TaxTMI 
TaxTMI 
2004 (4) TMI 292
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.... for sale of rice to the exporter, in view of section 5(3) read with section 15(ca) of the Central Sales Tax Act, 1956 (hereinafter referred to as "the 1956 Act"). 3.. For the sake of convenience, we may refer to the facts of Civil Appeal Nos. 3674-3710 of 2002. Appellant is the miller. It produces paddy, processes it and sells rice to the exporter who exports it out of India. In the assessment proceedings, the appellant claimed that in view of article 286 of the Constitution and sections 5(3) and 15(ca) of the 1956 Act, the State was not competent to levy purchase tax on the paddy purchased by it for sale of rice to the exporter. The appellant filed sales tax returns for four assessment years 1996-1997 to 1999-2000 in accordance with section 25 of the Haryana General Sales Tax Act, 1973 (hereinafter referred to as "the 1973 Act"). On August 16, 1999, the Sales Tax Tribunal accepted a similar claim of dealer M/s. Veerumal Monga & Sons vide Sales Tax Appeal No. 698 of 1998-99. Later in review by the State, the Tribunal held that the assessee was not entitled to exemption from payment of purchase tax on paddy. In pursuance of the order passed by the Tribunal, the assessing authori....
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....into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. (3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export. Section 15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State.-Every sales tax law of a State shall, insofar as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed four per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage: (b) where a tax has been lev....
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....ment of tax: Provided that this sub-section shall not apply to a dealer who deals exclusively in goods specified in Schedule B or who executes a sub-contract with a contractor who is liable to pay tax in respect of the works contract of which the sub-contract is a part: Provided further that in the case of a dealer,- (a) who imports any goods for sale or for use in manufacturing or processing any goods for sale, the liability to pay tax shall commence from the date on which he imports such goods; (b) who manufactures or processes any goods for sale, the liability to pay tax shall commence, from the date on which his gross turnover, during any year, first exceeds the taxable quantum; (c) who exports any goods purchased within the State, the liability to pay tax shall commence from the date on which he purchases such goods; (d) who deals in declared goods, the liability to pay tax shall commence from the date on which his gross turnover of such goods exceeds the taxable quantum; (e) who deals in foreign liquor (Indian made foreign liquor and foreign liquor) the liability to pay tax shall commence from the date on which he deals in such goods; (f) who deals in ....
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....been assessed under this Act as if this Act was in force during the said period. Section 17. Tax on declared goods.-Tax on declared goods shall be leviable and payable at the stage of sale or purchase, as the case may be, and under the circumstances specified against such goods in Schedule D: Provided that where the goods have not been subjected to tax at any of the stages of sale or purchase specified in Schedule D, the tax shall be levied on and paid by a dealer liable to pay tax under this Act at the stage of last purchase of such goods by him: Provided further that the tax under this section shall be levied, charged and paid after providing deductions admissible under section 27 of this Act. SCHEDULE 'D' Sl.No. Name of declared goods Circumstances under which tax is to be levied Stage of levy 1. Cotton, paddy and oil seeds other than cotton seeds, as are defined in section 14 of the Central Sales Tax Act, 1956. (i) When imported. First sale within the State by a dealer liable to pay tax under this Act. (ii) When purchased within the State. Last purchase within the State by a dealer liable to pay tax under this Act." ....
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....ong treated rice and paddy as two separate taxable items for all purposes till September 28, 1996 when clause (ca) was introduced to get over the effect of the judgment of the High Court in the case of United Riceland Limited v. State of Haryana reported in [1997] 104 STC 362 (P&H) [FB]. In that case, it was held that paddy and rice, both being declared goods under section 14 of the 1956 Act, are dif- ferent taxable commodities subject to tax under sections 6 and 17 read with Schedule D of the 1973 Act and consequently, the exporter who buys paddy, converts it to rice and exports it, is liable to pay tax on purchase of paddy under the said 1973 Act. This resulted in cost plus effect on exports, which made the exports very costly as the exporter had to pay the purchase tax. In order to make exports more competitive globally, clause (ca) was inserted in section 15 of the 1956 Act, under which rice and paddy are equated by a deeming fiction for the purposes of section 5(3) of the said 1956 Act. The effect of clause (ca) was twofold. Firstly, both the commodities were equated so that the State cannot tax them at multiple stages. Secondly, in view of the said equation by a deeming ficti....
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....tion in the world market. It was submitted that purchases and sales are two sides of the same coin and where such purchases and sales have been made prior to and not subsequent to placement of export orders by the foreign buyer, such transactions should get benefit of exemption under section 5(3) read with section 15(ca) of the 1956 Act. It was submitted that the High Court had erred in restricting the deeming fiction under clause (ca) only to the miller-cum-exporter; that it had failed to appreciate the scope and content of clause (ca) under which paddy and rice have been equated for the purposes of section 5(3) so that purchase of paddy by the appellant for sale of rice to the exporter would also be exempted from payment of purchase tax under the 1973 Act. 8.. Mr. S. Ganesh, learned Senior Counsel appearing on behalf of the appellant in Civil Appeal Nos. 1117-1121 of 2003, in addition to the above arguments, submitted that in view of clause (ca) of section 15, the term "paddy" and the term "rice" are interchangeable. He submitted that in the present case, we are concerned with two sales, namely, sale from appellant to the exporter and sale by the exporter to the foreign buyer.....
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....e export order being placed by the foreign buyer. The underlying rationale of section 5(3) is that such penultimate sale or purchase must occasion export in order to constitute sale or purchase in the course of export. Section 5(3) does not cover the penultimate transaction which occasions sale in the local market, nor does it cover sale for export. In the present case, appellant is a miller within the State; it buys paddy and procures rice therefrom within the State and sells it to the exporter within the State and as such it is a local sale which does not fall under section 5(3). It is a sale for export and not a sale which occasions export. There is one more way of looking at the question in hand. Under section 15(a) of 1956 Act, as it stood at the material time, the State could levy tax either at the sale end or purchase end of the trans- action in case of declared goods. Consequently, under sections 6 and 17 read with Schedule D of the 1973 Act, we have single point levy of tax and not tax at multiple points. It is the last purchase of paddy which is made taxable under the 1973 Act. The single point levy envisages tax at either ends of the same transaction provided that the id....
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....port. In the case of Hotel Balaji v. State of Andhra Pradesh reported in See [1993] 88 STC 98 (SC). (1993) Supp. 4 SCC 536 this Court has observed that it is difficult to define the words "last purchase " except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense levy can be crystallised only at the point of time when the goods have been utilised in a particular way. Applying the test propounded by this Court in Hotel Balaji's case* (1993) Supp. 4 SCC 536 we hold that clause (ca) of section 15 contains a limited deeming fiction by which tax exemption is given only to the sale of rice by the exporter and not to the sale by the appellant-miller to the exporter. 11.. At one stage, it was sought to be contended on behalf of the appellant in Civil Appeal Nos. 1117-1121 of 2003 that terms "rice" and "paddy" were interchangeable under clause (ca) from which it follows that what the appellant sold to the exporter was paddy and, therefore, the last purchaser of such paddy was the exporter and not the appellant and consequently the appellant was not liable for payment of purchase tax. We do not find merit in this argument. Clause (....