2001 (3) TMI 991 - HC - VAT and Sales Tax

Issues Involved:
1. Rejection of full rebate on tax paid on cotton seeds used in manufacturing oil.
2. Applicability of the Supreme Court's decision in Commissioner of Sales Tax v. Bharat Petroleum Corporation Ltd. [1992] 85 STC 220.
3. Contradictory orders by the Tribunal in similar cases.
4. Interpretation of Rule 24-A of the Haryana General Sales Tax Rules, 1975.

Issue-wise Detailed Analysis:

1. Rejection of full rebate on tax paid on cotton seeds used in manufacturing oil:
The petitioner, registered under the Haryana General Sales Tax Act, 1973, and engaged in manufacturing oil from tax-paid cotton seeds, claimed a full rebate on the tax paid on the raw material. The Excise and Taxation Officer-cum-Assessing Authority allowed only a proportionate rebate under Rule 24-A of the Haryana General Sales Tax Rules, 1975, instead of a full rebate. Subsequent appeals to the Joint Excise and Taxation Commissioner (Appeals) and the Sales Tax Tribunal were dismissed, as was a reference application filed under Section 42 of the Act.

2. Applicability of the Supreme Court's decision in Commissioner of Sales Tax v. Bharat Petroleum Corporation Ltd. [1992] 85 STC 220:
The petitioner argued that the Tribunal's decision was contrary to the Supreme Court's ruling in Bharat Petroleum Corporation Ltd., which supported the claim for a full rebate. The Tribunal had previously accepted the applicability of this Supreme Court decision in a similar case (Jyoti Luxman Roller Flour Mills P. Ltd.), which involved the manufacture of atta, maida, suji, and wheat using tax-paid wheat. The Tribunal had remanded that case for reconsideration based on the Supreme Court's ruling.

3. Contradictory orders by the Tribunal in similar cases:
The Tribunal's decision in the petitioner's case was contradictory to its earlier decision in Jyoti Luxman Roller Flour Mills. The Tribunal had granted relief in the latter case by relying on the Supreme Court's decision, but denied the same relief to the petitioner. This inconsistency was highlighted by both parties, with the respondent's counsel admitting the contradiction but defending the denial of full rebate on the grounds that "khal" (a by-product) is a tax-free item.

4. Interpretation of Rule 24-A of the Haryana General Sales Tax Rules, 1975:
The Tribunal's rejection of the petitioner's claim for a full rebate was based on its interpretation of Rule 24-A, which it argued did not entitle the petitioner to a full rebate if tax-free goods were also produced. The Tribunal concluded that proportionate relief was the most logical conclusion when both taxable and tax-free goods were produced. The Tribunal also referenced departmental instructions and previous judgments to support its decision. However, the High Court found that the Tribunal misread the Supreme Court's decision in Bharat Petroleum Corporation Ltd., which did not require the entire raw material to be used only for manufacturing taxable goods for claiming exemption.

Conclusion:
The High Court quashed the impugned order of the Tribunal, noting the contradictory nature of the Tribunal's decisions in similar cases and its misinterpretation of the Supreme Court's ruling. The High Court directed the Tribunal to decide the petitioner's appeals afresh, ensuring a consistent and legally sound application of the relevant rules and judicial precedents.

Final Judgment:
The writ petition was allowed, and the Tribunal was directed to reconsider the appeals filed by the petitioner, providing a speaking order that aligns with the Supreme Court's decision in Bharat Petroleum Corporation Ltd. and addresses the inconsistencies in its previous rulings.

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