Purchase tax on raw material and reassessment under a non obstante clause were upheld against constitutional and limitation challenges.

Purchase tax on raw material used in manufacture was upheld as not offending Article 301, because the impost was levied on purchase and did not directly and immediately restrict trade; any effect on movement of goods was only incidental, so Article 304(b) did not bar it. The reassessment machinery was also upheld: although Section 31 prescribed the ordinary reassessment period, Section 32, with its non obstante clause, permitted reassessment at any time where action was required to give effect to a court order. On that reasoning, the reassessment orders and demand notices were treated as within jurisdiction and not time-barred.

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Issues: (i) whether the levy of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973 was violative of Article 301 of the Constitution of India and outside the protection of Article 304(b); (ii) whether the impugned reassessment orders and demand notices were void for want of jurisdiction or limitation under Sections 31 and 32 of the Haryana General Sales Tax Act, 1973.

Issue (i): whether the levy of purchase tax under Section 9 of the Haryana General Sales Tax Act, 1973 was violative of Article 301 of the Constitution of India and outside the protection of Article 304(b).

Analysis: The levy was on the purchase of raw material by the manufacturer and not on the sale or consignment of the finished goods. The tax became payable only in specified situations where the manufactured goods were not sold within the State or were otherwise dealt with in a manner not yielding revenue, but that did not change the nature of the impost. A tax does not offend Article 301 unless it directly and immediately restricts the free flow of trade; an incidental or consequential effect on movement is insufficient. The impugned levy did not discriminate between goods or impose a direct barrier on movement of trade, and the authorities relied on by the petitioners concerned different forms of discriminatory taxation or cess on despatch, which were not comparable.

Conclusion: The levy of purchase tax under Section 9 was held to be valid and not violative of Article 301 or Article 304(b), and this issue was decided against the assessee.

Issue (ii): whether the impugned reassessment orders and demand notices were void for want of jurisdiction or limitation under Sections 31 and 32 of the Haryana General Sales Tax Act, 1973.

Analysis: Section 31 prescribed the ordinary period for reassessment, but Section 32 contained a non obstante clause authorising assessment or reassessment at any time when it was required in consequence of, or to give effect to, an order made by a court or other authority. Since the earlier assessment orders had been quashed and fresh action was taken pursuant to the legal position then prevailing, the special bar of limitation did not apply. The Income-tax decisions cited by the petitioners were inapposite because they did not involve a provision comparable to Section 32.

Conclusion: The reassessment orders were not barred by limitation and were within jurisdiction, and this issue was decided against the assessee.

Final Conclusion: The writ petitions failed on both the constitutional challenge to the purchase tax levy and the challenge based on limitation and jurisdiction, so the impugned assessments and demand notices stood sustained.

Ratio Decidendi: A tax on the purchase of raw material used in manufacture does not become a prohibited tax on trade merely because liability is triggered on subsequent disposal of the manufactured goods, and a statutory provision containing a non obstante clause may authorise reassessment without the ordinary limitation where fresh action is required to give effect to a court order.

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