TaxTMI 
TaxTMI 
2009 (1) TMI 811
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....rder") the rice shelling units were under obligation to sell the finished product known as rice to the District Food and Supplies Controllers (for brevity, "DFSC") to the extent of 75 per cent of total and the remaining part of the rice could be sold by them in the open market. All the petitioners in this batch of petitions are such units which are exempted under section 13B of the Haryana General Sales Tax Act, 1973 (for brevity, "the Act") read with rule 28A of the Haryana General Sales Tax Rules, 1975 (for brevity, "the Rules"). It is undisputed that various assessing authorities framed assessments in respect of these dealers for the assessment year 1996-97 on purchase of paddy and levied purchase tax on them at four per cent. The basic reason for levy of purchase tax at four per cent was that as per condition of exemption certificate they were exempted only from payment of sales tax but their liability to purchase tax at four per cent being the last purchaser would continue and the aforementioned amount has been collected from the DFSC being part of the price of the rice. It is appropriate to notice that the taxable event for imposition of purchase tax is milling of paddy becau....
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....who effected sales to an exempted manufacturer like the appellants who had actually utilized the goods in the process of manufacture. Assuming that rule 24(m) is applicable and the purchases of paddy were deductible from the turnover, there is no justification to allow the dealer to keep the amount of purchase tax on paddy with them which they received from the DFSC unjustly. The dealers have no business to retain the amount which they had received unjustly from the DFSC. The price received by them from the DFSC for rice sold to him (DFSC) was inclusive of purchase tax, mandi charges, etc. Relying on Sri Nagakrishna Filaments (P) Ltd. v. Government of Andhra Pradesh [1997] 104 STC 484 (AP) and Sri Parvati Parameswara Cables v. Government of A.P. [1995] 99 STC 110 (AP) we feel that the creation of demand of the amount received by the dealers from DFSC by way of purchase tax was quite just. In this case the simple principle involved is that when the dealers had received something unjustly from the DFSC by way of tax they should repay that amount to the Revenue because taxes belong to the State. If the price paid to the dealers by the DFSC for levy rice was far less than the price at ....
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....the rice. According to the learned counsel the tax event had come into existence as the miller is the last purchaser of paddy, which is to be subjected to milling and was actually milled. He has also submitted that they could have avoided payment of purchase tax had they paid the sales tax. Merely because the petitioners enjoy exemption under section 13B of the Act does not mean that purchase tax is also exempted. We have thoughtfully considered the submission made by the learned counsel for the parties and are of the view that there is no merit in these petitions. In order to determine the question of liability of the petitioners to pay purchase tax, a reference would be necessary to the relevant provisions of section 6, section 17 and Schedule D to the Act, which are charging sections and read thus: Section 6 of the Act: "Incidence of taxation.-(1) Subject to the other provisions of this Act, every dealer whose gross turnover during the year immediately preceding the 27th day of May, 1971 and every other dealer shall, on the expiry of thirty days after the date on which his gross turnover first exceeds the taxable quantum, be liable to pay tax under this Act on the sale or pur....
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....ncerning the taxable event in such circumstances has been subject-matter of consideration of the honourable Supreme Court in the case of Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71; [1990] 2 SCC 71, which took the view that the taxable event would not be the stage when the goods have been purchased by a taxable person being the last purchaser. However, the view taken in the case of Goodyear India Ltd. [1990] 76 STC 71 (SC); [1990] 2 SCC 71 did not find approval of the three-judge Bench of the honourable Supreme Court in the case of Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98; [1993] Supp. 4 SCC 536. The rationale for doing so is discernible from para 91 and the relevant extracts reads as under (at page 142 of 88 STC): "91. . . . Goodyear [1990] 76 STC 71 (SC); [1990] 2 SCC 71 takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers' own depots/agents outside the State, it is consignment, which cannot be taxed by the State Legislature. With the greatest respect at our command, we beg to disagree. The levy created by the said provision is a levy on the purchase of raw ma....
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....price of such raw material) to a consignment tax on the manufactured goods? We think not. Saying otherwise would defeat the very object and purpose of section 9 and amount to its nullification in effect. The most that can perhaps be said is that it is plausible (as pointed out by Ranganathan, J. in his separate opinion) to characterise the said tax both as purchase tax as well as consignment tax. But where two interpretations are possible, one which sustains the constitutionality and/ or effectuates its purpose and intendment and the other which effectively nullifies the provision, the former must be preferred, according to all known canons of interpretation. . ." It is worthwhile to mention here that the honourable Supreme Court in Hotel Balaji's case [1993] 88 STC 98; [1993] Supp. (4) SCC 536 has also affirmed the view taken by a Full Bench of this court in the case of Des Raj Pushap Kumar Gulati v. State of Punjab [1985] 58 STC 393 that the taxing event is the act of purchase of goods which are used in the manufacture of end-products and not the act of despatch or consignment. Once the aforesaid principles are clear then there is no escape from the conclusion that the peti....
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....his Act, there shall be levied on the taxable turnover of a dealer a tax, at such rates, not exceeding: (a) . . . (b) twelve paise in a rupee in the case of other goods as the State Government may by notification, direct, subject to the conditions and restrictions, as it may impose in this behalf: Provided that- (i) and (ii) . . . (iii) In the case of rice procured out of paddy on the purchase of which a tax has been levied inside the State, tax leviable on such rice shall be reduced by the amount of tax levied on such paddy." (emphasis(1) added) It would also be necessary to notice rule 24(m) of the Rules, which reads thus: Rule 24 of the Rules "Deductions of gross turnover (section 27) In calculating the taxable turnover, a dealer may deduct from his gross turnover, - (a) to (l) . . . (m) the value of goods (except those liable to tax at the first stage of sale or purchase under section 17 or 18 of the Act) purchased by a dealer who is exempt from the payment of tax under section 13B of the Act provided that the goods are used by him in the manufacture of any other goods in the State for the purpose of sale." The aforesaid provision and the observations made by the hon....