Supreme Court of India
MURLI MANOHAR AND CO. AND ANR.versusSTATE OF HARYANA AND ANR. ETC. ETC.
- Citation
- 1990 INSC 324
- Decided
- 25 October 1990
- Disposal
- Appeal(s) allowed
- Bench
- S RANGANATHAN
Holding
Section 9(1) exemption applies only to export sales falling within section 5(1) of the Central Sales Tax Act, and the assessees’ sales fall within the exempted categories, so no purchase tax is payable.
Summary
The appellants, registered dealers in Haryana, bought raw materials without paying purchase tax under section 24 of the Haryana Sales Tax Act, used them to manufacture goods and sold the finished products to dealers who exported them. They claimed exemption from the purchase tax under section 9(1) on the ground that the sales qualified as ‘sales in the course of export’ within the meaning of section 5(1) of the Central Sales Tax Act, relying also on section 5(3) to extend the definition. The State argued that the sales were only ‘penultimate’ sales and did not fall within section 5(1), and that section 9(1)(b) was unconstitutional following the Goodyear decision. The Court held that the exemption in section 9(1) is limited to export sales falling within section 5(1) and that the assessees’ sales, being either local, inter‑state or export sales under that definition, do not attract purchase tax under section 9(1), nor under sections 6 or 24(3). Consequently, the appeals and writ petitions were allowed and the assessments were set aside.
Issues considered
- Whether purchases of raw materials are exempt from purchase tax under section 9(1) of the Haryana Sales Tax Act when the manufactured goods are sold to dealers who export them.
- Whether such sales qualify as ‘sales in the course of export outside India’ within the meaning of section 5(1) of the Central Sales Tax Act, or whether section 5(3) expands that meaning to include penultimate sales.
- Whether section 9(1)(b) of the Haryana Sales Tax Act is unconstitutional in view of the Goodyear decision.
- Whether the State can rely on section 6 of the Haryana Sales Tax Act to levy tax on the raw‑material purchases if section 9(1) is inapplicable.
Legislation cited
- Central Sales Tax Act, 1956s. 5(1), s. 5(3)
- Haryana Sales Tax Act, 1973s. 14, s. 24, s. 27, s. 2(p), s. 6, s. 9(1)
Subjects
sales taxpurchase taxexportHaryana Sales Tax ActCentral Sales Tax Actsection 9section 24section 5exemptionconstitutional validityGoodyear casepenultimate saleinter‑state sale
Judgment
MURLI MANOHAR AND CO. AND ANR. A
v.
STATE OF HARYANA AND ANR. ETC. ETC.
OCTOBER 25, 1990
[S. RANGANATHAN, K.N. SAIKIA AND B
K. JAYACHANDRA REDDY, JJ.]
Haryana Sales Tax Act, 1973: Sections 9( 1) and 24-Assessee-
Purchusing raw materials in state without paying tax-Manufacturing
goods-Selling them to dealer who exported goods out of India-
Assessability to tax-Whether arises.
c
Central Sales Tax Act, 1956: Sections 5(1) & 5(3)-Distinction
between.
Each of the appellants/petitioners is a registered dealer in the
State of Haryana. He purchased certain raw materials in the State D
without paying purchase tax thereon, in view of the provision contained
in section 24 of the Haryana Sales Tax Act, 1973. He manufactured
certain goods in the State with the aid of the said raw materials. He then
sold the manufactured goods to dealers who, in turn, exported those
goods out of India. On these facts the assessee claimed that he was not
liable to pay the purchase tax on the raw materials, imposed under E
section. 9(1) of the Sales Tax Act. The Department denied the relief on
the short ground that the sales effected by the appellants were not sales
in the course of export outside India within the meaning of section 5(1)
of the Central Sales Tax Act. According to the Department, they were
only "penultimate" sales, which may be deemed to be 'export sales'
because of the fiction created under section 5(3) of the C.S. Act 1956, F
but that was not enough to escape from the clutches of the charge in
section 9( 1). Accordingly, the claim of the assessee was rejected by the
taxing authorities. The High Court also rejected the assessee's petition ..
Before this Court, it was contended on behalf of the assessees that
the effect of section 5(3) of the C.S.T. Act was to expand the scope of G
section 5( 1) and include within the concept of sales in the course of
export outside India also the 'penultimate' sales; that a reference to,
and the meaning of, section 5(1) could not be understood without a
reference to section 5(3); and that as a result of section 5(3), such penulti-
mate sales became extiort sales falling beyond the purview and compe-
- tence -0f State legislature. It was further submitted that purchases of H
343
344 SUPREME COURT REPORTS [ 1990] Supp. 2 S.C.R.
raw material used in the manufacture of goods inside the State attracted
A the tax under section 9(1) unless those manufactured goods were dealt
with in one of three ways; (1) disposed of by way of sale inside the State;
(2) despatched to a place outside the State but by way of a sale in the
course of inter-State trade or commerce; or (3) despatched to a place
outside the State but by way of sale in the course of export outside the
B territory oflndia.
In the alternative, it was contended that as the assessee had sold
goods to other parties in India, those sales must be either local sales or
inter-state sales; and that in any view of the matter, it would be a sale
covered by the exceptions in section 9(1), and the assessee's purchases
of raw material wonld not attract tax nnder section 9(1).
c
On the other hand, on behalf of the State it was, inter alia con-
tended that there were no facts on re.cord to substantiate the claim on
behalf of the assessee that the sales in question fulfilled the conditions
set out in section 5(3) of the C.S.T. Act. It was submitted that the
D assessees would be entitled to an exemption from the impugned pur-
chase tax only if their sales were export Sales within the meaning of
section 5(1) of the C.S.T. Act, which they admittedly were not.
Alttmatively, it was submitted that section 9(1)(b) had been
declared unconstitutional by this Court in the Goodyear ca&e (1990 2
E SCC 71) and the assessee could seek no implied exemption from its
language. Therefore, if section 9 was left out, the langnage Of section 6
(as amended) which brought to charge all purchases and sales Ill the State
would be attracted and so the impugned taxation of purchases would be
in order.
f Allowing the appeals and the petitions, this Court,
HELD: (1) The language of section 9(1)(a)(ii}-later Sktion 9(1)
(b)-using the words "within the meaning of sub-section (1) of section
5 of the Central Sales Tax Act, 1956" have to be given full meaning;
in other words, the exemption under section 9(1) has to be restricted
G only to exp(Jrt sal~s falling within the scope of section 5(1). [360F-G]
Mohammed Sirajuddin v. State, [1975] Supp. 1SCR169, referred
H
to.
(2) The language of the two provisions simultaneou..ly introduced
in section 24(1)(a) and (b) makes Interesting reading. The proviso to
-
.,
•
M.M. & CO. v. STATE OF HARYANA 345
clause (a) refers only to "sale by him in the course of export outside the
territory of India within the meaning of section 5 of the Central S.ales A
Tax Act, 1956" whereas the proviso to clause (b) refers to "sale by him
in the course of export outside the territory of India within the meaning
of sub-section (3) of section 5 of the Central Sales Tax Act, 1956".
Thus, the statute, within the same provision, has made a distinction
between a sale in the course of export within the meaning of section 5 B
and such a sale within the meaning of section 5(3). [361C-DJ
(3) The High Court was right in concluding that the assessee \fas
not entitled to the exemption under. section 9 because the sales made by
him were not sales in the course of export outside the territory of India
within the meaning of section 5(1) of the Central Sales Tax Act. [362A]
c
(4) What was declared unconstitutional by this Court when it
declared section 9(l)(b) of the Ad unconstitutional in Goodyear case
was only the levy of a tu where raw materials were purchased and used
inside the State for the manufacture of finished goods which were then
simply-and without any sale-despatched-rather, consigned-out- D
side the State. There is, however, nothing nnconstitutional about the
two other consequences that flow on the language of the clause : one
express and the other implied; one in favour of the Revenue and the
other in favour of the assessee, viz. (1) that there will he a tax on the
purchase of the raw materials if the manufactured goods are disposed of
in the State itself otherwise than by way of sale; and (2) that there will E
be no tax on the purchase of the raw materials if the manufactured
goods are despatched from the State consequent on a (i) local sale; (ii)
inter-State sale; or (iii) a sale in the course of export. These two aspects
of section 9(1)(b) survive even after the judgment of this Court in the
Goodyearcase. [363G-H; 364A-C]
F
·Goodyear, .case [1990] 2 SCC 71, explained.
(5) Section 9(1) is both a charging and exempting section. Even
after the decision in Goodyear case the charge under a part Of clause (b)
still survives and so also the exemption provided in the latter part of
clause (b). [364E; Cl G
(6) Since the sales effected by the assessee fall within one of the
three exempted categories set out in section 9(1)(b), there can he no levy
of purchase tax under section 9(1) of the Sales Tax Act. [363C]
(7) The purchase of raw materials by the assessees are not H
346 SUPREME COURT REPORTS . [ 1990] Supp. 2 S.C.R.
chargeable to tax either under section 9(1) or section 6 or section 24(3). [366G]
A
CIVIL APPELt:J\TE JURISDICTION: Civil Appeal No. 6202
(NT) of 1983.
From the Judgment and Order dated 3.2.1981 of the Punjab and
B Haryana High Court in L.P.A. No. 128 of 1981.
Raja Ram Aggarwal, Arvind Minocha, H.K. Singh, S.K. Bagga,
S. C. Patel and S.K. Gambhir for the Appellants.
Kapil Sibal, Additional Solicitor General, S.P. Goel, A. Subba
Rao, C.V.S. Rao, Mahabir Singh, Bishambher Lal and K.C. Dua for
c the Respondents.
The Judgment of the Court was delivered by
RANGANATHAN, J. I. All these appeals and writ petitions
D raise a con1rno;1 question regarding the interpretation of s 9l 1) of the
Horyana Saies Tax Act, 1973 (hereinafter referred to as 'the Act').
Counsel state that the facts in all these appeals are identical and thatthe
only facts necessary (or, atleast, on record before us), on the basis of
which the issue us is to be decided, are these : Each of the appellants/
petitioners (hereinafter referred to compendiously/ as 'assessees'), is a
E registered dealer in the State of Haryana. He purchased certain raw
materials in the State without paying tax thereon, in view of the provi-
sion contained in s. 24 of the Act. He then manufactured certain goods
in the State with the aid of said raw materials. He then sold the
manufactured goods to dealers who, in turn, exported those goods out
of India. On these facts, it is claimed, the assessee is not liable to pay
F the purchase tax on the raw materials imposed under s. 9( 1) of the Act.
This claim has been rejected by the taxing authorities and the High
Court and hence these appeals. The writ petitions have been· filed
directly in this Court in view of a learned single Judge of the High
Court having decided the issue against the assessees as early as
25.11.1980 in C.W.P. 1227/80, which was also affirmed by a Division
G Bench later.
2. The Act is a much-amended one and some of its provisions
have been recently amended with retrospective effect from 27th May,
1971 a point of time when actually a predecessor Act (the Punjab
General Sales Tax Act, 1948) had been in force. The provisions of the
H statute, relevant for our purpose, and their relevant amendments may
be noticed first:
M.M. & CO. v. STATE OF HARYANA (RANGANATHAN, J.] 347
I. Section 2(e)
A
(a) Originally s. 2( e) defined 'export' to mean "the taking out of
goods from the State to any place outside it otherwise than by way of
sale in the course of inter-State trade or commerce."
(b) Act 44 of 1976, added, at the end of the above definition, the B
following words w.e.f. 1.4.1976:
"or in the course of export out of the territory of India."
II. Section 2(p)
(a) S. 2(p) defined the expression 'turnover' as including "the c
aggregate of the amounts of the sales and purchases .......... made
by any dealer" in any capacity during a given period. Explanation 2 to
the second definition provided:
"(2) The proceeds of the sale of any goods on the purchase D
of which tax is leviable under this Act or the purchase value
of any goods on the sales of which tax is leviable under this
Act, shall not be included in the turnover, but the purchase
value of the goods liable to tax under section 9 shall be
included."
E
(b) Act 13 of 1989 amended the Explanation by inseriing, in it,
after the words "section 9", the words "or section 24".
(c) Act I of 1990 has amended the above Explanation retrospec-
tively to say that the words "but the purchase value of the goods liable
to tax under section 9 or section 24 shall be included" shall be omitted p
and shall be deemed always to have been omitted with effect from
27.5. 1971. So we have to proceed on the basis that the underlined
words never were there in cl. (p) of section 2. The 1990 Act also
inserted an Explanation 6 to the clause w.e.f. 31.3. 1983 which reads:
"(6) The purchase <>f barley or of goods used in the G
manufacture of guar gum, scientific goods, utensils and
metal handicrafts shall not form part of the turnover of a
dealer for the period he is entitled to purchase the goods on
the authority of his certificate of registration without pay-
ment of sales tax under section 24, provided these are used
exclusively for the specified purposes." If
348 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.
Ill. Section 6
A
Section 6, the charging section, read as under:
'l
I "6. Incidence of taxation-(1) Subject to other provisions
of this Act, every dealer whose gross turnover during the
B year immediately preceding the commencement of this Act
exceeded the taxable quantum, Defined in s. 7, shall be
liable to pay tax under this Act on all sales and purchases
effected after the coming into force of this Act.
Provided that this sectiotl shall not apply to a dealer
who deals exclusively in goods specified in Schedule B,
c · Goods on which no tax is leviable: s. 6 read withs. 15.
i
(2) Every dealer to whom sub-section (I) does not apply
shall, subject to other provisions of this Act, be liable to
pay tax under this Act on the expiry of thirty days after the
D date on which his gross turnover during any year first ex-
ceeds the taxable quantum;
Provided that this sub-section shall not apply to a
· • dealer who deals exclusively in goods specified in Schedule
B.
E
Provided further that .....
xxx xxx xxx
Explanation-For the purposes of sub-section (1) and (2)
F "purchased" shall mean the purchase of declared (As
defined in s. 2(c) of the Central Sales Tax Act, 1956)
goods, goods specified in Schedule C and goods falling
under section 9.
(b) S. 6 was amended by Act I of 1990 to read as follows with
G retrospective effect from 27.5.1971:
i.
"S. 6 Incidence of taxation-( 1) Every dealer whose gross
turnover during the year immediately preceding the com-
H
ing into force of the provisions of this section exceeded the
taxable quantum shall be liable to pay tax on all sales and
1 purchases effected after the coming into force of the provi-
-
sions of this section:
... M.M. & CO. v. STATE OF HARYANA [RANGANATHAN, J.l 349
Provided that this sub-section shall not apply to a A
dealer who deals exclusively in goods specified in Schedule
B.
(2) Every dealer to whom sub-section (1) does not
apply shall be liable to pay tax on all sales and purchases
effected on the expiry of thirty days after the date on which B
his gross turnover during any year first exceeds the taxable
quantum.
Provided that this sub-section shall not apply to a
dealer who deals exclusively in goods specified in Schedule
B:
c
Provided further that .....
xxx xxx xxx
The ·earlier Explanation, however, is omitted with the same D
· retrospective effect.
IV. Section 9
(a) S. 9(1) has undergone several amendments : by Act 44 of
1976, Act 11of1979, Act 3 of 1983, Act 11of1984, Act 16 of 1986 and E
Act 1 of 1988. Act 1 of 1990 has also an impact, as we shall indicate
later.
.. The section originally read th~s:
"S. 9 Liability to pay purchase tax-Where a dealer pur- F
chases goods other than those specified in the Schedule B
from any source in the State and-
(a) uses them in the State in the manufacture of
(i) goods specified in Schedule B; or G
(ii) any other goods and disposes of the manufac-
tured goods in any manner otherwise than by way of sale
whether within the State or in the course of inter-State
trade or commerce or in the course of export out of the
territory of India; H
350 SUPREME COURT REPORTS
(b) exports them
[ 1990] Supp. 2 S.C.R.
-
, in the circumstances in which no tax is paybale 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
i goods at such rate as may be notified under section 15."
B
(b) Act 44 of 1976 made two amendments to this sub-section.
The first amendment was to insert, after the opening words, "where a
dealer", the words "liable to pay tax under this Act". The second
amendment, which is crucial for the purposes of this case, is the addi-
tion at the end of sub-clause (ii) of clause (a) above, the words:
c "within the meaning of sub-section ( 1) of section 5 of the
Central Sales Tax Act, 1956."
These amendments were effective from 1.4.1976.
D · (c) Act 11 of 1979 redrafted the above provision, excluded milk
from clause (b) and added clause (c). After this amendment, effective
from 9.4.1979, the provision read thus:
"9( 1) Where a dealer liable to pay tax under this Act,
E (a) purchases goods, other than those specified in Sche-
dule B, from any source in the State and uses them in the
State in the manufacture of goods specified in Schedule li;
or
(b) purchases goods, other than lhose specified in Sche-
F dule B except milk, from any source in the State and uses
them in the State in the manufacture of any other goods
and disposes of the manufactured goods in any manner
otherwise than by w.ay, o.f sale whether within the State or in
the course of inter-State trade or commerce or in the
course of export out of the. territory -0f India within the
G meaning of sub-section (I) of section 5 of the Central Sales
Tax Act, 1956; or
(c) purchases goods, other than those specified in Schedule
B, from any source in the State and exports them,
H in the circumstances in which no tax is payable under any
J
M.M. & CO. v. STATE OF HARYANA [RANGANATHAN, J.] 351
other provision of this Act, there shall be levied, subject to A
the provisions of section 17, a tax on the purchase of such
goods at such rate as may be notified-under section 15."
•.
(d) A doubt had arisen whether the words "disposes of" used in
clause (a)(ii)-later, clause (b)-above was comprehensive enough to
include cases of despatches by a dealer of the manufactured goods B
otherwise than by way of sale as, for example, by way of stock transfer.
The State Government had issued a notification dated 19.7.74 (even
before the 1976 amendment) clarifying the position with an answer to
the question· in the affirmative but this notification as well as the
interpretation favoured by it were quashed by a decision of the High
Court reported as Goodyear India Ltd. v. State, [1982] 53 STC 163.
This led to the amendment of S. 9( 1) by Act 3 of 1983. This amend- c
ment substituted a new clause (b) for the earlier one w.e.f. 27.5.71,
inserted a new clause (bb} w.e.f. 9.4.79 and added a proviso. Actually
. clauses (b) and (bb) are identical, except that the latter excludes milk
from its purview w.e.f. 9.4.79. However, to avoid confusion both the
clauses may be set out here: D
(b) purchases goods, other than those specified in Sche-
dule 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 other-
wise than by way of sale in the State or despatches the E
manufactured goods to a 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 sub-
section ( 1) of section 5 of the Central Sales Tax Act, 1956;
or; F
(bb) purchases goods, other than those specified in
Schedule B except milk, 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 G
despatches the manufactured goods to a 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
sub-section (1) of section 5 of the Central Sales Tax Act,
1956; or". H
352 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.
The proviso added was in the following terms:
A
"Provided that no tax shall be leviable under this section on
scientific goods and guar gum, manufactured in the State
and sold by him in the course of export outside the territory
of India within the meaning of sub-section (3) of section 5
B of the Central Sales Tax Act, 1956 ...
(e) Act 11of1984 effected no material change. The exclusion of
milk was decided to be dropped and so all that this amendment did was
to roll both clauses (b) and (bb) into one clause, reading thus: •
"4. Amendment of section 9 of Haryana Act 20 of 1973-
c For clauses (b) and (bb) of sub-section ( 1) of section 9 of
the principal Act, the following clause shall be substituted,
namely:
"(b) purchases goods, other than those specified in Sche-
D dule H, 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 other-
wise than by way of sale in the State or dispatches the
manufactured goods to a place outside the State in any
manner otherwise than by way of sale in the course of '
E inter-State trade or commerce or in the course of export
outside the territory of India within the meaning of sub-
section (I) of section 5 of the Central Sales Tax Act, 1956;
or''.
(f) Amendment Act 8 of 1986 substituted, in the proviso to s.
F 9(1), the words "scientific goods, guar gum, utensils and handicrafts"
in place of "scientific goods and guar gum" w.e.f. 26.2.86.
li
(g,) The amendment to S. 9( 1) by Act 16 of 1986 is not relevant
for our purposes and we pass on to the two relevant amendments
•
•
effected by Act 1 of 1988. The first was to change the marginal heading
G of the section to read thus: "9( 1) Liability to pay tax on purchase value
of goods". The second was to omit the words "sub-section (1) of" at
the end of clause (b ). The relevant part of clause (b ), as thus amended,
will, therefore, read:
"despatches the manufactured goods to a place outside the
H State in any manner otherwise than by way of sale ..... in
J
M.M. & CO. v. STATE OF HARYANA [RANGANATHAN, J.I 353
the course of export outside the territory of India within
the meaning of section 5 of the Central Sales Tax Act, A
1956;" .
These amendments became effective from 31. 12.1987.
V. Section 24 B
S. 24 is the next section relevant for our purposes. After its
amendment by Act 44 of 1976, it read thus, w.e.f. 28. 11.76:
"24. Rights of registered dealer-Every dealer registered
under this Act shall be entitled to purchase, without pay- C
ment of sales tax, the following goods within the State, on
the authority of his certificate of registration by giving to
the dealer, from whom the goods are purchased, a declara-
tion, duly filled and signed by him, containing such particu-
lars, on such form, obtained from such authority, as may be
prescribed, and in case such form is not available with such D
authority, in such manner as may be prescribed,-
(a) any goods, other than those leviable to tax at first
stage of sale under section 17 or section 13, for the purpose
of-
E
(i) resale in the State; or
(ii) sale in the course of inter-State trade or com-
merce;
(b) containers and packing materials and other goods F
(excluding those liable to tax at the first stage of sale under
section 17 or section 18), specified in his certificate of
registration for use by him in the manufacture, in the State,
of any goods other than those specified in Schedule B, for
the purpose of-
G
(i) sale in the State; or
(ii) S!lle in the course of inter-State trade or com-
merce; or
(iii) sale in the course of export out of the territory of H
354 SUPREME COURT REPORTS (1990) Supp. 2 S.C.R.
India within the meaning of sub-section ( 1) of section 5 of
A the Central Sales Tax Act, 1956."
(b) Act 3 of 1983 renumbered the above as s. 24(1) and added,
with effect from 31.3.83, a proviso each, to clauses (a) and (b). These
provisoes read thus. The proviso to clause (a) was:
B
"Provided that a dealer registered under this Act, shall also
be entitled to purchase barley, without. payment of sales tax
on the authority of his certificate of registration, on fur-
nishing to the selling registered dealer, a declaration refer-
red to above, for sale by him in the course of export outside
the territory of India within the meaning of section 5 of the
c Central Sales Tax Act, 1956."
and that to clause (b) read:
"Provided that a dealer registered under this Act, shall also
D be entitled to purchase, without payment of sales tax, on
the authority of his certificate of registration, goods men-
tioned in clause (b) above, on furnishing to the selling
registered dealer a declaration referred to above, for use by
him in the manufacture, in the State, of scientific goods and
guar gum for the purpose of sale by him in the course of
E export outside the territory of India within the meaning of
sub-section (3) of section 5 of the Central Sales Tax Act.
1956."
It also inserted, with retrospective effect from 1.4. 76, the follo·.ving
sub-section.
F
"(2) Notwithstanding anything contained in form S.T. 15
or the certificate of registration issued under this Act or the
Rules made thereunder, no dealer shall be entitled to claim
the right envisaged in sub-section ( !) so renumbered, for
the period from the first day of April, 1976, to the third day
G of September, 1979 in contravention of the provisions of
sub-section ( 1) so renumbered."
The Act also contained a section (s. 8) validating the notification )
issued under s. 9 read with s. 15 and also validating all levy, assess-
ment and collection of taxes under s. 9 notwithstanding any judgment,
H Jccree or order of any court or other authority.
M.M. & CO. v. STATE OF HARYANA (RANGANATHAN, J.J 355
(c) Act 11 of 1984 changed the marginal heading of the section A
as "Rights and liabilities of registered dealers". It added a clause (c) to.
sub-section ( !) relating to use of the goods in the execution of works
contract in the State, with which we are not concerned. However, it
added a new sub-section (3) with retrospective effect from 27.5. 1971,
to the following effect:
B
"(3) Notwithstanding ·any other provisions of this Act or
any judgment decree or order of any court or other autho-
rity to the contrary, if a dealer who purchases goods, with-
out payment of tax, under sub-section ( l) and fails to use
the goods so purchased for the purposes specified therein,
he shall be liable to pay tax, on the purchase value of such
goods, at the rates notified under section 15, without pre-
c_
judice to the provisions of section 50;
Provided that the tax shall not be levied where tax is
payable on such goods under any other provision of this
Act." D
(d) An amendment of 1986 expanded the proviso to S. 24(\)(b)
by adding "utensils and metal handicrafts" to "scientific goods and
guar gum", as ins. 9(1) proviso.
(e) Act 1 of 1988, effecting from 31.12.1987, omitted the words E
"sub-section (I) of" ins. 24( l)(b)(ii). It also omitted the proviso to
the said clause.
' VI. Section 27
Section 27, which defines "taxable turnover" is not quite rele- F
vant for our_ purposes. We should only like to mention that the pro-
visoes to s. 27(a)(iv), s. 27(b)(iii) ands. 27(c)(ii) inserted by Act44of
1976 w.e.f .. 1.4.76·alJ make specific reference to sales "in the course of
export out of the territory of India within the meaning of sub-section
( 1) of section 5 of the Central Sales Tax Act, 1956". The provisoes to
s. 27(a)(iv), in particular, make a dear contrast between sales falling G
under sub-section (3) and those falling under sub-section(!) of s. 5 of
i the C.S.T. Act.
-~
VII. Validation provision
Act I of 1990 effected no amendments to s. 24 or 27. Buts. 14 of H
356 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.
this Act (which is a validation section on the same lines as those con-
A tained in the earlier amendment Acts) has been referred to in the
course of the arguments before us and can be usefully extracted. It
reads:
"14. Notwithstanding any judgment, decree or order of
B any <!ilurt or tribunal or other authority to the contrary, any
levy, assessment, re-assessment or collection of any amount
by way of tax made or purporting to have been made and
any action taken orthings done or purporting to have been
taken or done before the commencement of the Haryana
General Sales Tax (Amendment and Validation) Act,
1990, in relation to such levy, assessment, re-assessment or
c collection made under the provisions of section 9 or sub-
section (3) of secton 24 of this Act shall be deemed to be as
valid and effective as if such levy, assessment, re-assess-
ment or collection had been made or action taken or things
done under the provisions of clause (p) of section 2, section
D 6, section 15-A, section 17, section 27 and Schedule D
appended to this Act and as amended by the provisions of
the Haryana General Sales Tax (Amendment and Valida-
tion) Act, 1990 and shall not be called in question in any
court or tribunal or other authority and accordingly-
E (i) all acts, proceedings or things done or action
taken by the State Government or by any officer of the
State Government or by any authority, in connection with
the levy, assessment, re-assessment or collection of such a
tax shall, for all purposes be deemed tc be, and to have
always been done or taken in accordance with law;
F
(ii) no suit or other proceedings shall be maintained
or continued in any court or before any authority for the
refund of any such tax so collected; and
(iii) .no court or authority shall enforce a decree or
G order directing the refund of any such tax so collected.
These, then, are the relevant provisions of the Act.
Before turning to the question posed for our consideration, it is
.....
necessary to refer to s. 5(1) of the Central Sales Tax Act, 1956. Thus
H sub-section read as follows:
M.M. & CO. v. STATE OF HARYANA IRANGANATIIAN, J.] 357
"5. When is a sale or purchase of goods said to take place in A
the course of import or export-( I) A sale or purchase of
goods shall be deemed to take place in the course of the
export of the goods out of the territory of India or.ly if the
sale or purchase either occasions such export or is effected
by a transfer of documents of title to the goods after the
goods have crossed the customs frontiers of India." B
This sub-section came up for the consideration of this Court in
Mohammed Sirajuddin v. State, [ 1975] Supp. I S.C.R. 169. In that case
the appellant's goods were exported out of India. The course of the
transaction was that the appellant sold goods to the State Trading
Corporation (S.T.C.) but, to the knowledge of both these parties, the C
goods were to be exported to fulfill contracts entered into by the -
S. T.C. with foreign buyers, the terms of such contracts between the
foreign buyers and the S.T.C. beirig referred to in, and part of, the
appellant's contracts with the S.T.C. The apppellant claimed its sales
to be "sales in the course of export'' and hence exempt under s. 5 of
the C.S.T. Act. This Court, Khanna, J. dissenting, held that the sales D
of the appellant were not exempt u/s 5( I). The appellant had agreed to
sell his goods only to the S.T.C. and there was no provity of contract
between him and the foreign buyer. The court held that the movement
of goods outside India was occasioned by the contract between the
S.T.C. and the foreign buyer and not by that between the appellant
and the S.T.C. The decision caused several practical difficulties and E
called for an amendment of the C.S. T. Act. The object and reasons of
the C.S.T. (Amendment) Act (Act 103 of 1976), may be usefully
extracted. It said:
"According to section 5(1) of the Central Sales Tax Act, a
sale or purchase of goods can qualify as a sale in the course F
of export of the goods out of the territory of India only if
the sale or purchase has occasioned such export or is by a
transfer of documents of title to the goods after gods have
crossed the customs frontiers of India. The Supreme Court
had held (vide: Mohd. Serajuddin v. State of Orissa, 36
S. T.C. 136 that the sale by an Indian exporter from India to G
a foreign importer alone qualifies ·as a sale which has
occasioned the export of the goods. According to the
Export Control Orders, exports of certain goods can be
made only by specified agencies such as the State Trading
Corporation. In other cases also, manufacturers of goods,
particularly in the small-scale and medium sectors, have to H
358 SUPREME COURT REPORTS (1990] Supp. 2 S.C.R.
depend on some experienced export house for exporting
A
the goods because special expertise is needed for carrying
on export trade. A sale of good~ made to an export canalis-
ing agency such as the State Trading Corporation or to an
export house to enable such agency or export house to
export those goods in compliance with an existing contract
B or order is inextricably connected with the export of the
g0ods. Further, if such sales do not qualify as sales in the
course of export, they,would be liable to State sales tax and
there would be a corresponding increase in the price of the
goods. This would make our exports incompetitive in the
fiercely competitive markets. It is, therefore, proposed to
amend, with effect from the beginning of the current finan-
c cial year, section 5 of the Central Sales Tax Act to provide
that the last sale or purchase of any goods preceding the
sale or purchase occasioning export of those goods out of
the territory of India shall also be deemed to be in the
course of such export if such last sale or purchase took
D place after and was for the purpose of complying with the
agreement or order for, or in relation to, such export."
S. 5(3), inserted by the above Amendment Act w.e.f. 1.4. 1976, reads
thus:
E "(3) Notwithstanding anything contained in sub-section
( 1), the last sale or purchase of any goods preceding the
sale or purchase occasioning the export of those goods out
of the territory of India shall also be deemed to be in the
course of such export, if such last sale or purchase took
place after, and was for the purpose of complying with, the
p agreement or order for or in relation to such export."
Now, coming to the facts of the present case, the assessees
purchased raw materials inside the State of Haryana but paid no tax
thereon, as they were registered dealers and furnished the declaration
forms prescribed under s. 24. Their sales of the manufactured .goods
G are to persons who have exported the goods outside India and so, they
claim, they are not liable to pay the tax sought to be imposed on them
under s. 9( I). The department, however, has denied the reliefon the short
ground that the sales effected by the appellants are not sales in the
course of export outside India within the meaning of s. 5( l) of the
C.S. T. Act. They are only "penultimate" sales; they may be deemd to
H be 'export sales' because of the fiction created under S. 5(3) of the
M.M. & CO. v. STATE OF HARYANA IRANGANATHAN, J.] 359
C.S.T. Act but that is not enough to escape from the dutches of the
charge in s. 9(1). A
Sri Rajaram Agarwal, learned counsel for the assessees, con·
tended that the effect of s . .5(3) of the C.S.T. Act is to expand the
scope of s. 5(1) and include within the concept of sales in the course of
export outside India also the 'penultimate' sales dealt with in Mohd. B
Sirajuddin's case (supra). A reference to, and ·the meaning of, section
5( 1) cannot be understood without a reference to section 5(3 ). As a
result of s. 5(3), such penultimate sales become export sales falling
beyond the purview and competence of State legislatures. The provi-
sions in s. 9(1) of the Act need to be interpreted harmoniously and
consistently with the constitutional scheme. S. 9( 1) is a charging
section. Purchases of raw materials in the State used in the manufac- c
ture of goods inside the State attract the tax under s. 9( 1) unless those
manufactured goods are dealt with in one of three ways:
(1) disposed of by way of sale inside the State;
, D
(2) despatched to a place outside the State but by way of a sale in
the course of inter-~tate trade or commerce; or
(3) despatched to a place outside the State but by way of sale in
the course of export outside the territory of India.
E
He submitted that the transactions in the present case fall under cate-
gory (3) above. In the alternative, he submitted that, clearly, as the
assessees had sold goods to other parties in India, those sales must be
either local sales falling under category (I) or inter-State sales falling
under category (2). In any view of the matter, therefore, the assessee°s
purhases of raw materials would not attract tax under s. 9(1). F
On the other hand, Sri Gupta, learned 'counsel for the State.
submitted that there were no facts on record to substantiate the claim
on behalf of the assessee that the sales in question fulfilled the condi-
tions set out ins. 5(3) of the C.S.T. Act, as claimed. He submitted that
even if the claim were to be accepted, the asscssees \vould Qe in nt i G
better position. He fully supported the reasoning of the High Cou• t
and urged that full effect should be given to the words ··within the
meaning of sub-section ( 1) of section Y' which found a place w,
s. 9( l)(b) till they were dropped by Act I of 1988. If due regard be
given to these words, he pointed out, the assessees would be entitled
to an exemption from the impugned purchase tax only if their sale; H
360 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.
were export sales within the meaning of section 5( 1) of the C.S.T. Act
A
which they, admittedly were not. He submitted that the argument that.
to levy the tax imposed bys. 9( 1) in cases covered bys. 5(3) but not
s. 5( 1) of the C.S.T. Act would violate Article 286 of the Constitution,
was misplaced and overlooks the vital circumstances that what
s. 9(!)(b) taxes are the purchases of raw materials and not the
B manufactured goods that were eventually exported. Alternatively, he
submits, s. 9(1)(b) has been declared unconstitutional by this Court in
the Goodyear case [ 1990] 2 SCC 71 and, therefore,, the assessees can
seek no implied exemption from its language. If s. 9 is left out, he
says, the language of s. 6 (as amended) which brings to charge all
purchases and sales in the State would be attracted and so the
impugned taxation of the purchases would be in order. For these
c reasons, he submits that the writ petitions were rightly rejected by the
High Court and that the appeals as well as writ petitions before us
deserve to be dismissed.
It will be convenient first to dispose of the contention dealt with
D by the High Court. For the purposes of this argument we shall assume
that the sales made by the assessees were 'penultimate sales' which
would fall within the purview of section 5(3) of the C.S.T. Act. The
argument on behalf of the Revenue, which has found favour with the
High Court is that section 9( 1) exempts only sales made in the course
of export within the meaning of section 5(1) of the C.S.T. Act but not
E those under section 5(3) of the said Act. After careful consideration
we think that this argument was rightly accepted by the High Court. In
the first place there is no dispute before us that section 5(3) covers a
category of cases which would not otherwise have come within the
purview of section 5( I), as explained in Mohd. Sirajuddin.'s case. The
language of section 9( l)(a)(ii)-later 9( l)(b )-using the words "within
F the meaning of sub-section ( 1) of section 5 of the Central Sales Tax
Act, 1956" have to be given full meaning; in other words, the exemp-
tion under section 9( 1) has to be restricted only to export sales falling
within the scope of section 5( 1). It seems clear, from the circumstances
referred to below, that the legislature deliberately used these words
and intended to give a restricted operatjon to section 9(1)(a)(ii)(b).
G These circumstances are:
(1) Section 9(1)(a)(ii), as originally framed, merely uses
the words "in the course of export outside the territory of India'.
Clause 9( 1)(b) referred to cases where raw materials were
purchased and exported and the word 'export' was defined in
H section 2(c) as meaning "the taking out of the goods from the
M.M. & CO. v. STATE OF HARYANA [RANGANATHAN, J.J 361
State to any place outside it otherwise than by way of sale in the
Course of inter-State trade or commerce." Act 44 of 1976 A
amended the definition of 'export' in section 2(c) by adding the
wide words "or in the course .of export out of the territory of
India" w.e.f. 1.4. 1976. But the same Act narrowed down the
scope of clause (a)(ii) by adding the restrictive words at the end
of the clause. B
(2) If a reference· is made to section 24, one finds that
section 24(1)(iii) refers again to sub-section ( 1) of section 5 of the
Central Sales Tax Act only. However, the language of the two
provisoes simultaneously introduced in section 24(1)(a) and (b)
by Act 3 of 1983 makes interesting reading. The proviso to clause
(a) refers only to "sale by him in the course of export outside the C
territory of India within the meaning of section 5 of the Central
Sales Tax Act, 1956", whereas the proviso to clause (b) refers to
"sale by him in the course of export outside the territory of India
within the meaning of sub-section 3 of section 5 of the Central
Sales Tax Act, 1956". Thus the statute, within the same provi- o
sion, has made. a distinction between a sale in the course of
export within the meaning of section 5 and such a sale within the
meaning of section 5(3 ).
(3) When we turn to s. 27 nex!, we find two provisoes
introduced ins. 27(1)(iv)(a) by Act 44 of 1976, the same amend- E
ing Act that introduced the extra words at the end of
s. 9(1)(a)(ii). These provisoes make a marked contrast between
sales falling under sub-sections (1) and those falling under sub-
section (3) ofs. 5 of the C.S.T. Act.
(4) As will be seen from the extract of the legislative F
amendments set out earlier the legislature has subsequently
deleted the reference to sub-section 3 of section 5 in section
9(l)(b). However, this amendment, which has been made both
in section 9 and in section 24 by Act 1 of 1988 has not been given
any retrospective effect. Considering that the legislation is
replete with instances of retrospective effect (in some cases even G
to as early as a date as 7.9.1955), the failure or omission to give
any retrospective effect to the amendment to section 9 in this
regard is an eloquent pointer to the intention of the legislature.
In view of the circumstances outlined above, we are of the
opinion that the High Court was right in concluding that the assessee H
362 SUPREME COURT REPORTS (1990) Supp. 2 S.C.R.
was not entitled to the exemption under s. 9 because the sales made by
A
him were not sales in the course of export outside the territory of India
within the meaning of section 5( 1) of the Central Sales Tax Act.
Shri Rajaram Agarwal, learned counsel for the assessees raised a
new contention before us, which we have already referred to as an
B alternative contention. This contention which really seems to be
unanswerable appears to have been missed at the stage of the High
Court but this contention is purely one of law and merits considera-
tion. The point made by him was this. There is no dispute that the
assessees have transferred the manufactured goods by way of sale and
that these goods have been despatched to various ports of India. The
exact terms of despatch are not clear and there are no facts on record
c which 'will help us to understand the course of transactions in the
several cases before us. But Shri Agarwal submitted that the sales
made by the assessees can only fall within one of three categories.
They are either local sales or inter-State sales or export sales. Each of
the assessee have sold its goods to another dealer. If that dealer is also
D a resident of Haryana and has taken delivery of the goods in Haryana
and exported them thereafter, the assessees' sales would be local sales.
If the purchaser-dealer of the manufactured goods is in some other
State and the goods have been moved out of Haryana in pursuance of
that sale, they would be inter-State sales. The goods which have been
sold by the assessee must have been delivered to the dealer in1
E pursuance of the sale either withiff the State or outside the State in
India. In either event, it would be a sale covered by the exceptions in
section 9(1). It would be a local sale or inter-State sale. The only third
possibility is that assessee sold the goods to a dealer outside India and
exported the goods in pursuance of that sale in which event it would be
a sale within the meaning of section 5(1) of the Central Sales Tax Act.
F
We think Shri Agarwal is right in saying that any sale effected by
the assessees in the circumstances, which have been set out by us
earlier, must fall in one of three categories. We are unable to conceive
of a fourth category of sale, which could be neither a local sale nor an
inter-State sale nor an export sale. Shri Gupta, on behalf of the State,
G contended that the goods might have been directly moved by the asses-
see to a port for shipment abroad in pursuance of an export contract
entered into by the dealer who purchased from the assessee. Even in
such a case if the transport of goods from the assessee's place of busi-
ness to the port is in pursuance of the terms of the sale, the movement
of the goods would be occasioned by the sale made by the assessee and
H would be an inter-State sale. If, on the other hand, the goods were sent
M.M. & CO. v. STATE OF HARYANA (RANGANATHAN, J.] 363
to the port by the assessee subsequent to .and independent of the sale
made by him, then,. for the purpose of that transport, the assessee A
would only be an agent of the purchaser and the movement of the
goods in pursuance of the contract of sale entered into by the. pur-
chaser and would be one in the course.of export within the meaning of
s. 5(1) of the C.S.T. Act. As pointed out by Sri Agarwal, even in
Mohd. Sirajuddin's case (supra), although the exemption claimed for. B
the sales as export sales was denied, the condusioit of the High Court
that the sales to S.T.C. were inter-State sales chargeable under s. 5(1)
of the C.S.T. Act was upheld. We are, therefore, of the opinion that
this alternative contention urged by the learned counsel for the asses-
see has to be accepted and it has to be held that, since the sales
effected by the assessees fall within one of the three exempted
categories set out in section 9( 1)(b), there can be no levy of purchase c
tax under section 9(1) of the Act.
Faced with this situation, Shri Gupta, for the State, contended
that this argument will not avail the assessees as, according to him,
s. 9(1)(b) of the Act has been declared unconstitutional by this Court D
and is, therefore; non est. It is somewhat curious that such contention
should come from the department which has charged the assessees on
the basis ofs. 9(1)(b). Nevertheless, we proceed to consider this con-
tention, as Sri Gupta says he can support the assessments, alterna-
tively, under s. 6 of the Act, without any aid from s. 9 at all. This
contention, it seems to- us, proceeds on a misconception of the issue E
before, and the ratio of the decision of this Court in the Goodyear
case [ 1990] 2 SCC 71. _That was a case in which certain dealers, having
purchased raw materials and manufactured goods inside the State
despatched those .goods outside the State otherwise than by way of
sale. The State levied a purchase tax on the raw materials u/s 9( !).
Thereupon the assessee contended that the levy of tax in the circums- F
tances was in truth and substance the levy of a tax on the manufactured
goods on the event of their consignment outside the State otherwise
then by way of sale and that the State legislature was not competent to
levy such a tax. This contention was accepted by this Cour~. What was
declared unconstitutional by this Court was, threfore, only the levy of
a tax where raw materials are purchased and used inside the State for G
the manufacture of finished goods which are then simply-and without
any sale-despatched-rather, consigned-outside the State. There is,
however, nothing unconstitutional about the two other consequences
that flow on the language of the clause : one express and the other
implied; one in favour of the Revenue and the other in favour of the
assessee viz. H
~-
364 SUPREME COURT REPORTS [1990) Supp. 2 S.C.R.
(I) that there will be a tax on the purchase of the raw materials if
A
the manufactured goods are disposed of in the State itself
otherwise than by way of sale; and
'(2) that there will be no tax on the purchase of the raw materials
if the manufactured goods are despatched from the State conse-
B quent on a
(i) local sale;
(ii) inter-State sale; or
. (iii) a sale in the course of export.
c
It seems that these two aspects of s. 9(l)(b) survive even after the
judgment of this Court in the Goodyear case (1990) 2 SCC 71.
Shri Gupta, however, drew our attention to certain sentences in
D the headnote as well as the body of the above decision where certain
wider expressions have been used, such as: "s. 9(l)(b) was ultra vires"
"s. 9(1) and 24(3) are constitutionally invalid" "s. 9(l)(c) is ultra
vires" and" ..... the latter part of s. 9(l)(b) is ultra vires and void".
As pointed out above, s. 9( 1) is both a charging and exempting sec1ion.
Even after the decision the charge under a part of clause (b) still
E survives and so also the exemption provided in the latter part of clause
(b). But let us examine what the position would be if we hold, as
contended by Shri Gupta, that the effect of the decision is that the
words "or despatches the manufactured goods to a 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
f territory of India within the meaning of sub-section ( 1) of section 5 of
the Central Sales tax Act, 1956" in s. 9(1)(b) should be deemed to
have been deleted from the statute. Shri Gupta contends that, ifs. 9( !)
is left out of account for this reason, the purchases of raw materials by
the assessee would be liable to tax under s. 6 of the Act. This argument
will now be considered.
G
.The contention of Shri Gupta on this aspect proceeds thus : s. 6,
whicIYis the charging section, both originally and after its retrospective
amendment in 1990, imposes a tax on all sales and purchases effected by
a dealer. In the original section, there was an Exolanation which
restricted the meaning of purchases for the purposes of the section. It
H provided that only purchases of declared goods, goods specified in
M.M. & CO. v. STATE OF HARYANA '[RANGANATHAN, J.J 365
Schedule C and goods falling under s. 9 would be part of the
A
'turnover'. In other words purchases which did not fall under s. 9
i.e. which could not be taxed under section 9, could not be taxed then
under s. 6 either. But the 1990 amendment has omitted this Explana-
tion retrospectively. The result is that' all purchases are now taxable in
the State.
B
This contention is an interesting one but it overlooks the effect of
s. 2(p) read withs. 15 of the Act. Though s. 6, as amended, purports to
make dealers liable to pay tax on their sales as well as purchases, the
actual charge of tax, under s. 15, is only imposed on the sales and pur-
chases that form part of his taxable turnover. To ascertain what this is,
one has to turn to s. 2(p) of the Act. This definition includes, within C
the definition of 'turnover' the purchase value of goods liable to tax
under s. 9 but, the goods presently in question are not laible to tax
under s. 9, not only as contended for the assessees and held by us
above but also on the hypothesis as to the invalidity of s. 9(l)(b) on
·which the present argument on behalf of the Revenue proceeds. The
definition also excludes from its purview "the sale proceds of goods on D
which purchase tax is leviable under this Act" and "the purchase value
of any goods on the sales of which tax is leviable unde this Act". There
can be no dispute that a tax is leviable under the Act on the goods in
question when they are sold by a dealer and, indeed, the assessees
would have had to pay tax on the sales made to-the purchases
effected by-them but for a claim for exemption under s. 24. The E
definition of 'turnover' clearly postulates that goods are either to be
taxed at the point of purchase or sale and the same transaction cannot
be taxed as a sale in the hands of the dealer who sells to the assessees
and as a purchase in the hands of the assessees. The only exception was
the limited class of goods covered by s. 9 but even this exception has
been left out with complete retrospective effect. We do not, therefore, F
think that Sri Gupta is right in arguing that the purchase tax on the raw
materials can be upheld under s. 6 itself even if the charge under s. 9
fails. Explanation 6, inserted in s. 2(p) read, with the provisoes
inserted in s. 24( 1) w .e.f. 3 J.3. 1983 and their amendment in 1986 have
also a bearing in the cases of raw materials purchased for manufacture
of guar gum and utensils where the p_urchase is exempt even if G
purchased by a registered dealer for the purpose of export within the
meaning of s. 5(3) of the C.S.T. Act, 1956--and some of the assessees
before us are such manufacturers-out we le8.ve these amendments
out of account as they are relevant only for purposes of later assess-
ment years. The raw materials purchased by the assessees are goods on
the sales of which tax is leviable under the Act though the.assessees are H
366 SUPREME COURT REPORTS [1990] Supp. 2 S.C.R.
A exempt from payment of such tax by reason of s. 24( 1). The value of
the purchases 'cannot, therefore, be included within the definition of
"turnover" and, consequently, s. 6 will not come to the aid of the
Revenue to support the levy of the impugned sales.
We may also make a reference to sub-section (3) of s. 24,
B
inserted with retrospective effect from· 27.5.1971, which taxes the
purchase of raw materials, when the dealer who purchases them had
claimed exemption under section 24(1) but is found not to have used
the goods for the purposes specified therein i.e. for the manufacture
of goods for the purpose of
c (a) local sale;
(b) inter-State sale; or
(c) sale in the course of export outside the territory of India
within the meaning of sub-section (1) of section 5 of the C.S.T.
D
Act.
This provision will not help the Revenue for two reasons: (i) As held
earlier, while discussing the alternative contention of Shri Agarwal,
the assessees here have effected either local or inter-State sales, if not
sales in the course of export within the meaning of s. 5( 1) of the C.S.T.
E
Act, 1956. It may be pointed out that, after Act I of 1988, this provi-
sion does not tax purchases even in cases where the manufactured
goods are disposed of only by way of 'penultimate sales falling under
s. 5(3) but not under s. 5(1) of the C.S.T. Act, 1956, but this amend-
ment came later and will have to be left out of account for the purpose
of these cases; (ii) This provision has been held to be ultra vires in the
F \,
Goodyear case (supra).
We have; therefore, reached the conclusion that the purchases of
raw materials by the assessees are not chargeable to tax either u/s 9(1)
or s. 6 ors. 24(3). The appeals and petitions are, therefore, allowed.
f
The relevant assessments to tax will be computed/modified accord-
G
ingly. We, howeve·r, make no order regarding costs.
R.S.S. Appeals & Petitions allowed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "sales tax"Sign in to search