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TMI Blog2009 (1) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... once the sale transactions of the petitioner-dealers are exempted under section 13B of the Act from payment of sales tax then it would not amount to granting exemption in respect of purchase tax as well. In law it cannot be presumed, as suggested, that sales tax has been paid by the petitioner-dealers. Assessee appeal dismissed. - C.W.P. Nos. 15133 of 2006 & Others - - - Dated:- 14-1-2009 - KUMAR M.M. AND BHALLA H.S. , JJ. The judgment of the court was delivered by M.M. KUMAR J. This order shall dispose of this bunch of 20 petitions. For putting the controversy in its proper perspective, facts are being stated from C.W.P. No. 15133 of 2006. This petition filed under article 226 of the Constitution challenges order dated March 30, 2006, passed by the Haryana Tax Tribunal (for brevity, the Tribunal ) upholding demand of purchase tax at the rate of four per cent, which the shelling units belonging to the petitioners were liable to pay as purchase tax. It is undisputed that all the dealers are running rice shellers in the State of Haryana and they purchase paddy from the grain markets of Haryana. The paddy was subjected to shelling process, which resulted into extracti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se dealers was inclusive of purchase tax ,etc., DFSC was not liable to purchase tax. Purchase tax is leviable on the purchase of paddy. These dealers were purchasers of paddy and therefore, they were liable to pay purchase tax. The dealers purchased paddy and sold rice to the DFSC. Receipt of purchase tax by the dealers from DFSC was not authorized, DFSC was required to pay sales tax to the dealers on the sale of rice made to him by the dealers. The purchase tax liability of the dealer cannot be adjusted towards notional tax liability of the dealers as dealers were given exemption only from payment of sales tax as suggested by the exemption certificate. They were not given exemption from payment of purchase tax. The dealers did not make any effort to secure rectification of the exemption certificate in the wake of amendment carried out in section 13B on October 1, 1989 providing for exemption from payment of sales tax or purchase tax or both. Adjustment of purchase tax towards notional tax liability cannot be made. The view taken in 16 PHT 265 is per incuriam as the Tribunal did not advert to the definition of notional sales tax liability which is the tax payable on the sale of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... especially when there is actual payment of purchase tax made to the petitioner-dealers. The other submission made by the learned counsel is that in any case once they are exempted under section 13B of the Act from payment of sales tax then it cannot be presumed that they were not exigible to sales tax. According to the learned counsel the grant of exemption would itself show that they were exigible to sales tax and an incentive has been given to them by exempting them. Therefore, it must be presumed that the sales tax has been paid, which has been paid back to them in the shape of incentive. In other words, the argument is that once the sales tax is presumed to have been paid then the liability to pay purchase tax would cease to exist by virtue of section 27(1) read with the first proviso to section 17 of the Act and rule 24(m) of the Rules. In support of their submission, learned counsel have placed reliance on a Constitution Bench judgment of the honourable Supreme Court rendered in the case of Mafatlal Industries Ltd. v. Union of India [1998] 111 STC 467; [1997] 5 SCC 536. Mr. Sanjiv Kaushik, learned State counsel, however, has submitted that a perusal of note (i) of Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the stage provided by section 17 in respect of declared goods. The expression declared goods has been defined by section 2(d) of the Act to have the same meaning as has been assigned to it by section 2(c) of the Central Sales Tax Act, 1956 (for brevity, the CST Act ). On a reference to section 2(c) of the CST Act we find that the declared goods would be such goods which are listed in section 14 of the CST Act. A perusal of section 14 shows that it includes paddy (Oryzasativa L) and rice (Oryzasativa L). Section 17 of the Act in terms defines that the tax on declared goods is leviable and payable at the stage of sale or purchase and under the circumstances specified against such goods in Schedule D, which in terms states that paddy when purchased within the State would be subjected to tax at the last purchase by a dealer who is liable to pay tax under the Act. It appears that the taxing event would occur when the miller has purchased paddy being the last purchaser for the purposes of subjecting it to the process of milling. The taxable event would come into play when the purchase has been made being the last purchaser because when the process of milling of paddy is undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of manufactured goods which are disposed of otherwise than by sale within the State or are sent out of State like consigned to dealers own depots or agents. In such like situation, law does not permit bearing of purchase tax. Giving detailed reasoning to conclude that the taxing event is the purchase of raw material like paddy in the present case, the honourable Supreme Court has observed as under (at page 143 of 88 STC): . . . The object is to tax the purchase by a manufacturer of goods whose existence as such goods is put an end to by him by using them in the manufacture of different goods in certain circumstances. The tax is levied upon the purchase price of raw material, not upon the sale price or consignment value of manufactured goods. Would it be right to say that the levy is upon consignment of manufactured goods in such a case? True it is that the levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way of sale or are consigned to the manufacturingdealer's depots/agents outside the State of Haryana. But does that change the nature and cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that regard has been given in the last proviso to section 17 of the Act itself, which states that the purchase tax is to be levied, charged and paid after providing deductions admissible under section 27. Accordingly, it would be profitable to make a reference to section 27 of the Act, which reads thus: Section 27 of the Act: Taxable turnover. (1) In this Act, the expression, 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom his turnover during that period . . . (b) on account of purchase of goods which are specified in Schedule C or Schedule D and are liable to tax at the stage of last purchase as specified in Schedule C or Schedule D or the first proviso to section 17 (A) . . . (i) and (iii) . . . (iv) to a dealer who is exempt under section 13 of this Act; (B) . . . (c) On account of purchase of goods, other than those mentioned in clause (b) above. (A) which are sold during the year (i) in the State; or (ii) in the course of inter-State trade or commerce within the meaning of section 3 of the Central Sales Tax Act, 1956. . . The further reflection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sela rice 1 Common (IR8, Jaya) 671.70 675.50 2 Fine (Begmi, HM95, PR 107 (Sita) 696.10 699.50 3 Superfine (Parmal, Ratna, RP 5-3 (Sona), PR 106, Basmati (Terricot) Pusa-150, Pusa-33, Punjab No. 1, HKR 120, Pusa Basmati-1) (1)Here italicised. Note: (i) The above prices of rice are for net weight of naked grains inclusive of purchase tax and mandi charges of paddy and depreciation of gunny bags used for packing paddy but exclusive of cost of gunny bags and taxes, if any, after ex-mill stage of rice. (ii) The above prices are applicable to 1996-97 crop of rice with effect from October 1, 1996. The argument that no purchase tax is deemed to be recovered while recovering the payment of rice would be wholly without substance because the obligation to pay purchase tax is not dependent on anything else but on the event to pay purchase tax. Such an event arises, as already noticed, when the petitioner-dealers purchase paddy being the last purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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