M/S United Riceland
Ltd. Vs State of Haryana & ANR.
JUDGMENT
D.K. JAIN, J.:
1.
This
appeal, by special leave, is directed against the judgment dated 3rd August,
2000 delivered by the High Court of Punjab and Haryana, whereby the writ
petition 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 Act, 1973 (for short "the Act") retrospectively w.e.f.
27th May, 1971, has been dismissed.
2.
The
appellant (hereinafter referred to as "the dealer"), a registered
dealer under 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 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 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 alia, the 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 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 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 laces.
5.
Hence,
the present appeal.
6.
Mr.
Ramesh Singh, learned counsel appearing on behalf of the dealer contended that
in Satnam Overseas (Export) & Ors. Vs. State of Haryana & Anr.2, this
Court did not consider the effect of the Haryana General Sales Tax (Second
Amendment) Ordinance No. 2 of 1990 (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 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.68 it is settled
that the date of commencement of an Act which is preceded by an ordinance, is
the date of promulgation of the ordinance. 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.
7.
Per
contra, learned counsel for the respondents submitted that since the provisions
of Ordinance No. 2 of 1990 were incorporated in the Haryana General Sales Tax
(Amendment) Act No.4 of 1991 (for short "Act No. 4 of 1991"), in
light of the judgment of this Court in Fuerst Day Lawson Ltd. (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 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 M/s. Titagarh Paper Mills Ltd. Vs. 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).
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,
a. * * *
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 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. * * * in 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 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 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 B) from any source in the State;
iii.
uses
them in the State in the manufacture of any other goods (referred to as
"manufactured goods"); (iv) disposes of the manufactured goods in any
manner otherwise, than by way of sale or
iv.
dispatches
the manufactured goods to a place outside the State in any manner and provides
that in such a case there shall be levied, a tax, subject to the provisions of
Section 17, on the purchase of raw 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-State trade or commerce, or
(ii) in the course of
export outside the territory of India, within the meaning of Section 5 of the
CST Act. It was emphasised that the exemptions contained in Section 9(1)(b) of
the Act were confined to cases of impost levied there under 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.
State of A.P. & Ors.9 and K.B. Handicrafts Emporium & Ors. Vs. State of
Haryana & Ors.
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), 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 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."
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: "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 May, 1971. Presently, we are concerned with
Section 15-A as substituted by Act No. 9 of 1993 retrospectively from 27th May,
1971. It provides:9 "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 restrictions, as may be
prescribed—
(i) 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
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 (ii)
when no tax is leviable on the sale of manufactured 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 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. 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 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 this Court in Satnam Overseas (Export) (supra), wherein
this Court, while upholding the constitutionality of Act 9 of 1993,
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 other goods. In the light of 8 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 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. 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 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
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: "
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 by this Court in
Murli 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 regard to levy of purchase tax on paddy; 9 (3) adjustment of
purchase tax paid on paddy (raw material) is permissible under Section 15-A of
the Haryana Act during the relevant period; (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 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 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. 15
th October, 1990.
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
abundantly clear that an ordinance operates in the field it 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 and
unquestionably, subject to the same inhibitions. In those inhibitions lie the
safety of the people." This view has been approved and reiterated in other
Constitution Bench decisions. (See: R.K. Garg (supra); T. Venkata Reddy &
Ors. Vs. State of Andhra Pradesh11 and Fuerst Day Lawson Ltd. (supra).)
15.
Examined
on the touch-stone of the afore-noted legal 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, 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 (Exports) (supra).
16.
In
light of the foregoing discussion, the appeal is partly 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.
17.
In
the facts and circumstances of the case, we make no order as to costs.
..........................................
(D.K. JAIN, J.)
...........................................
(ANIL R. DAVE, J.)
NEW
DELHI;
JANUARY
7, 2011. (RS)
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