2010 (4) TMI 987 - HC - VAT and Sales Tax

Whether on the facts and circumstances of the case tax rebate admissible to M/s. H.M.T. Ltd. Pinjore in terms of section 15A of the Haryana General Sales Tax Act 1973 read with rules 24A and 24B of the Rules made thereunder or the formula as per notification dated October 19 2000 issued under section 15A is to be computed separately for the two divisions of the company tractor division and machine tools division? Held that - The Assessing Authority was correct in splitting and segregating the turnover reflected in the return of two divisions of the assessee for the purpose of calculating rebate and levy of tax and rightly applied the indicated formula in this respect. Hence the question of law is accordingly answered against the assessee. Sequelly all the incidental questions of law framed in other reference petitions are also accordingly decided against the assessee as well.

Summary

Issues Involved:
Interpretation of section 15A of the Haryana General Sales Tax Act, 1973 and rules 24A and 24B of the Haryana General Sales Tax Rules, 1975 in relation to tax rebate calculation for a company with two separate divisions under a single registration certificate.

Detailed Analysis:

1. Background and Facts:
The petitioner, M/s. HMT Limited, was engaged in manufacturing agricultural tractors and machine tools under a single registration certificate in Haryana. The company maintained separate accounts for the two divisions but filed a consolidated tax return. The Revenue split the turnover and assessed purchase tax separately for each division based on the goods purchased and used in manufacturing.

2. Legal Dispute:
The main question raised was whether the tax rebate under section 15A of the Act should be calculated separately for each division or combined for the entire company. The petitioner argued for a single assessment due to being a single entity with one registration certificate, while the Revenue supported the separate calculation based on rules 24A and 24B.

3. Court's Analysis:
The court examined the case law cited by both parties, emphasizing that the turnover of separate businesses must be clubbed for assessment only when there is no change in the identity of the dealer. In this case, the goods purchased for each division were clearly identifiable, and clubbing the turnover would lead to unfair tax exemption.

4. Segregation of Turnover:
The court noted that the Assessing Authority correctly split the turnover into two parts for the tractor and machine tool divisions. The method of segregation was justified as the goods purchased for each division were distinct, and separate accounts were maintained.

5. Tax Adjustment and Rebate Calculation:
The court agreed with the Revenue's argument that tax paid on inputs could only be adjusted against the tax payable on the sale of goods manufactured from those inputs. The adjustment had to be made on a pro rata basis, as per section 15A and rules 24A and 24B, especially when goods were consignment transferred outside the state.

6. Conclusion:
The court held that the Assessing Authority acted legally in segregating the turnover and applying the correct formula for tax rebate and liability calculation. The decision favored the Revenue's approach, and the question of law was answered against the petitioner. All related incidental questions were also decided against the petitioner, leading to the disposal of all reference petitions accordingly.