2001 (3) TMI 1012 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether clause (3) of notification No. S.O. 127/H.A. 20/73/S. 15/A/2000 dated October 9, 2000, issued by the Government of Haryana under section 15-A of the Haryana General Sales Tax Act, 1973, is ultra vires to the power of the State Government.
2. Whether the exclusion of high-speed diesel from the class of goods used for manufacturing edible and non-edible oil violates the doctrine of equality enshrined in Article 14 of the Constitution.

Issue-Wise Detailed Analysis:

1. Ultra Vires to the Power of the State Government:
The petitioner argued that the impugned notification should be declared ultra vires because section 15-A(1) does not empower the State Government to exclude high-speed diesel from the list of goods used for manufacture or processing of edible and non-edible oil by the dealer. The petitioner contended that high-speed diesel used for generating electricity should be treated as a raw material necessary for running the industry. The Court, however, did not agree with this argument. It held that section 15-A(1) of the Act allows the State Government to prescribe different formulae for computing the fraction and different conditions and restrictions for being entitled to reduction or refund of tax under this provision. The Court found that the exclusion of high-speed diesel from the class of goods used in manufacture or processing was justified because it is used for generating electricity and not directly in the manufacturing process of edible and non-edible oil. The petitioner failed to produce evidence to prove otherwise.

2. Violation of Article 14 of the Constitution:
The petitioner argued that the exclusion of high-speed diesel from the class of goods used in manufacturing oil was irrational and arbitrary, thus violating Article 14 of the Constitution. The Court rejected this argument, stating that the distinction made between the goods used in the manufacture of the final product and those not used for that purpose is neither irrational nor arbitrary. The Court emphasized that the two categories of goods constitute separate classes, and therefore, the exclusion does not violate the doctrine of equality. The Court also referred to the Supreme Court's decision in Arya Vaidya Pharmacy v. State of Tamil Nadu, where it was held that different rates of tax for commodities of the same class must have a rational basis. However, the Court found this decision distinguishable as high-speed diesel and other lubricants constitute different classes.

Conclusion:
The Court concluded that clause (3) of the notification dated October 9, 2000, does not suffer from any legal or constitutional infirmity. The writ petition was dismissed, upholding the validity of the notification issued by the Government of Haryana. The Court emphasized that the exclusion of high-speed diesel from the class of goods used in manufacturing edible and non-edible oil was justified and did not violate the powers vested in the State Government under section 15-A(1) of the Act or the doctrine of equality under Article 14 of the Constitution.