailed Analysis:

1. Legality of the Impugned Orders/Demand Notices:
The petitions challenge the orders passed by the Assessing Authority for the assessment years 1973-74 to 1977-78 and the demand notices for recovery of purchase tax. The petitioners had previously succeeded in challenging the levy of purchase tax, which was declared ultra vires by the High Court in Goodyear India Limited v. State of Haryana [1983] 53 STC 163 and Bata India Limited v. State of Haryana [1983] 54 STC 226. However, the Full Bench later upheld the validity of Section 9(1) of the State Act in Des Raj Pushap Kumar Gulati v. State of Punjab [1985] 58 STC 393. The Supreme Court eventually reversed the Full Bench decision and upheld the earlier judgments in Goodyear India Limited and Bata India Limited.

2. Constitutional Validity of the Haryana General Sales Tax (Amendment and Validation) Act, 1984:
The petitioners also challenged the constitutional validity of the Haryana General Sales Tax (Amendment and Validation) Act, 1984. The Full Bench had overruled the Division Bench's judgment in Bata India Limited and upheld the validity of Section 9(1) and the levy of purchase tax. However, the Supreme Court in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 declared that the taxes sought to be levied under Section 9(1)(b) of the Haryana Act were beyond the legislative competence of the State.

3. Levy of Purchase Tax under Section 9 of the Haryana General Sales Tax Act:
The Supreme Court's decision in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 held that the levy of purchase tax under Section 9(1)(b) was a tax on consignment and beyond the legislative competence of the State. However, in Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98, a three-judge bench upheld the validity of similar provisions in other state acts, holding that the tax was on the purchase of raw materials and not on consignment sales. This decision effectively overruled the earlier judgment in Goodyear India.

4. Violation of Article 301 of the Constitution:
The petitioners argued that the levy of purchase tax interferes with free trade and commerce, violating Article 301 of the Constitution. The Supreme Court in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 had rejected this argument, stating that the tax did not directly impede the free movement of goods. The court held that the tax on raw materials used in manufacturing did not constitute a restriction on trade and commerce.

5. Period of Limitation under Section 31 of the Haryana General Sales Tax Act:
The petitioners contended that the reassessment orders were void as they were passed after the expiry of the limitation period specified in Section 31. The court noted that Section 32 of the Act, which allows reassessment at any time to give effect to court orders, overrides the limitation period in Section 31. The court held that the reassessment orders were valid as they were made in consequence of the earlier court orders quashing the initial assessments.

6. Jurisdiction of the Assessing Authority:
The petitioners argued that the Assessing Authority lacked jurisdiction to pass the reassessment orders after the limitation period. The court held that the reassessment was necessitated by the quashing of the initial assessments and that Section 32(1) allowed for reassessment without the limitation period applying. The court rejected the argument that the reassessment orders were void for lack of jurisdiction.

Conclusion:
The court dismissed the writ petitions, upholding the validity of the reassessment orders and the levy of purchase tax under Section 9 of the Haryana General Sales Tax Act. The court found no merit in the arguments regarding the violation of Article 301, the period of limitation, or the jurisdiction of the Assessing Authority. The court also upheld the constitutional validity of the Haryana General Sales Tax (Amendment and Validation) Act, 1984. The interim orders were vacated, and the respondents were allowed to recover the tax along with interest from the petitioners. The petitions were dismissed with costs of Rs. 10,000 each.

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