Sales tax certainty and exemption liability: statutory liability survives exemption, while clarificatory instructions may guide scrutiny of paper transactions.

A sales tax provision is not vague where it clearly identifies the taxable commodity, the stage of levy, and the person liable to pay tax; on that basis, the levy on paddy at the last purchase in the State was treated as sufficiently certain and consistent with constitutional limits. Exemption from payment of tax does not extinguish the underlying statutory liability, but only suspends collection while the exemption operates, so an exempted unit remains within the class of dealers liable under the Act. Clarificatory instructions requiring scrutiny of transactions on their merits did not curtail statutory discretion, and sales found to be mere paper transactions could be ignored for tax purposes.

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Issues: (i) Whether section 17 and entry 2-B of Schedule D of the Haryana General Sales Tax Act, 1973, were vague or unconstitutional; (ii) whether a dealer exempted from payment of tax under section 13 of the Haryana General Sales Tax Act, 1973, continued to remain a dealer liable to pay tax; (iii) whether the impugned instructions interfered with the statutory discretion of the assessing authorities and whether the alleged sales to exempted units could be ignored as paper transactions.

Issue (i): Whether section 17 and entry 2-B of Schedule D of the Haryana General Sales Tax Act, 1973, were vague or unconstitutional.

Analysis: The charging scheme specified the taxable commodity, the stage of levy, and the person liable to pay tax. The levy on paddy was at the last purchase in the State by a dealer liable to pay tax, which made the charge sufficiently certain. The provisions were also consistent with the treatment of declared goods and did not offend the constitutional limitations relied upon.

Conclusion: The impugned provisions were held to be valid and not violative of Articles 14 and 286 of the Constitution of India.

Issue (ii): Whether a dealer exempted from payment of tax under section 13 of the Haryana General Sales Tax Act, 1973, continued to remain a dealer liable to pay tax.

Analysis: Exemption from payment of tax does not extinguish the underlying statutory liability. It only relieves the department from collecting tax so long as the exemption operates. The exemption is conditional, and the statute itself contemplates that liability may revive on breach of conditions. Therefore, an exempted unit remains within the class of dealers liable to pay tax under the Act. At the same time, if the sale to the exempted unit is genuine, the seller is not to be fastened with purchase tax merely because the purchaser is exempted.

Conclusion: Exempted dealers were held to remain dealers liable to pay tax under the Act.

Issue (iii): Whether the impugned instructions interfered with the statutory discretion of the assessing authorities and whether the alleged sales to exempted units could be ignored as paper transactions.

Analysis: The instructions were only an elucidation of the statutory position and required scrutiny of transactions on their merits. They did not direct any predetermined outcome or curtail independent decision-making. On the facts, the assessing authority had recorded that the transactions in question were not genuine and were merely paper transactions, which justified treatment of the sales as ineffective for tax purposes.

Conclusion: The instructions were upheld as merely clarificatory, and the finding of paper transactions was not disturbed.

Final Conclusion: The writ petitions succeeded only to a limited extent by preserving the petitioners' right to pursue statutory appeals, while the substantive challenge to the levy and the status of exempted dealers failed.

Ratio Decidendi: A tax provision is not vague when it clearly identifies the taxable commodity, the stage of levy, and the person liable to pay tax, and exemption from tax does not by itself extinguish the dealer's underlying liability under the taxing statute.

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