Taxability of DEPB transactions upheld where transferable import rights were treated as goods under sales tax law.

Section 61(2)(e) of the Haryana Value Added Tax Act, 2003 was examined on the basis that Duty Entitlement Pass Book receipts were transferable rights and not goods. The challenge argued that, if DEPB was not goods, the State lacked competence under Entry 54 of List II to levy sales tax on its sale or transfer. The Court relied on earlier authority treating transferable import licences and similar scrips as goods, and on Sunrise Associates, which left the earlier binding position intact for REP licences and DEPB transactions until that decision. On that reasoning, the levy on DEPB turnover was sustained and the provision was upheld as valid.

---

---

Issues: Whether section 61(2)(e) of the Haryana Value Added Tax Act, 2003, as amended, was ultra vires on the ground that DEPB receipts were not goods and whether tax could validly be levied on their sale or transfer.

Analysis: The impugned provision imposed tax on the turnover arising from sale or purchase of Duty Entitlement Pass Book transactions and reduced the applicable rate for past transactions. The challenge was founded on the plea that DEPB represented only a right to credit and not goods within the meaning of the sales tax law, and that the State Legislature lacked competence under Entry 54 of List II. The Court noted that earlier authorities had treated similar transferable import licences and scrips as goods and had upheld levy of sales tax. It further relied on the Constitution Bench decision in Sunrise Associates, which had not decided the taxability of REP licences or DEPB, but had overruled the earlier contrary line only prospectively, leaving the earlier binding position intact until the date of that judgment. On that basis, the Court held that the challenge to the levy could not be sustained.

Conclusion: Section 61(2)(e) of the Haryana Value Added Tax Act, 2003 was upheld as valid, and the assessment levying tax on DEPB transactions was sustained.

---