TaxTMI 
TaxTMI 
1994 (9) TMI 309
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....ing vanaspati. Part of the oil so required was being imported through the agency of State Trading Corporation and sold to various manufacturers all over the country. Very often, the State Trading Corporation depot, nearest to the plant, was designated as the source from which the manufacturer was to draw the supply of imported oil. Since the manufacturers were obliged to sell vanaspati at an uniform price, the Government of India proposed to supply imported oil to all the manufacturers, wherever their plants are situated, at an uniform price. It is this aspect which gave rise to certain problems. The rates of sales tax on the sale of oil were not uniform throughout the country. Some State enactments did not levy any tax while others levied tax at rates ranging from 1 per cent to 4 per cent. Complaining of discrimination on this score, a number of vanaspati manufacturers approached the High Courts by way of writ petitions which were all transferred to this Court and numbered as Transferred Case No. 7 of 1981, etc. Some writ petitions were filed directly in this Court under article 32 of the Constitution. All these matters came to be disposed of by this Court by order dated February....
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....2) against the existing State Trading Corporation's scheme about freight equalisation charges included in the release price of imported oils. 2. To consider various relevant issues such as equalisation of incidence of sales tax and other statutory duties like octroi, etc., by giving proper hearing to the vanaspati manufacturers individually, if necessary. 3.. To suggest a suitable formula of periodical revision of freight equalisation charge as to neutralise the escalations in transportation charges of imported oils incurred by the vanaspati manufacturers from time to time. 4.. To recommend measures necessary for achieving the objective of uniform delivered cost of imported oils to vanaspati units as far as possible so as to enable the Government to enforce a uniform price of vanaspati throughout the country more effectively. 5.. To make other recommendations as may be necessary to allay the apprehensions of a section of vanaspati industry about the alleged discriminatory treatment for fixation of release price of imported oils. The Committee was required to submit its final report to Government by the 15th June, 1982. The Committee had to give hearings to vanaspati manu....
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...., etc., if any, may be reimbursed at actuals on production of necessary documentary evidence by the manufacturers. (Para 5.19)." The Government of India accepted the aforesaid recommendation and issued instructions accordingly. It is the interpretation of the said formula that falls for consideration in this writ petition. But before we set out how the controversy has arisen, it would be appropriate to refer to certain provisions of the Uttar Pradesh Sales Tax Act. Section 4-B of the Uttar Pradesh Act provides for special relief to certain manufacturers. Sub-section (2) provides that "where a dealer requires any goods, referred to in sub-section (1), for use in the manufacture by him, in the State, of any notified goods, or in the packing of such notified goods manufactured or processed by him, and such notified goods are intended to be sold by him in the State or in the course of inter-State trade or commerce or in the course of export out of India, he may apply to the assessing authority in such form and manner and within such period, as may be prescribed, for the grant of a recognition certificate in respect thereof; and if the applicant satisfies such requirements and conditi....
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....wn and has been explained by this Court in Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 and Devi Dass Gopal Krishan Pvt. Ltd. v. State of Punjab [1994] 95 STC 170; [1994] 3 JT 239. The State does not wish, in the interest of consuming public and of trade, to tax both the raw material and manufactured goods. If the manufactured goods are sold within the State or sold in the course of inter-State trade or commerce, the State gets the tax. So far as the export out of India is concerned, though the State does not get the tax, it serves the national interest by promoting exports. It is for this reason that the purchase of raw material required for the manufacture of such goods is exempted from tax. But where the manufactured goods are taken out of State without selling them in any of the above three modes, the State says, it will tax the sale/purchase of raw materials. This is for the reason that where the manufactured goods are taken out of the State without selling them in any of the above three modes (sale within State, sale in the course of inter-State trade or commerce and export sale), neither the State gets the tax nor the national interest in export promotion is serv....
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....ot furnished by the petitioner (purchasing dealer) that the Corporation charged and collected (i.e., passed on the burden of) the sales tax. Inasmuch as 50 per cent of its produce is taken out of the State of Uttar Pradesh and sold in some other States in India, the petitioner could not and did not furnish any declaration forms with respect to 50 per cent of its purchases. Furnishing of a declaration for purchase of raw material required for manufacturing goods which are intended to be taken out of the State of Uttar Pradesh and sold in other States, says the petitioner, would have exposed it to penalty and prosecution besides the liability to pay the tax due. Insistence upon furnishing of declarations as a condition for reimbursement, says the petitioner, amounts in effect to denial of the benefit of the "formula" accepted and enforced by the Government of India. Sri Ganesan, learned counsel for the writ petitioner, seeks to explain the words "subject to their furnishing necessary declaration forms, etc., as required under the relevant Sales Tax Acts" in the formula thus: Under some State enactments, furnishing of a declaration does not lead to full exemption from sales tax but ....
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....r point of time, and certainly not for claiming reimbursement of tax. The sales tax enactments do not prescribe any declaration forms for claiming reimbursement in a case like the present one. The claim for reimbursement in this case arises not under the Uttar Pradesh Sales Tax Act but under the formula suggested by the Parmeshwaran Committee and accepted and implemented by the Government of India. This is a matter outside any of the State sales tax enactments-certainly outside the Uttar Pradesh Act. Having regard to the difficulty created by the language employed in this formula-the formula, it may be noted is not statutory but only an administrative decision, no doubt of general application-one has to turn to the object and purpose underlying the formula. It was simply this: since the manufacturers were obliged under the scheme to sell vanaspati at a uniform price all over the country, the imported oil-raw material required for such manufacture-was to be supplied to them at an uniform price. The import of oil was canalised at that time. Only the State Trading Corporation could and did import the oil and State Trading Corporation alone was supplying it to various manufacturers th....
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....led to claim reimbursement under the said formula. Ordinarily, it must be noted, no dealer-purchaser would fail to furnish the declaration if he is entitled to do so but the possibility of such failure cannot be ruled out altogether. At the same time, we must point out that any dealer-manufacturer claiming such reimbursements has to establish to the satisfaction of State Trading Corporation the following facts, which constitute the basis-the underpinning- of the scheme, viz., (1) that the oil purchased by the purchasing dealer-manufacturer from the Corporation was in fact utilised by the purchasing dealer-manufacturer entirely and exclusively for the manufacture of vanaspati, (2) that the entire vanaspati manufactured was in fact sold at the prescribed rate either within the State of Uttar Pradesh or in any other State, as the case may be, and that such sale was subjected to tax under the relevant sales tax enactment and (3) that the non-furnishing of declaration contemplated by section 4-B of the Uttar Pradesh Sales Tax Act read with rule 25-B of the Uttar Pradesh Sales Tax Rules was because the purchasing dealer could not in law furnish such a declaration. Only where the abov....