1986 (7) TMI 383 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973.
2. Imposition of purchase tax under section 9 of the Haryana General Sales Tax Act.
3. Interpretation of sub-sections (1) and (3) of section 5 of the Central Sales Tax Act.
4. Alleged violation of articles 14, 19(1)(g), 286, and 300-A of the Constitution of India.
5. Repugnancy between sections 9, 24, and 27 of the Haryana Act and section 12 of the same Act and section 5(3) of the Central Act.

Detailed Analysis:

1. Constitutional Validity of Sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973:
The petitioners challenged the constitutional validity of sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973, on the grounds that they violate articles 14, 19(1)(g), 286, and 300-A of the Constitution of India. The court held that:
- The provisions of sections 9, 24, and 27 of the Haryana Act are intra vires and not repugnant to section 5(3) of the Central Sales Tax Act.
- The State Legislature was competent under article 246(3) of the Constitution to legislate regarding taxes on the purchase and sale of goods as enumerated in entry 54 of List II of the Seventh Schedule to the Constitution.
- The provisions do not infringe articles 19(1)(g) and 300-A of the Constitution.

2. Imposition of Purchase Tax Under Section 9 of the Haryana General Sales Tax Act:
The court addressed the issue of whether the purchase tax under section 9 of the Haryana Act is validly imposed on the transactions of purchase made by the petitioners. It was observed:
- Section 9 is a charging section where the taxing event is the purchase of goods by the dealers in the State of Haryana.
- The incidence of tax is on the purchase transactions, not on the sales made by the petitioners to exporters.
- The court affirmed the Full Bench decision in Des Raj Pushap Kumar Gulati v. State of Punjab [1985] 58 STC 393 (P & H), which held that the tax in question is a purchase tax and not a tax on the despatch of goods outside the State.

3. Interpretation of Sub-sections (1) and (3) of Section 5 of the Central Sales Tax Act:
The petitioners contended that the purchases made by them should be deemed to be in the course of export as envisaged by sub-section (1) of section 5 of the Central Sales Tax Act due to sub-section (3) of the same section. The court held:
- Sub-section (3) of section 5 is not an extension or proviso to sub-section (1); they are separate and independent.
- Sub-section (3) was enacted to mitigate the difficulties of small and medium manufacturers and traders who depend on experienced trade houses for exporting goods.
- The purchases made by the petitioners do not fall within the meaning of sub-section (1) of section 5 as used in sections 9 and 24 of the Haryana Act.

4. Alleged Violation of Articles 14, 19(1)(g), 286, and 300-A of the Constitution of India:
The petitioners alleged that the provisions of sections 9, 24, and 27 of the Haryana Act are discriminatory and violate articles 14, 19(1)(g), 286, and 300-A of the Constitution. The court held:
- The provisions do not violate article 14 as there is a reasonable classification between dealers who directly export goods and those who sell through export houses.
- The imposition of reasonable sales or purchase tax does not violate articles 19(1)(g) and 300-A.
- The State Legislature has the discretion to select the subject-matter of tax and the economic wisdom of a tax is within its exclusive province.

5. Repugnancy Between Sections 9, 24, and 27 of the Haryana Act and Section 12 of the Same Act and Section 5(3) of the Central Act:
The petitioners argued that sections 9 and 24 of the Haryana Act are inconsistent with section 12 of the same Act and section 5(3) of the Central Act. The court held:
- There is no conflict, inconsistency, or repugnancy between the provisions of sections 9, 24, and 27 of the Haryana Act and section 12 of the same Act and section 5(3) of the Central Act.
- The incidence of taxation under the two sections is entirely different, and the provisions of the Haryana Act are valid and within the legislative competence of the State Legislature.

Conclusion:
The court dismissed the writ petitions, affirming the ratio in Murli Manohar's case and holding that the provisions of sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973, are constitutionally valid and do not violate the provisions of the Constitution of India. The imposition of purchase tax under section 9 of the Haryana Act is valid, and the interpretation of sub-sections (1) and (3) of section 5 of the Central Sales Tax Act as separate and independent principles was upheld.

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