9911796707
TMI Blog1990 (3) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... place of business situated outside the State within India, then such dealer shall be liable to pay, in addition to the sales tax paid or payable or as the case may be, the purchase tax levied or leviable, under the other provisions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture and accordingly the dealer shall include purchase price of such goods in his turnover of purchases in his return under section 32, which he is to furnish next thereafter." 2.. This section as well as a similar section in the sales tax legislation of the State of Haryana was challenged in a number of writ petitions. The writ petitions were finally de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the purchase tax on the transaction of purchase of the taxable goods but when further the said taxable goods are used up and turned into independent taxable goods, losing their original identity, and thereafter when the manufactured goods are despatched outside the State of Haryana and only then tax is levied and liability to pay tax is created." He goes on to say, "In this series of transactions the original transaction is completely eclipsed or ceases to exist when the levy is imposed at the third stage of despatch of manufacture." The Supreme Court held that the charging event was that event the occurrence of which immediately attracted the charge. It held that the tax which was levied under the old section 13AA was a tax on despatc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Schedule C, directly or through commission agent, from a person who is or is not a registered dealer and uses such goods in the manufacture of taxable goods, then, unless the goods so manufactured are sold by the dealer, there shall be levied, in addition to the sales tax, paid or payable, if any, or as the case may be, the purchase tax levied or leviable, if any, under the other provisions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly the dealer shall include purchase price of such goods in his turnover of purchases in his return under section 32, which he is to furnish next thereafter." 6.. Under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or despatched outside the State. It is only when the last contingency occurs that the original goods which went into the manufacture of taxable goods become liable to extra tax. The ratio of the Supreme Court, prima facie at any rate, would directly apply to the new section 13AA also. The tax is levied on despatch of goods outside the State or using up the manufactured goods, i.e., its "non-sale" in the State. There is therefore a. strong prima facie case made out by the petitioners for challenging the validity of the new section 13AA. In fact, the new section 13AA closely resembles section 9 of the Haryana legislation which was also struck down by the Supreme Court. 8.. Section 3 of the new Ordinance/Act which validates the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take place effectively. The most important condition of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. " (page 233). 11.. In the present case the cause for invalidation of old section 13AA is not removed. The cause for invalidating old section 13AA was lack of legislative competence. This cause has not been removed. Prima facie, even the new section 13AA does not impose a tax on purchase. It is beyond the legislative competence of the State under entry 54 List 11 of the Seventh Schedule to the Constitution. In these circumstances, the petitioners have made out a strong prima facie case for interim relief. 12.. It was submitted by Mr. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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