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TMI Blog1983 (11) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Insurance Scheme. The sales to the State Governments are chargeable at four per cent of taxation under section 8(1) of the Central Sales Tax Act, 1956 (Act No. 74 of 1956) (briefly the Act). Prior to the amendment effected in the year 1975, the rate of tax on such sales was three per cent. For the sales of medicines to various State Governments in the country by the company, it was assessed to sales tax at three per cent in the year 1974-75 by the Assessing Authority, Faridabad, by order, copy of which is annexure P-5(A). For the assessment year 1975-76, the same authority assessed similar sales by the company at the rate of four per cent, vide orders dated 17th March, 1978, copy of which is annexure P-5(B). For the assessment year 1976-77, the company was again assessed by the same authority for similar sales at the rate of four per cent, vide orders dated 9th May, 1978, copy of which is exhibit P-5(C). The Deputy Excise and Taxation Commissioner (Appeals), Rohtak (Haryana), suo motu took action to revise the rate of tax on the sales for the assessment years 1974-75, 1975-76 and 1976-77. He was of the view that these sales were not to any Government department, but to the E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution of India, seeking the quashing of the orders, copies of which are annexures P-1, P-2, P-13, P-13(A) (in C.W.P. No. 4500 of 1981) and copy of order annexure P-2 (in C.W.P. The Excise and Taxation Officer, Bahadurgarh, respondent No. 1, in his return took a preliminary objection that the company had filed appeals before the Sales Tax Tribunal which are pending and it could not, without waiting for the result thereof, come to this Court and file these writ petitions. It was further averred that in case the company lost the appeals, it could ask the Sales Tax Tribunal to make a reference to the High Court. Since the company had not exhausted the alternative remedy, it could not approach the Court on the writ side. Respondent No. 1 in the written statement filed in this Court defended the order and reiterated the position that the sales by the company, as a matter of fact, were in favour of the Corporation which is not a department of the Government and that section 8(1) of the Act is not attracted for application. The charging of ten per cent of the sales tax was defended. The State of Rajasthan, in the return filed in both the petitions, supported the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased for use in the E.S.I. Hospitals/Institutions is on behalf of the Punjab Government and not on behalf of the Corporation. The necessary budget provisions for the purchase of medicines in respect of the E.S.I. Hospitals/ Dispensaries in the State are being made in the State Budget and the same are voted by the State Assembly. Apart from the above expenditure involved, it is debited to the relevant heads of the State Government, form D issued by the direct demanding officers of the E.S.I. Hospitals/Institutions have heretofore been accepted by the concerned authority for availing benefit of concessional rate of sales tax. The petitioner-company in its replication reiterated the position taken in the petition. Regarding the preliminary objection, it was averred that it was not an efficacious remedy. Since the States which were impleaded as respondents took the stand against respondent No. 1, the Assessing Authority of Bahadurgarh, it was agreed at the motion stage between the parties that the case be heard on merits. The preliminary objection was not pressed and this case was, on the request of the learned counsel for the parties, admitted for hearing before a Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in sub-section (4) of section 8 shall be in forms C and D respectively: Provided that form C in force before the commencement of the Central Sales Tax (Registration and Turnover) (Amendment) Rules, 1974, or before the commencement of the Central Sales Tax (Registration and Turnover) (Amendment) Rules, 1976, may also be used up to the 31st December, 1980, with suitable modifications: ........................................ " Form D which is issued by the purchaser to the seller is as under: "ORIGINAL The Central Sales Tax (Registration and Turnover) Rules, 1957 FORM D Form of certificate for making Government purchases [See rule 12(1)] (To be used when making purchases by Government not being registered dealer) Central Government/Name of the State Government.................................. Name of issuing Ministry/Department............................. Name and address of Office of issue................................ To ........................................................... (Seller) ......................................................................... Certified that the goods ordered for in our purchase order No.......................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be agreed upon between them. In case the average incidence of sickness cash benefit in any Province is in excess of the all-India average, Provincial Government will also bear such share of the cost of the excess incidence as may be agreed upon between it and the Corporation." Sections 56 and 57 of the Act made the insured workers entitled to the medical treatment. The legislature, as is apparent from the Objects and Reasons, intended to make it the primary responsibility of the State Government to provide medical care and treatment to the workmen. This intention was given a practical shape in the form of sections 58 and 59 of this Act. Sub-section (1) of section 58 states that the State Government shall provide for insured persons and (where such benefit is extended to their families) their families in the State, reasonable medical, surgical and obstetric treatment. There is a proviso to this subsection which says that the State Government may with the approval of the Corporation, arrange for medical treatment at clinics of medical practitioners on such scale and subject to such terms and conditions as may be agreed upon. Section 58, therefore, imposes a liability on the State G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil Surgeons in the State, Medical Superintendents of the Hospitals, including E.S.I. Hospitals up to Rs. 50,000. In this very letter, vide clause (v), they were directed not to effect any purchase from the rate contracting firms without the prior approval of the State Government. This applies to the Medical Superintendents of the E.S.I. Hospitals also. The State of Rajasthan in its return averred that the view, expressed by the Deputy Excise and Taxation Commissioner, Haryana, in his order dated 1st August, 1980 (copy annexure P-8 in C.W.P. No. 1986 of 1982), that the Government Officers who purchased the goods and issued certificates in form D were on deputation under the ESI Scheme and were given duty to look after hospitals were employees covered by the ESI Scheme was incorrect, and untenable. It is firm in its stand that the various State Governments were purchasing the goods from the company in their own right and did not act as agents of the Corporation. The goods are purchased by the State Government and distributed to various hospitals by it. In the return filed on behalf of the State Government of Madhya Pradesh, it was categorically stated that the Corporation was bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Government for the purchase of medicines for the ESI Hospital and Dispensaries. As per certificate reproduced, the payment is made from the Consolidated Fund of the State. There cannot be any doubt that the payment of the medicines purchased for the E.S.I. Hospitals/Dispensaries and other institutions is made by the State Government from its Consolidated Fund, because the duty to provide medical care is placed on the State by the statute. The State Governments made purchases of medicines in the discharge of their own statutory obligations, to implement the E.S.I. Scheme, as stated on behalf of the States of Punjab, Rajasthan, Gujarat, Madhya Pradesh and Andhra Pradesh. It is a State subject. The State Governments do not do this act as agents of the Corporation. The Corporation can enter into an agreement with the State in regard to the nature and scale of medical care and treatment to be provided to the insured workers and their families. The State Government has to share the expenditure with the Corporation in case the incidence of sickness is found to exceed the all-India average. The Corporation may establish hospitals with the approval of the State Government. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine the ultimate use of the goods after the issue of form D by the purchaser. The Deputy Excise and Taxation Commissioner, Haryana came to conclusion that the purchaser was the Corporation and not the State Government. One of the grounds on which he based his conclusion was that the medicines purchased ultimately found their way to the E.S.I. Hospitals/Dispensaries run by the Corporation. By this the Taxation Authorities were led to hold that the Corporation was the purchaser of the goods. The medicines purchased by the State Government have to reach the E.S.I. Hospitals/Dispensaries as it is the duty of the State Government to provide medical aid to the insured workmen. The seller cannot be fixed with the responsibility to conduct an enquiry into the intention of the purchaser for the ultimate use of the goods. A similar question came up before a Division Bench of this Court in Dalmia Dadri Cement Ltd. v. State of Haryana, [1975] 35 STC 320. In that case, cement was sold against the certificates issued by the Executive Engineer that it was required for use in generation and use of electrical energy. The cement was, however, used in the construction of the quarters for the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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