TaxTMI 
TaxTMI 
2010 (3) TMI 1034
X X X X Extracts X X X X
X X X X Extracts X X X X
....he petitioner-company was found to make sale outside the State of Haryana for first five years by way of transfer or consignment of goods manufactured by the petitionercompany. Ultimately, order dated January 31, 1997 was passed against the petitioner-company directing the petitioner-company to pay Rs. 3,23,66,683, i.e., total tax exemption availed of by the petitioner during the period of exemption. The petitioner by way of present petition is challenging the vires of Explanation to rule 28A(2)(n)(i) and Explanation to rule 28A(2)(n)(ii) and rule 28A(11)(b) of the Haryana General Sales Tax Rules, 1975 (hereinafter referred to as, "the 1975 Rules"). Further challenge in the writ petition is the order of assessment dated January 31, 1997 (annexure P10) on the ground that no tax can be imposed on the goods transferred by the petitioner-company to its godown outside the State of Haryana, taking shelter of Explanation to rule 28A(2)(n)(i) and rule 28A(2)(n)(ii) and rule 28A(11)(b) of the 1975 Rules. The respondents have refuted the contention of the petitioner. According to the State, as per the turnover submitted by the petitioner, goods manufactured by the petitioner were transfer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment cannot impose tax on the same by taking recourse to the definition of "sale" given in Explanation to rule 28. The learned counsel for the State vehemently argued that once the definition of "sale" is given in the Explanation to rule 28 of the 1975 Rules, plaintiffs having availed of the benefit of exemption as per the provisions of section 13 of the 1973 Act read with rule 28A of the 1975 Rules, are estopped to challenge the imposition of tax by invoking definition of "sale" as per condition of exemption certificate. Tax can be imposed on the goods on the basis of notional turnover submitted by the petitioner to the State. To examine respective contentions of the parties, we have to take help from the definition and provisions given in the Haryana General Sales Tax Act, 1973 (hereinafter referred to as, "the 1973 Act"). Section 2(l) of the 1973 Act defines "sale" as under: "(l) 'sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration and includes- (i) transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) transfer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the execution of a works contract are within the State at the time of their use in the execution of the works contract. Note 4: A sale falling under sub-clause (iv) shall be deemed to have taken place within the State if the goods in respect of which right to use has been transferred are within the State at the time of their use." "Gross turnover" is defined in section 2(gg) of the 1973 Act as under: "(gg) 'gross turnover' means the aggregate of the amounts of sale and purchase and parts of sales and purchases made by any dealer whether as principal, agent or in any other capacity during the given period less any sum allowed as cash discount according to ordinary trade practice, but including any sum charged for anything done by the dealer in respect of the goods at the time of, or before, delivery thereof; Explanation:- (1) The gross turnover of any dealer in respect of transaction of forward contracts, in which goods are actually not delivered shall not be included in the gross turnover. (2) Any amount collected by a dealer by way of tax under this Act shall not be included in the gross turnover. (3) In respect of transactions covered under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....13B of this Act; (ii) last purchase in all other cases except when the purchase is made on payment 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 liabi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... who was assessed under the Punjab General Sales Tax Act, 1948 shall be deemed to have been assessed under this Act as if this Act was in force during the said period." Section 12 of the 1973 Act reads as under: "12. No tax payable in case of inter-State trade, etc.-Notwithstanding anything contained in this Act, a tax on the sale or purchase of goods shall not be imposed under this Act,- (i) where such sale or purchase takes place outside the State; (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India; or (iii) where such sale or purchase takes place in the course of inter-State trade or commerce." Section 13 of the 1973 Act reads as under: "13. Power to exempt.-(1) The State Government, if satisfied that it is necessary or expedient so to do in the interest of cottage industries or rural tiny industries, may, by notification, exempt any class of co-operative societies, rural tiny industrial units or persons from the payment of tax under this Act, on the purchase or sale of any goods subject to such conditions as may be specified in such notification. (2) Where a notifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nless the context otherwise requires carry the same meaning as assigned to them under the Act and Rules made thereunder." From the perusal of the definitions given under the 1973 Act and the provisions of section 12 thereof, it can very well be said that transfer of goods from one place to another place must be for a cash or deferred payment or other valuable consideration to constitute the "sale" as defined under the 1973 Act. The branch transfer of consignment outside the State in the course of inter-State transfer, does not amount to sale. From the provisions of section 12 of the 1973 Act, it can very well be said that even the State Government is not competent to impose tax on the sale or purchase of goods, which have taken place in the course of inter-State trade or commerce. Entries 92A and 92B of List I, Seventh Schedule read as under: "92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. 92B. Taxes on the consignments of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-St....