Purchase tax on manufactured goods taken out of Haryana may apply where later sale outside the State is fact-dependent.

Purchase tax may be levied on raw material bought in Haryana and used to manufacture goods taken out of the State without an intra-State, inter-State or export sale, where those goods are later sold outside the State or as a penultimate export sale. The text states that, after Hotel Balaji, this forms a separate fourth category of transactions and the true character of the later sale must be determined on facts by the competent authority. It further clarifies that Murli Manohar cannot be read as excluding that category and stands limited accordingly.

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Issues: (i) Whether purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 could be levied on raw material purchased in Haryana and used to manufacture goods later taken outside the State and sold to dealers or exporters; (ii) whether the earlier decision in Murli Manohar required clarification in the light of Hotel Balaji.

Issue (i): Whether purchase tax under section 9 of the Haryana General Sales Tax Act, 1973 could be levied on raw material purchased in Haryana and used to manufacture goods later taken outside the State and sold to dealers or exporters.

Analysis: The Court stated that, after the clarification given by Hotel Balaji, there is a fourth category in addition to local sales, inter-State sales and export sales, namely cases where goods are taken out of Haryana without a sale and are later sold outside the State. In such situations, the subsequent sale may be a sale in Delhi or a penultimate sale under section 5(3) of the Central Sales Tax Act, 1956, and the levy of purchase tax on the raw material used in manufacturing those goods is permissible under section 9 of the State Act.

Conclusion: The levy of purchase tax was upheld as legally permissible in the stated category of transactions, subject to factual determination by the appropriate authority.

Issue (ii): Whether the earlier decision in Murli Manohar required clarification in the light of Hotel Balaji.

Analysis: The Court explained that Murli Manohar had proceeded on the then-prevailing understanding in Goodyear, but Hotel Balaji later held that purchase tax could be levied where goods manufactured from raw material purchased in Haryana are taken out of the State without an intra-State sale, inter-State sale or export sale within section 5(1). The Court therefore clarified that Murli Manohar could not be read as excluding this fourth category and that classification of the sale remains a matter for the assessing authority on facts.

Conclusion: Murli Manohar stood clarified and limited accordingly.

Final Conclusion: The Court declared the governing legal position on purchase tax and sale classification, but left the individual writ petitioners to pursue factual determination before the competent authorities under the Act.

Ratio Decidendi: Where goods manufactured from raw material purchased in Haryana are taken out of the State without effecting a sale, and are thereafter sold outside the State or as a penultimate export sale, purchase tax on the raw material may be levied under section 9 of the Haryana Act; the true character of the sale is a question of fact for the competent authority.

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