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TMI Blog2012 (3) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2003. It purchases mustard seeds which are used for manufacturing of oil and the oil is sold in the local market. The by-product, i.e., oil-cakes are disposed of by way of stock transfer on consignment basis outside the State of Assam. The assessing authority, in the course of assessment for the assessment year 2006-07, sought to levy purchase tax on the proportionate purchase value of the mustard seeds referable to the production of oil-cakes under section 12(iii) of the Act as follows: "The dealer is paying the output tax under section 10 against sale of mustard oil within the State. The second product mustard oil-cake is disposed of by the dealer by way of stock transfer to its appointed agents in the State of Tripura. Out of total stock of mustard seed used in the manufacturing of mustard oil-cake a part comprises locally procured mustard seed from unregistered dealer without payment of VAT. As per section 12(iii) of the Assam Value Added Tax Act, 2003 the dealer is found liable to purchase tax at four per cent on the proportionate purchase value of locally procured mustard seed, from unregistered dealer without payment of VAT, which was used as raw material in the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 10 and 12: "10. Levy of tax on sales.-(1) Every dealer, who is liable to pay tax for any year under section 7, shall pay output tax on his taxable turnover for such year,- (a) in respect of goods specified in the Second, Third and Fifth Schedule, at every point of sale of such goods within the State, at the rate or rates specified therein; and (b) in respect of goods specified in the Fourth Schedule, at the first point of sale of such goods within the State, at the rate or rates specified therein: . . . 12. Levy of tax on purchases.-Every dealer who in the course of his business purchases any taxable goods from any person, in the circumstances in which no tax under section 10 is leviable on the sale price of such goods, shall be liable to pay tax on the gross turnover of purchase of such goods, if after such purchase, the goods are,- (i) used or disposed of in any manner other than by way of sale in the State; or (ii) consumed or used in the manufacture of tax free goods specified in the First Schedule; or (iii) consumed or used in the manufacture of taxable goods, and such manufactured goods are disposed of otherwise than by way of sale in the State or in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent outside the State (otherwise than by way of inter-State sale or export sale) the tax has to be paid on the purchase value of the raw material. The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of the State (i.e., consigned to dealers' own depots or agents), the State does not get any revenue because no sale of manufactured goods has taken place within Haryana. In such a situation, the State says, it would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations. Now coming to inter-State sale and export sale, it may be noticed that in the case of inter-State sale, the State of Haryana does get the tax revenue-may not be to the full extent. Though the Central sales tax is levied and collected by the Government of India, article 269 of the Constitution provides for making over the tax collected to the States in accordance with certain principles. Where, of course, the sale is an export sale within the meaning of section 5(1) of the Central Sales Tax Act (export sales) the State may not get any revenue but larger national interest is served thereby. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act such sales were not to be included in the taxable turnover. However, purchase tax on such purchase made by the dealer-assessee is leviable under section 4B of the Act in respect of those transactions which are not to be included in the taxable turnover under section 5(2)(a)(ii) of the Act. The sale of oil-cakes outside the State of Punjab is not covered by any of the clauses of section 5(2)(a)(ii) of the Act. Therefore, the event of tax would come into existence on such purchases of the cotton seed to the extent the by-product oil-cakes has been sold outside the State of Punjab. The aforesaid view is fully supported by the judgment of the honourable Supreme Court in the case of Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 (SC); [1993] Suppl 4 SCC 536. The honourable Supreme Court was considering section 9 of the Haryana General Sales Tax Act, 1973 (as it stood then). The honourable Supreme Court has also opined that provisions of section 4B of the Act are similar in material particulars to that of the provisions of section 9 of the Haryana Act and therefore we are of the view that the views expressed in Hotel Balaji's case [1993] 88 STC 98 (SC) would apply t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now coming to inter-State sale and export sale, it may be noticed that in the case of inter-State sale, the State of Haryana does get the tax-revenue may not be to the full extent. Though the Central sales tax is levied and collected by the Government of India, article 269 of the Constitution provides for making over the tax collected to the States in accordance with certain principles . . .' It is further appropriate to mention that the object of charging section is to tax the purchase of goods by the manufacturer. The observations completely answer the argument raised by the counsel for the petitioner that the disposal of oil-cakes (khal) outside the State of Punjab on consignment basis would not attract the levy of purchase tax as it is a consignment sale. In that regard the observations made in para 91 are extracted in extenso which reads thus (at page 143 of STC): '. . . The object is to tax the purchase of goods by a manufacturer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1990] 76 STC 71 (SC); [1990] 2 SCC 71 does not accord with the scheme, intendment and language of the relevant provisions of the Haryana and Bombay Acts and cannot be accepted.' A further perusal of the judgment in Devi Dass Gopal Krishan Pvt. Ltd.'s case [1994] 95 STC 170 (SC); [1994] Supp 2 SCC 59 would show that the honourable Supreme Court has upheld the validity of section 4B of the Act holding that the State is fully empowered to levy purchase tax and has adopted the same reasoning as adopted in Hotel Balaji's case [1993] 88 STC 98 (SC); [1993] Supp 4 SCC 536. The argument that the levy created by the purchase tax levied by section 4B (or any other similar section in respect of other States) has really been on manufacture of goods and therefore not a tax referable to entry 54 of List II of the Seventh Schedule to the Constitution was rejected and the contrary argument that such provision merely levies pure and simple purchase tax on the raw material, like cotton seed in the present case, was accepted. Therefore, the legislative competence of the State Legislature to levy purchase tax under section 4B of the Act has been upheld. Once the aforesaid position is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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