Haryana General Sales Tax Act, 1973: Section 9 (Prior to its amendment by Act No. 11 of 1979) Purchase Tax-Provision for levy of purchase tax on 'Disposal' of manufactured goods-Notification- (No. S.O 119/H.A. 20/73/Ss. 9 & 15/74 dated July 19, 1974)-Levy of tax on mere despatch of goods to the dealers themselves outside the -State-Validity of.

Section 9(1)(b) (As amended by Haryana General Sales Tax (Amendment and Validation Act), 1983-Purchase Tax Taxing of purchase of raw material if goods manufactured therefrom despatched outside the State otherwise than by way of sale in the course of inter State trade-Whether taxing of consignments in the course of inter State trade-Whether beyond the legislative competence of State Legisla- ture-Effect of Constitution (Forty-Sixth) Amendment Act, 1982.

Section 9(1)(c) Purchase tax on Exports-Food Corporation of India-Purchase of foodgrains from farmers within the State Des- patch of foodgrains to its Branches outside the State-Levy of Tax at the Point of Despatch-Validity of.

Section 24(3)-Validity of:

Haryana General Sales Tax (Amendment and Validation) Act, 1983- Law declared ultra vires State Legislature-Validating Act-No change made in substantive law mere direction to ignore judgment-Whether void.

Section 50-Penalty Charging provision held ultra vires- Penalty proceedings based on charging provision whether invalid.

Bombay Sales Tax Act 1959: Section 13-AA (As inserted by Maharashtra Act XXVIII of 1982) Scope, effect and validity of. Purchase tax-Raw material purchased by paying tax used in the manufacture of goods-Manufactured goods despatched to Agents in other States-Levy of Additional Tax-Whether tax on the consignment A of manufactured goods outside the State-Whether beyond the legislattive competence of State Legislature-Whether violative of Articles 14 and 30 1 of the Constitution of India.

Constitution of India, 1950: Article 14 Section 13-AA of the Bombay Sales Tax Act, 1959 (As inserted by Maharashtra Act XXVIII of 1982) Vires of.

Articles 245 and 246-Doctrine of Pith and Substance-What is- Test for determination-Legislative competence-Relevancy of pith and substance rule.

Article 269(1)(h)-Constitution (Forty-Sixth) Amendment Act, 1982-Object and effect of.

Article 301-Freedom of Trade Commerce and Intercourse Bombay Sales Tax Act, 1959 Section 13-AA (As inserted by Maharashtra Act XXVIII of 1982)-Vires of-Imposition of Additional purchase tax-Permissibility of.

Schedule VII-Entries in the Legislative Lists Only demarcate legislative field-Do not confer legislative powers.

Statutory Interpretation: Rules of interpretation of statutes- applicability of to interpretation of Constitution Constitution-Not to be interpreted in a narrow pedantic sense.

Fiscal statutes-Tax liability Whether can be determined by reference to interpretation of a statute other than the statute creating liability Should be construed strictly-Assumptions and presumption in interpretation of fiscal law-Whether permissible.

Determination of nature of a tax-Standard or measure on which the tax is levied-Whether relevant and conclusive-Courts whether to look into Pith and Substance Rule.

Taxable event-Charging event What is-Test for determination-What is-Stages of taxation explained.

Excise duty Sales Tax-Distinction between-Tax on sale of goods-Tax on use or consumption of goods-Distinction between- Reasonable construction should be followed and literal construction to be avoided if that defeats the manifest object and purpose of the Act.

Mischief Rule: Provisions of Constitutional changes-To be construed in the context of Mischief Rule.

Practice and Procedure: Precedent-What is A decision on a

question which has not been argued-Whether can be treated as precedent.

Words and Phrases: 'Disposal'-Meaning of.

The appellant/petitioner company-Good Year India Limited-a registered dealer both under the Haryana General Sales Tax Act, 1973 and Central Sales Tax Act, 1956, was manufacturing automobile tyres and tubes at Ballabgarh in the State of Haryana. For the said manufacturing activity it was purchasing various kinds of raw mate- rials both within the State and from outside the State of Haryana. The Company was despatching these manufactured goods viz. tyres and tubes to its own branches and sales depots outside the State of Haryana.

The assessing authority imposed upon the appellant company the purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 in view of the despatches made by it of the manufactured goods to its various depots-outside-the-State.

The petitioner company filed writ petition in the Punjab and Haryana High Court challenging the validity of the Notification levying the tax. A Division Bench of the High Court allowed the petition holding that disposal of goods being separate and distinct from despatch thereof, a mere despatch of goods out of the State by a dealer to his own branch while retaining both the title and possession thereof does not come wittrin the ambit of the phrase "disposes of the manufactured goods in any manner otherwise than by way of sale", as employed in Section 9(1)(a)(ii) of the Act. Accordingly the High Court set aside the assessment orders and quashed the impugned Notification as ultra vires of section 9 on the ground that whereas Section 9 provided only for the levy of purchase tax on the disposal of the manufacture goods, the impugned Notification makes mere despatch of goods to the dealer themselves taxable. To override the effect of the said judgment the Haryana Legislature enacted Haryana General Sales Tax (Amendment and Validation) Act 1983 where by Section 9 of the Act was amended with retrospective effect to include within its sweep the despatch of manufactured goods to a place outside the State in any manner 1 otherwise than by way of sale. The impugned Notification and the consequential action taken thereunder were also validated.

The petitioner company filed writ petitions challenging the assessments. The High Court allowed the petitions holding section 9(1)(b) of the Haryana General Sales Tax Act 1973 as amended by the Haryana General Sales Tax (Amendment and Validation) Act, 1983 in so far as it levied a purchase tax on the consignment of goods outside the State in the course of inter-State trade or commerce was beyond the legislative competence of the State of Haryana and was void and inoperative because it intruded and trespassed into an arena exclusively meant for taxation by the Union of India under Entry 92-B of List 1 of the Seventh Schedule. Accordingly the High Court set aside the amended provisions of section 9 as also the retrospective validation of the Notification and the consequential validation of all actions taken thereunder. Against this decision of the High Court, State of Haryana preferred Special Leave Petitions in this Court.

During the pendency of these Special Leave Petitions, the asses- sing authority issued Show-cause notices asking the petitioner company ☐ to show-cause why in addition to the purchase tax, it should not be liable to penalty as well. The Petitioner company again filed writ petitions in the Punjab & Haryana High Court challenging the validity of these notices. In the meantime a Full Bench of the High Court decided the question again and overruling the decision of the earlier Division Bench held that the taxing event was the act of purchase and not the act of despatch of the consignment. The Full Bench of the High Court held that section 9(1)(b) as amended was neither invalid nor ultra vires. Against the aforesaid judgment of the Full Bench the Petitioner Company filed appeals in this Court. All these questions are the subject matters of these appeals.

In the connected appeals, the Food Corporation of India was procuring food-grains from the farmers through commission agents in the mandis of Haryana and despatching them to its own branches in the deficit State of the country. The Corporation branches in the recipient States were supplying these stocks to the State agencies/Fair Price Shops and were also paying tax as per the provisions of the Sales Tax law of the respective States. Some of the stocks were distributed within the State of Haryana for the public distribution system for which sales tax was charged and deposited with the sales-tax depots as per the Haryana General Sales Tax Act, 1973. In respect of the inter-State despatch of wheat and other food-grains by the Food Corporation of India to its own branches tax was attracted at the time of despatch  under section 9(1 )( c) of the 'Haryana Act. The Food Corporation of  India impugned the levy of tax.

In the other connected appeals the appellant companies-Hindus- tan Lever Ltd. and Wipro Products were manufacturing vanaspati, soaps, chemicals and agro chemicals. For the said manufacturing 3 activities, they were purchasing non-essential vegetable oil (VNE oil) and other raw materials and were paying purchase tax @4% under section 3 of the Bombay Sales Tax Act, 1959. The VNE oil was subse- quently used by the appellant companies in the manufacture of vanaspati and soaps. The finished products manufactured by the appellant companies viz. vanaspati and soaps used to be despatched outside the State of Maharashtra to their clearing and forwarding agents. The assessing authority levied additional purchase tax @ 2% under section 13-AA of the Act on the purchase of said goods-VNE oil.

The appellant companies filed writ petitions in the High Court challenging the orders of the assessing authority levying the additional tax of 2% and also the vires of section 13-AA of the Bombay Sales Tax Act, 1959 under which the additional tax was levied, contending that the additional tax of 2% levied on raw materials, where the finished goods manufactured therefrom were despatched outside the State was in the nature of consignment tax which was not within the legislative competence of the State Legislature.

The High Court dismissed the petitions holding (i) the additional purchase tax levied under section 13-AA of the Act was on the purchase value of VNE oil used in the manufacturing of goods transferred outside the State and not on the value of the manufactured goods so transfer- red; (ii) the State Legislature was competent to levy the tax under Entry 54 of the State List in the Seventh Schedule to the Constitution, and (iii) Section 13-AA was not violative of either Article 14 or Article 301 of the Constitution of India.

Against the decision of the High Court appellant companies filed appeal in this Court.