Court rules against imposition of purchase tax on goods sent to branches outside Haryana under sales tax law.

The court held that the mere despatch of manufactured goods to branches outside Haryana, while retaining title and possession, does not constitute "disposes of the manufactured goods in any manner otherwise than by way of sale" under section 9(1)(a)(ii) of the Haryana General Sales Tax Act, 1973. The notification imposing purchase tax on such despatches was deemed ultra vires and struck down as it went beyond the scope of the Act. The court allowed the writ petitions, set aside assessment orders based on the invalidated notification, and permitted reassessment without its consideration, with each party bearing their own costs.

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Issues Involved:
1. Whether the despatch of manufactured goods to branches outside Haryana constitutes "disposes of the manufactured goods in any manner otherwise than by way of sale" u/s 9(1)(a)(ii) of the Haryana General Sales Tax Act, 1973.
2. Validity of Notification No. S.O. 119/H.A. 20/73/Ss. 9 and 15/74 dated 19th July, 1974, issued u/s 9 and sub-section (1) of section 15 of the Haryana General Sales Tax Act, 1973.

Summary:

1. Despatch of Manufactured Goods:
The core issue was whether the mere despatch of manufactured goods by a dealer to its branches outside Haryana, while retaining both title and possession, falls within the ambit of "disposes of the manufactured goods in any manner otherwise than by way of sale" u/s 9(1)(a)(ii) of the Haryana General Sales Tax Act, 1973. The court held that the phrase "disposes of" implies a minimum of forsaking control over the goods, if not the title. Therefore, mere despatch of goods to oneself does not constitute disposal. The court emphasized that "disposes of" involves relinquishing control or title, which does not occur when goods are merely transferred to another branch of the same dealer.

2. Validity of Notification No. S.O. 119/H.A. 20/73/Ss. 9 and 15/74:
The notification in question levied purchase tax on the despatch of goods to branches outside Haryana. The court found that this notification extended beyond the scope of section 9 of the Act, which only provided for the levy of purchase tax on the disposal of manufactured goods. The notification, by making mere despatch taxable, effectively legislated a new tax, which it could not do. Consequently, the notification was declared ultra vires and struck down.

Conclusion:
The court concluded that the mere despatch of goods to branches outside Haryana does not amount to disposal u/s 9(1)(a)(ii) of the Act. The impugned notification was held to be beyond the scope of the parent section and was struck down. The assessment orders based on this notification were also set aside, with the Assessing Authority allowed to reassess the matter without considering the invalidated notification. The writ petitions were allowed, with parties bearing their own costs.

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