Notional sales tax liability excludes sales to registered dealers when computing taxable turnover for exemption adjustment.

Under Rule 28A(2)(n) of the Haryana General Sales Tax Rules, 1975, notional sales tax liability is computed by reference to taxable turnover of the finished products of an eligible industrial unit. Sales made to registered dealers were held not includible in that computation unless the rule expressly requires their inclusion. The earlier interpretation of the same provision was followed, and the turnover attributable to such sales had to be deducted while calculating the exemption-related liability. As a result, the impugned orders were set aside and relief was granted to exclude sales to registered dealers from the notional tax liability calculation.

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Issues: Whether sales made to registered dealers were includible while computing notional sales tax liability under Rule 28A(2)(n) of the Haryana General Sales Tax Rules, 1975.

Analysis: The dispute turned on the meaning of "notional sales tax liability" under Rule 28A(2)(n), which computes the tax payable on the finished products of an eligible industrial unit at the prescribed maximum rates. The Court followed the earlier decision applying the same principle and held that sales to registered dealers were not to be brought into the computation of notional liability. The direction was to deduct such sales while working out taxable turnover, with the consequence that they would not form part of the notional tax liability for the relevant period.

Conclusion: The issue was decided in favour of the assessee and against the Revenue; sales to registered dealers were held to be outside the computation of notional sales tax liability.

Final Conclusion: The impugned orders were set aside and relief was granted by directing exclusion of sales to registered dealers from the taxable turnover computation for the purpose of exemption adjustment.

Ratio Decidendi: Where the governing exemption rule computes notional sales tax liability by reference to taxable turnover, sales made to registered dealers are not includible unless the rule expressly requires their inclusion.

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