Punjab-Haryana High Court
State Of Haryana And Anr. vs Ambika Oil And Soap Industries on 8 January, 1996
Equivalent citations: (1996)114PLR163
Author: Ashok Bhan
Bench: Ashok Bhan
JUDGMENT N.K. Sodhi, J.
1. This order will dispose of three Sales Tax Cases 15, 16 and 17 of 1988 filed by the State of Haryana under Section 42(2) of the Haryana General Sales Tax Act, 1973 (for short, the Act) wherein a direction is sought to the Sales Tax Tribunal, Haryana to refer to this Court the following three questions of law which, according to the Revenue, arise from the order of the Tribunal dated 19.1.1987 :-
"i) Whether on the facts and circumstances of the case the Assessing Authority and the Joint Excise and Taxation Commissioner (Appeals), Rohtak rightly disallowed the claim of deductions in the amount of Rs. 24,982.97 and Rs. 11,404/during the assessment years 1977-78 and 1978-79, respectively, of sale of cotton seed to M/s Sushil Trading Company and M/s Atma Ram Ram Lal, Bhiwani, as ingenuine.
ii) Whether on the facts and circumstances of the case Assessing Authority rightly used its best judgment estimate and worked out the sale of cotton seed in the amount of Rs. 4,20,000/-, 9,77,000/- and Rs. 4,27,794/- in each of the three years 1977-78, 1978-79 and 1979-80 respectively, purchased from within the State on the strength of registration certificate without payment of tax for purposes specified in Section 24 of the Haryana General Sales Tax Act, 1973 and used by the respondent without reasonable excuse in the manufacture of goods sent for sale.
iii) Whether on the facts and circumstances of the case the Assessing Authority for misuse of the registration certificate rightly invoked penal provisions of Section 50 of the Haryana General Sales Tax Act, 1973, in all the three years i.e. 1977-78, 1978-79 and 1979-80."
2. The assessee is engaged in the business of resale of cotton seeds and manufacture of cotton seed oil and khal etc. It purchased cotton seeds from within the State of Haryana on the strength of its registration certificate without payment of tax and also from outside the State of Haryana on furnishing 'C' forms and after paying central sales tax under the Central Sales Act, 1956. The oil and khal as manufactured was sold within the State of Haryana in the course of trade or commerce and also consigned for sale on consignment basis outside Haryana. The dealer claimed that cotton seeds used in the manufacture of oil and khal in consignment dispatches had been imported and did not attract any tax liability. The Assessing Authority on the other hand, took the view that the dealer could not prove clearly that only the imported cotton seeds were used in the manufacture of oil and khal sent on consignment basis and on the basis of best judgment determined the proportion of cotton seeds used in consignment sale taking into account the purchases made from within Haryana and outside the State. On this basis, the Assessing Authority worked out that cotton seeds worth Rs. 4,20,000/- in 1977-78, Rs. 9,77,000/- in 1978-79 and Rs. 4,27,794/ in 1979-80 purchased from within the State on the strength of registration certificate without payment of tax were used without reasonable excuse in the manufacture of goods sent for sale outside Haryana on consignment basis. The Assessing Authority did not levy tax on these purchases but held that the dealer became liable to penal action under Section 50 of the Act and imposed penalties for these three years. The dealer claimed deductions to the extent the-cotton seeds were sold to registered dealers. These deductions were disallowed by the Assessing Authority as ingenuine sales and the order was upheld in appeal. In second appeal, the Appellate Tribunal reversed the findings of the Assessing Authority on the second issue and held that it had not been conclusively established that the sales were not genuine. The order of the Assessing Authority in this regard was set aside. As regards the first point, the Tribunal found that large quantities of oil and khal were sent outside the State for sale on consignment basis and that the dealer had not maintained separate accounts of cotton seeds purchased from within the State and imported from other States. The Tribunal also found that adoption of ratio of 5:7 by the Assessing Authority in respect of the year 1977-78 and other ratios in the other two relevant years was not logical. According to the Tribunal the Assessing Authority should have gone into the question of determining how much oil and khal could have been manufactured out of the quantity purchased from within the State and imported from outside the State and examined whether the quantity exported could have been produced out of the quantity of total cotton seeds imported from outside the State. If the total quantity exported turned out to be higher than the quantity that would have been produced out of the total cotton seeds imported, only then it could be held that part of the, raw material purchased from within the State was used for the manufacture of oil and khal for sale outside the State. The case was remanded to the Assessing Authority to re-examine this issue in this light. Feeling aggrieved by the order of remand, the State of Haryana filed applications before the Tribunal under Section 32(I) of the Act requiring it to refer the aforesaid three questions of law to this Court for its opinion. The applications have been rejected holding that no question of law needs to be referred to this Court as, according to the Tribunal, the issue to be re-examined by the Assessing Authourity was in conformity with the judgments reported as Chittarmal Rani Dayal v. Commissioner of Sales Tax, 52 S.T.C. 18, Commissioner, Sales Tax v. Ganesh Flour Mills Co. Ltd., 52 S.T.C. 24, Commissioner of Sales Tax v. Barar Oil Industries, 36 S.T.C. 473 and The State of Madras v. V.P.S.A. Narayana Nadar and Co., 21 S.T.C. 25.
3. We have heard counsel for the petitioner and perused the order of the Tribunal dated 19.1.1987 remanding the case to the Assessing Authority and also the order dated 8.12.1987 whereby the three applications for making reference to this Court have been declined. We are of the opinion that the order of the Tribunal dated 19.1.1987 is correct and the/Assessing Authority has only been called upon to find out how much oil and khal would have been manufactured out of the quantity purchased from within the State and imported from outside the State and further whether the quantity exported could have been produced out of the total quantity of cotton seeds imported from outside the State. Before the dealer can be held liable for violating the declarations furnished under Section 24 of the Act, it is necessary for the Assessing Authority to examine what the Tribunal had directed it to do. The Tribunal was thus right in holding that no question of law arises from its order dated 19.1.1987.
4. Consequently, these applications are dismissed with no order as to costs.