Composition levy cannot create sales tax liability before business commencement under the Haryana sales tax rules.

A composition provision under a taxing statute cannot be used to levy sales tax for a period before the business begins operations. On the admitted facts, liability under the Haryana sales tax framework commenced only when the brick-kiln started functioning on 2 November 1989, and there was no legal basis to extend tax liability to an earlier period. The later proviso to rule 39-A(8) also confirmed that a new brick-kiln is liable only from the quarter in which it is operated. Tax paid under protest was therefore to be adjusted accordingly.

---

---

Issues: Whether the petitioner was liable to pay sales tax for any period prior to commencement of business on 2 November 1989 under rule 39-A(8) of the Haryana General Sales Tax Rules, 1975 read with section 26 of the Haryana General Sales Tax Act, 1973.

Analysis: Section 26 authorises the State Government to accept a lump sum in lieu of tax by way of composition for any period, and the rule framed under it could only prescribe the method for working out that amount for a period during which tax was payable. A composition formula could not be used to impose tax for a period when the business had not yet started. On the admitted facts, the liability to pay tax commenced only from 2 November 1989, and there was no legal basis to extend that liability to an earlier period. The later proviso added to rule 39-A(8) also reinforced that a new brick-kiln was liable only from the quarter in which it was operated.

Conclusion: The petitioner was not liable to pay sales tax prior to 2 November 1989, and the tax paid under protest was to be adjusted accordingly.

Ratio Decidendi: A composition provision under a taxing statute cannot be applied to levy tax for a period before the taxable business has commenced, unless the statute or rule clearly and validly provides for such liability.

---