2013 (8) TMI 869 - HC - VAT and Sales Tax

Supreme Court ruling on purchase tax upheld, appellant to refund tax. Incorrect tribunal interpretation corrected.

The Supreme Court upheld the purchase tax on the sale of levy rice by an exempted rice mill but left the issue of purchase tax on exempted units open for ... Demand for payment of purchase tax on the purchase of paddy made by appellant - held that:- Notwithstanding the fact that the matter of levy of purchase tax on the purchase of paddy in case of exempted units was not decided and rather was left open to be decided in an appropriate case later by the honourable Supreme Court, no part of earlier judgments of the Tribunal (annexure A6) or of this court (annexure A7) would survive to be used as a precedent. Rather, after judgment of the honourable Supreme Court (annexure A9) neither judgment of the Tribunal (annexure A6) nor of this court (annexure A7) could be used as a precedent in the face of pronouncement of the honourable Supreme Court in Civil Appeal No. 8242 of 2010 (Jay Vee Rice and General Mills v. State of Haryana [2010 (9) TMI 881 - SUPREME COURT OF INDIA], leaving the matter to be decided in appellate proceedings. When the impugned order of the Tribunal is glanced through, it transpires that path of making an independent adjudication remained unchartered. Rather, the Tribunal fell into an error in interpretation of the doctrine of merger and faltered consequently. Sequelly, the impugned order of the Tribunal not only lacks legal probity required of it, but also suffers from a factually non-existent and legally unacceptable interpretation of the doctrine of merger. - Leaving the real controversy untouched and undebated, as noticed earlier, the Tribunal fell prey to rendering an untenable explanation qua the doctrine of merger in turn rendering the impugned order to be no order in the eyes of law. - Sequelly, since the impugned order suffers from inherent incurable defect, the same is set aside - Decided in favour of assessee. Issues:1. Assessment of purchase tax on an exempted rice mill under the Haryana General Sales Tax Act.2. Applicability of purchase tax on the procurement of paddy by the rice mill.3. Interpretation of the doctrine of merger in relation to previous judgments and orders.Analysis:1. The appellant, an exempted rice mill, was assessed for purchase tax by the Assessment Authority based on the inclusion of purchase tax in the sale price paid by the Department of Food and Supplies, Haryana. The appellant challenged this assessment through various levels of appeal, including the Haryana Tax Tribunal and the Supreme Court of India. While the Supreme Court upheld the purchase tax on the sale of levy rice, it left the issue of purchase tax on exempted units open for future determination. Subsequently, a second assessment order was issued, demanding payment of purchase tax on the purchase of paddy. The appellant contended that being exempted, it should not be liable for purchase tax until the issue of exemption is conclusively decided by a competent court. The Revenue argued that previous Tribunal and court decisions should stand until the matter is finally resolved by the Supreme Court.2. The main issue was whether the appellant, having collected purchase tax on paddy from the Department of Food and Supplies along with the procurement price, was liable to refund the tax to the Government. The Supreme Court had already ruled that the appellant must refund the purchase tax element to the State. However, the question of whether purchase tax could be levied on the purchase of paddy by exempted units was left open by the Supreme Court for future determination. The Tribunal erred in applying the doctrine of merger and failed to independently adjudicate the issue, leading to an untenable explanation of the doctrine and an order lacking legal probity.3. The Tribunal's failure to address the real controversy and its incorrect interpretation of the doctrine of merger rendered its order legally unacceptable. As a result, the High Court set aside the impugned order and remitted the matter to the Tribunal for fresh adjudication in accordance with the law. The judgment emphasized the need for an independent assessment of the leviability of general purchase tax on exempted units, uninfluenced by previous orders and judgments until the matter is conclusively decided by the appropriate court.This comprehensive analysis highlights the legal complexities and procedural errors in the assessment of purchase tax on an exempted rice mill, emphasizing the importance of independent adjudication and the correct application of legal principles.