Supreme Court of India
M/S. UNITED RICELAND LTD.versusSTATE OF HARYANA AND ANR.
- Citation
- 2011 INSC 21
- Decided
- 7 January 2011
- Disposal
- Case Partly allowed
- Bench
- D K JAIN
Holding
The exemption under Section 9(1)(b) was available only until 15 October 1990, the date of promulgation of Ordinance No.2 of 1990, after which the dealer was liable for purchase tax.
Summary
United Riceland Ltd., a dealer engaged in purchasing and dehusking paddy for export, was assessed purchase tax for the assessment year 1990-91 under the Haryana General Sales Tax Act, 1973. The dealer challenged the assessment, arguing that the exemption under Section 9(1)(b) should remain effective until the amendment act of 1 April 1991, while the State contended that the exemption ceased when Ordinance No.2 of 1990 deleted Section 9. The Supreme Court held that an ordinance has the same force as an act and its date of promulgation marks the commencement of its provisions. Consequently, Section 9 ceased to exist on 15 October 1990, the date the ordinance was promulgated, and the exemption was available only up to that date. The Court partially allowed the appeal, relieving the dealer of purchase tax liability on paddy bought up to 15 October 1990, and made no order as to costs.
Issues considered
- The date of commencement of the exemption under Section 9(1)(b) of the Haryana General Sales Tax Act, 1973 in view of Ordinance No.2 of 1990 deleting the section
- Whether an ordinance promulgated by the Governor has the same legal effect as an act for determining statutory rights
- The effect of retrospective substitution of Section 15-A on the dealer's liability
Legislation cited
- Central Sales Tax Act, 1956s. 5, s. 6
- Constitution of Indias. Article 213(2), s. Article 367(2)
- Haryana General Sales Tax Act, 1973s. 15, s. 15-A, s. 17, s. 6, s. 9(1)(b)
- Haryana General Sales Tax (Amendment) Act 9 of 1993
- Haryana General Sales Tax (Amendment) Act No.4 of 1991
- Haryana General Sales Tax (Second Amendment) Ordinance No.2 of 1990
Subjects
purchase taxexemptionordinanceHaryana General Sales Tax Actretrospective amendmentlachesconstitutional validityassessment year 1990-91
Judgment
[2011] 1 S.C.R. 186 •
A M/S. UNITED RICELAND LTD.
v.
STATE OF HARYANA AND ANR.
(Civil Appeal No. 3463 of 2003)
JANUARY 7, 2011
B
[D.K. JAIN AND ANIL R. DAVE, JJ.]
----
Haryana General Sa/es Tax Act, 1973: s.9(1)(b) - 'r
Exemption under - Assessment year 1990-91 - Held: The
c benefit of the exemption contained in s. 9(1 )(b) is available to
the dealer only upto 15th October, 1990 i.e. the date when
Ordinance no. 2 of 1990, deleting s. 9 was promulgated - The
dealer would not be liable to pay purchase tax on the
purchase of paddy made by them upto 15th October, 1990 -
D Haryana General Sales Tax (Second Amendment) Ordinance
no.2 of 1990. >-
Constitution of India, 1950: Articles 367(2) and 213(2) -
Held: An ordinance promulgated by the President or the
Governor has the same force and effect as an Act of
E
Parliament or Act of State Legislature, as the case may be -
Articles 367(2) and 213(2) make it abundantly clear that an
ordinance operates in the field it occupies with the same rigour
as an Act - Haryana General Sales Tax (Second -r-
Amendment) Ordinance no.2 of 1990.
F
The appellant was engaged in the business of
purchase and dehusking of paddy to produce rice, in the
State of Haryana. The turnover of the paddy purchased
by the dealer during the assessment year 1990-91 was
G subjected to purchase tax under Sections 6 and 15-A of ~'
the Central Sales Tax Act, 1956 by assessment orders ,.
dated 14th January, 1997 and 9th July, 1999. The
appellant filed a writ petition before the High Court
challenging the assessment orders. The High Court
H 186
~
.. UNITED RICELAND LTD. v. STATE OF HARYANA 187
AND ANR.
dismissed the writ petition on the ground of delay and A
laches.
In the instant appeal, it was contended for the
appellant that the date of commencement of an Act which
is preceded by an ordinance, is the date of promulgation
B
of the ordinance; and that the benefit of exemption
contained in Section 9(1)(b) of the Act would be available
to the dealer till 15th October, 1990 i.e. the date when
Ordinance No.-2 of 1990, deleting Section 9 of the Act, was
promulgated.
c
Partly allowing the appeal, the Court
HELD: 1. It is trite that an ordinance promulgated by
the President or the Governor has the same force and
effect as an Act of Parliament or Act of State Legislature, D
as the case may be. Articles 367(2) and 213(2) of the
I ~.
Constitution make it abundantly clear that an ordinance
operates in the field it occupies with the same rigour as
an Act. [Para 14] [196-F-G]
R.K. Garg v. Union of India & Ors. (1981) 4 SCC 675; E
A.K. Roy v. Union of India & Ors. (1982) 1 SCC 271; Fuerst
Day Lawson Ltd. v. Jindal Exports Ltd. (2001) 6 SCC 356; T.
~
Venkata Reddy & Ors. v. State of Andhra Pradesh (1985) 3
SCC 198; Satnam Overseas (Export) & Ors. v. State of
Haryana & Anr. (2003) 1 SCC 561 - relied on. F
2. Ordinance no.2 of 1990 was succeeded by the
Haryana General Sales Tax (Amendment) Act no.4of1991
(Act no.4 of 1991) which came into effect from 15th April,
1991. Section 9 ceased to exist in the statute book from G
'
-~ the date of promulgation of the ordinance i.e. 15th
October, 1990. There was nothing in the Act No. 4of1991
rendering the provisions of the ordinance otiose during
the period from 15th October, 1990 to 15th April, 1991,
H
'
A
188 SUPREME COURT REPORTS [2011] 1 S.C.R.
therefore, the benefit of the exemption contained in
• 1--
Section 9(1)(b) of the Act was available to the dealer only
upto 15th October, 1990; and not till 1st April, 1991. The
dealer will not be liable to pay purchase tax on the
purchase of paddy made by them upto 15th October,
B 1990, i.e. till the date of promulgation of Ordinance No.2
of 1990. (Paras 15, 16] (197-8-E]
United Riceland Limited & Anr. v. State of Haryana &
_.,,...
Ors. 104 STC 362 (Full Bench); Bishambhar Nath Kohli &
Ors. v. State of Uttar Pradesh & Ors. AIR 1966 SC 573; Mis.
c Titagarh Paper Mills Ltd. v. Orissa State Electricity Board &
Anr. (1975) 2 SCC 436; Murli Manohar and Co. & Anr. v. State
of Haryana & Anr. (1991) 1 SCC 377; Hotel Balaji & Ors. v.
State of A.P. & Ors. 1993 Supp (4) SCC 536; K.B. Handicrafts
Emporium & Ors. v. State of Haryana & Ors. 1993 Supp (4)
D sec 589 - referred to.
Case Law Reference:
104 STC 362 (FB) referred to Para 4
E (2003) 1 sec 561 referred to Paras 6, 7,
9,12, 13, 15
AIR 1966 SC 573 referred to Para 6
(1981) 4 sec 675 relied on Para 6
F
(1982) 1 sec 211 relied on Para 6, 14
(2001) 6 sec 356 relied on Para 6, 7
(1975) 2 sec 436 referred to Para 7
G (1991) 1 sec 377 referred to Para 9
1993 supp (4) sec 536 referred to Para 9
+
1993 Supp (4) sec 589 referred to Para 9
(1985) 3 sec 198 relied on Para 14
H
UNITED RICELAND LTD. v. STATE OF HARYANA 189
AND ANR.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. A
3463 of 2003.
From the Judgment & Order dated 03.08.2000 of the High
Court of Punjab & Haryana at Chandigarh in C.W.P. No. 10110
of 2000.
B
Ramesh Singh, Ankur Saigal, Bina Gupta for the
__.,<. Appellant.
Gaurav Teotia (for Kamal Mohan Gupta) for the
Respondents. C
The Judgment of the Court was delivered by
D.K. JAIN, J.: 1. This appeal, by special leave, is directed
against the judgment dated 3rd August, 2000 delivered by the
4. High Court of Punjab and Haryana, whereby the writ petition D
filed by the appellant herein, questioning the Constitutional
validity of Haryana General Sales Tax (Amendment) Act 9 of
1993 (for short "Act 9 of 1993"), substituting Section 15-A in
the Haryana General Sales Tax Ac;:t; 1973 (for short "the Act")
retrospectively w.e.f. 27th Ma.y, 1971, has been dismissed. E
2. The appellant {hereinafter referred to as "the dealer"),
a registered dealefunder the Act, was engaged in the business
of purchase and dehusking of paddy to produce rice, in the
State of Haryana. Rice so produced was exported outside the
F
country within the meaning of Section 5 of the Central Sales
Tax Act, 1956 (for short "the CST Act"). The present appeal
relates to the assessment year 1990-91. The turnover of the
paddy purchased by the dealer during the relevant year was
:)... subjected to purchase tax under Sections 6 and 15-A of the G
Act vide assessment orders dated 14th January, 1997 and 9th
July, 1999.
3. Aggrieved by the said levy, the dealer preferred a writ
petition before the High Court, challenging, inter a/ia, the
H
190 SUPREME COURT REPORTS [2011] 1 S.C.R.
•
A substitution of Section 15-A in the Act vide Act 9 of 1993, with
retrospective effect. '
4. Before the High Court, it was conceded by the counsel
for the dealer that the question of the constitutional validity of
8 substituted Section 15-A was concluded against the dealer by
virtue of the decision of a Full Bench of the High Court in United
Riceland Limited & Anr. Vs. State of Haryana & Ors. 1, and
therefore, the said issue did not survive for consideration. In so
far as the merits of the assessments were concerned, the High
C Court was of the opinion that since an efficacious statutory
remedy by way of appeal was available to the dealer and that
the writ petition also suffered from delay and laches, it could
not be entertained. Accordingly, as noted above, by the
impugned judgment, the writ petition has been dismissed
primarily on the ground of laches.
D
5. Hence, the present appeal.
6. Mr. Ramesh Singh, learned counsel appearing on behalf
of the dealer contended that in Satnam Overseas (Export) &
E Ors. Vs. State of Haryana & Anr. 2, this Court did not consider
the effect of the Haryana General Sales Tax (Second
Amendment) Ordinance No. 2of1990 (for short "Ordinance No.
2 of 1990") which had deleted Section 9 of the Act with effect
from 15th October, 1990. Learned counsel argued that in light
F of the decisions of this Court in Bishambhar Nath Kohli & Ors.
Vs. State of Uttar Pradesh & Ors. 3 ; R.K. Garg Vs. Union of
India & Ors. 4 ; A.K. Roy Vs. Union of India & Ors. 5 and Fuerst
Day Lawson Ltd. Vs. Jindal Exports Ltd. 6• it is settled that the
date of commencement of an Act which is preceded by an
G 1. 104 STC 362 (Full Bench).
2. (2003) 1 sec 561.
3. AIR 1966 SC 573.
4. (1981) 4 sec 675.
5. (1992) 1 sec 211.
H 6. c2001 l 6 sec 356.
UNITED RICELAND LTD. v. STATE OF HARYANA 191
AND ANR. [D.K. JAIN, J.]
ordinance, is the date of promulgation of the ordinance. A
Learned counsel argued that in any case the benefit of
exemption contained in Section 9(1)(b) of the Act would be
available to the dealer till 15th October, 1990 i.e. the date when
Ordinance No. 2 of 1990, deleting Section 9 of the Act, was
promulgated. B
7. Per contra, learned counsel for the respondents
submitted that since the provisions of Ordinance No. 2 of 1990
were incorporated in the Haryaria General Sales Tax
(Amendment) Act No.4 of 1991 (f9r' Short "Act No. 4 of 1991 "),
in light of the judgment of this Court in Fuerst Day Lawson Ltd. C
(supra), the amendment was effective from the date of the
ordinance i.e 15th October, 1990. It was urged that if at all the
dealer was eligible for the benefit of the exemptions under
Section 9(1 )(b) of the Act, it would only be for a part of the year
and not for the whole of the assessment year, as initially D
claimed. While supporting the impugned judgment, learned
counsel contended that the High Court had rightly dismissed
the dealer's writ petition as barred by laches, and had correctly
relegated them to the statutory remedy under the Act in light of
the decision of this Court in Mis. Titagarh Paper Mills Ltd. Vs. E
Orissa State Electricity Board & Anr. 7 • It was asserted that
-
dealer's challenge to the levy of purchase tax cannot survive
after this Court had upheld the validity of Section 15-A of the
Act in Satnam Overseas (Export) (supra).
F
8. In order to appreciate the rival submissions, it would be
expedient to examine relevant provisions of the Act. Section
9, as it stood prior to its deletion by Ordinance No.2 of 1990,
provided that:
"9. (1) Where a dealer liable to pay tax under this Act, G
;
(a)* * *
7. (1975) 2 sec 436. H
A
192 SUPREME COURT REPORTS [2011) 1 S.C.R.
(b) purchases goods, other than those specified in
•
Schedule B, from any source in the State and uses them
in the State in the manufacture of any other goods and
either disposes of the manufactured goods in any manner
otherwise than by way of sale in the State or dispatches
B the manufactured goods to the place outside the State in
any manner otherwise than by way of sale in the course of
inter-State trade or commerce or in the course of export
outside the territory of India within the meaning of Section
5 of the Central Sales Tax Act, 1956; or
c (c) * * *
!n the circumstances in which no tax is payable under any
other provision of this Act, there shall be levied, subject to
the provisions of Section 17, a tax on the purchase of such
D goods at such rate as may be notified under Section 15."
9. The scope and ambit of Section 9(1)(b) of the Act, was
succinctly explained by this Court in Satnam Overseas (Export)
(supra). It was observed that the Section postulates the
E existence of circumstances in which no tax is payable, under
any provisions of the Act by a dealer who: (i) is liable to pay
tax under the Act; (ii) purchases goods (referred to as "raw
material") (other than those specified in Schedule 8) from any
source in the State; (iii) uses them in the State in the
manufacture of any other goods (referred to as "manufactured
F goods"); (iv) disposes of the manufactured goods in any manner
otherwise, than by way of sale or (v) dispatches the
manufactured goods to a place outside the State in any manner
and provides that in such a ca.se there shall be levied, a tax,
subject to the provisions of Section 17, on the purchase of raw
G material at such rate as may be notified under Section 15 of
the Act. It was explained that the levy of purchase tax on the
raw material would have no application when the manufactured
goods are: (a) disposed of by way of sale in the State; (b)
dispatched to a place outside the State: (i) in the course of inter-
H S,tate trade or commerce, or (ii) in the course of export outside
UNITED RICELAND LTD. v. STATE OF HARYANA 193
AND ANR. [D.K. JAIN, J.]
the territory of India, within the meaning of Section 5 ofthe CST A
Act. It was emphasised that the exemptions contained in
Section 9(1)(b) of the Act were confined to cases of impost
levied thereunder and not otherwise. Endorsing the view
expressed by this Court in the cases of Murli Manohar and Co.
& Anr. Vs. State of Haryana & Anr. 8 , Hotel Balaji & Ors. Vs. B
State of A.P. & Ors. 9 and K.B; Handicrafts Emporium & Ors.
Vs. State of Haryana & Ors. 10 , it was held as under:
-+
• ... we conclude that specific charging provision of Section
9(1)(b) will be attracted as the assessee purchased paddy
(which is not one of the goods specified in Schedule B),
c
procured rice (manufactured goods) from the said paddy
and exported rice outside the territory of India, on which
no purchase tax was payable under the general charging
provision of Section 6 which is, inter alia, subject to the
_...._ provisions of Section 9. We have already held above that D
the assessees will not be liable to pay tax on the purchase
of such paddy in view of the provisions of clause (b) of sub-
section (1) of Section 9 in the assessment years in
question, or, for that matter, any assessment year ending
before 1-4-1991 ." E
10. Ordinance No.2 of 1990 was succeeded by Act No.4
of 1991 which came into effect from 15th April, 1991. Section
15 of Act No.4 of 1991 provided that:
F
"The Haryana General Sales Tax (Second Amendment)
Ordinance, 1990 (Haryana Ordinance No.2 of 1990), is
hereby repealed."
11. Section 15-A was initially inserted in the Act on 25th
~ January, 1990 and was given retrospective effect from 27th G
May, 1971. Presently, we are concerned with Section 15-A as
8. (1991) 1 sec 377.
9. 1993 Supp (4) sec 536.
10. 1993 Supp (4) sec 589. H
194 SUPREME COURT REPORTS [2011) 1 S.C.R.
•.
.
A substituted by Act No. 9 of 1993 retrospectively from 27th May,
1971. It provides:
"15-A. Adjustment or refund of tax in certain cases.-
Subject to the provisions of clause (iii) of proviso to sub-
section (1) of Section 15 and subject to the conditions and
B
restrictions, as may be prescribed-
(1) the tax leviable under this Act or the Central Sales Tax
Act, 1956, on the sale of goods by a dealer, manufactured
by him, shall be reduced by the amount of tax paid in the
c State on the sale or purchase of goods, other than the tax
paid on the last purchase of paddy, cotton and oilseeds,
used in their manufacture; and
(i1) when no tax is leviable on the sale of manufactured
D goods except those specified in Schedule B, subject to the
conditions and exceptions specified therein, or when the
tax leviable on the sale of manufactured goods is less than
the tax paid in the State on the sale or purchase of goods,
other than the tax paid on the 1st purchase of paddy, cotton
and oilseeds, used in their manufacture, the full amount of
E
tax paid or the excess amount of tax paid over the tax
leviable on sale, as the case may be, shall be refundable
if the manufactured goods are sold in the State or in the
course of inter-State trade or commerce or in the course
of export out of the territory of India.
F
Provided that in case the manufactured goods have been
sold before the 1st day of January, 1988 the tax paid on
goods, leviable to tax at the first stage of sale under
Section 18, used in their manufacture, shall not be
G refunded."
12. The question relating to the constitutional validity of the
retrospective substitution of Section 15-A in the Act w.e.f. 27th
May, 1971 is no more res integra, in light of the decision of
H this Court in Satnam Overseas (Export) (supra), wherein this
UNITED RICELAND LTD. v. STATE OF HARYANA 195
AND ANR. [D.K. JAIN, J.]
Court, while upholding the constitutionality of Act 9 of 1993, A
observed thus:
"It is true that Section 15-A does not permit refund of
purchase tax paid on paddy, cotton and oilseeds by an
assessee though such a relief is available in regard to
8
other goods. In the light of the above discussion, the
challenge to Section 15-A on the ground of violation of
Section 15(c) of the CST Act or Article 286(1)(b) of the
Constitution cannot be sustained because the only relief
that is granted by Section 15(c) is reduction of tax leviable C
on the sale of rice procured from out of paddy, where tax
has been levied on sale or purchase of such paddy inside
the State. This relief is incorporated by the Haryana Act
in clause (iii) of the proviso to sub-section (1) of Section
15. Even clause (b) of sub-article (1) of Article 286 does
not provide for exemption of tax on the purchase of paddy. D
There is no other provision either in Article 286 or in the
CST Act which bars a State from levying tax on the sale
or purchase of paddy which is not exported out of the
territory of India. Section 15-A proceeds on the premise
that purchase tax is payable, inter alia, on paddy. From the E
above discussion, it is clear that before the omission of
Section 9 from the Haryana Act, no purchase tax was
payable on paddy under Section 6 of the Act, therefore,
during the aforesaid period, the assessee cannot complain
of the denial of the benefit of adjustment and refund of F
purchase tax on the basis of Section 15-A of the Haryana
Act. The position would, however, be different after 1-4-
1991, when Section 9 was omitted from the Act."
The Court finally summed up its conclusions as follows:
G
"(1) In the specified circumstances in which charge of
purchase tax on the raw material is imposed, clause (b)
of sub-section (1) of Section 9 of the Haryana Act and the
exemptions provided therein would apply; the law declared
H
196 SUPREME COURT REPORTS [2011) 1 S.C.R.
A by this Court in Mur/i Manohar & Co., Hotel Balaji and
K.B. Handicrafts holds the field;
(2) while Section 9 remained on the statute-book till 1-4-
1991, retrospective amendments of Sections 2(p), 6, 15
and 15-A of the Haryana Act would make no difference in
B
regard to levy of purchase tax on paddy;
(3) adjustment of purchase tax paid on paddy (raw
material) is permissible under Section 15-A of the Haryana
Act during the relevant period;
c
(4) by virtue of Section 15-A of the Haryana Act, denial of
refund of purchase tax, if any, paid by a dealer is not illegal
much less unconstitutional."
13. The Court held that the exemptions mentioned in
D Section 9(1)(b) of the Act would be available to the dealer for
assessment years ending before 1st April, 1991, and the
substituted Section 15-A, which provides that purchase tax
payable on paddy used as raw material can neither be
refunded nor adjusted, will not have any effect between. 27th
E May, 1971 and 1st April, 1991 as Section 9(1)(b) still existed
in the statute book during that period. It is evident that in
Satnam Overseas (Export) (supra), this Court did not examine
the effect of Ordinance No.2 of 1990, as Section 9 was first
deleted vide the said Ordinance w.e.f. 15th Oc;tober, 1990.
F
14. It is trite that an ordinance promulgated by the President
or the Governor has the same force and effect as an Act of
Parliament or Act of State Legislature, as the case may be.
Articles 367(2) and 213(2) of the Constitution make it
G abundantly clear that an ordinance operates in the field it --4<
occupies with the same rigour as an Act. In A.K. Roy (supra);
a Constitution Bench of this Court had observed that "an
ordinance issued by the President or the Governor is as much
a law as an Act passed by the Parliament and is, fortunately
H and unquestionably, subject to the same inhibitions. In those
UNITED RICELAND LTD. v. STATE OF HARYANA 197
AND ANR. [D.K. JAIN, J.]
inhibitions lie the safety of the people." This view has been A
approved and reiterated in other Constitution Bench decisions.
(See: R.K. Garg (supra); T. Venkata Reddy & Ors. Vs. State
of Andhra Pradesh 11 and Fuerst Day Lawson Ltd. (supra).)
15. Examined on the touch-stone of the afore-noted legal 8
principles, it is manifest that Section 9 ceased to exist in the
statute book from the date of promulgation of the ordinance i.e.
15th October, 1990; particularly, when there was nothing in the
Act No. 4 of 1991 rendering the provisions of the ordinance
otiose during the period from 15th October, 1990 to 15th April, C
1991. Therefore, it follows that the benefit of the exemption
contained in Section 9(1)(b) of the Act was available to the
dealer only upto 15th October, 1990; and not till 1st April, 1991,
as elucidated in Satnam Overseas (Exporls) (supra).
16. In light of the foregoing discussion, the appeal is partly D
allowed to the extent that the dealer will not be liable to pay
purchase tax on the purchase of paddy made by them upto 15th
October, 1990, i.e. till the date of promulgation of Ordinance
No.2 of 1990.
E
17. In the facts and circumstances of the case, we make
no order as to costs.
D.G. Appeal partly allowed.
11. (1985) 3 sec 198.
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