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2012 (11) TMI 495 - HC - VAT and Sales TaxPurchase tax under section 9 read with section 24(3) - job-work done by the petitioner on stock transfer of goods to other States by working out the purchases of goods utilised in manufacture including the consumable stores - taxable event Held that - Act of purchase of goods which are used in the manufacture of end-products and not the act of despatch or consignment - petitioner becomes liable to pay purchase tax when it purchase the raw material being the last purchaser - petitioner cannot escape the liability to pay purchase tax. It is on the basis of sound taxation policy of the State in respect of the declared goods that if sales tax is paid on the manufactured goods then the purchase tax on the raw material would not be payable but if sales tax is not paid then the liability to pay purchase tax is to continue. The aforesaid policy has been incorporated by the legislation in order to avoid double taxation - Decided against the assessee.
Issues:
Challenge to order dated June 26, 1991 and May 8, 1992 regarding levy of purchase tax, interest, and penalty under the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. Detailed Analysis: The petitioner, engaged in manufacturing stainless steel, alloy steel, and alloy castings, filed a petition under Article 226 of the Constitution to quash orders dated June 26, 1991, and May 8, 1992, passed by the Joint Excise and Taxation Commissioner and the Sales Tax Tribunal, Haryana, respectively. The Assessing Authority levied purchase tax, interest, and penalty for non-payment of tax on job-work done by the petitioner on stock transfer of goods to other states. The additional demand raised amounted to Rs. 3,65,702 for 1983-84, Rs. 1,04,444 for 1984-85, and Rs. 15,296 for 1986-87. The petitioner challenged the assessment orders before the Joint Excise and Taxation Commissioner, who partly allowed the appeals and remanded the matter back to the Assessing Authority. The Sales Tax Tribunal rejected the appeals, upholding the remand for de novo assessment due to amended provisions of the Act. However, the Tribunal accepted the petitioner's plea against the levy of interest and penalty. The court examined Sections 6 and 17 of the Haryana General Sales Tax Act, 1973, which specify that every dealer is liable to pay tax on the sale or purchase of goods in the state. The court referred to the definition of "declared goods" under the CST Act and highlighted the taxable event as the purchase of goods by the last purchaser. The court discussed the Supreme Court judgments in Goodyear India Ltd. v. State of Haryana and Hotel Balaji v. State of Andhra Pradesh, emphasizing that the purchase tax is levied on raw materials used in manufacturing goods. The court affirmed that the taxing event is the purchase of raw material, not the act of despatch or consignment. Based on these principles, the court concluded that the petitioner is liable to pay purchase tax when purchasing raw material as the last purchaser. The court emphasized the State's taxation policy to avoid double taxation, stating that if sales tax is paid on manufactured goods, then purchase tax on raw material is not payable. The court dismissed the petition, finding it devoid of merit. In conclusion, the court upheld the levy of purchase tax, interest, and penalty under the Haryana General Sales Tax Act, 1973, and the Central Sales Tax Act, 1956, based on the principles of taxation policy and the taxable event being the purchase of raw material by the last purchaser.
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