TaxTMI 
TaxTMI 
2023 (10) TMI 519
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.... and above tax payable on finished goods at the stage of sale at his hands? 2. The brief facts of the case are that the petitioner dealer (hereinafter referred to as 'the assessee') was engaged inter alia in the business of crushing cotton seed yielding cotton-seed oil, oil-cake and residue. The case related to 1995-96. Cotton seed was declared goods. It was taxable at the stage of first sale in the State of Haryana at that relavent time. Cotton-seed oil was also taxable at the stage of first sale. Oil-cake was tax free. Residue was taxable at the stage of last sale. The assessee purchased cotton seed both from within the State as well as from outside the State. He was charged to tax on purchase of cotton seed in the State and he charged tax on sale of cotton-seed oil in the State. In order to avoid double taxation, once on the purchase of raw materials and again on sale of goods manufactured from the raw materials, Section 15A of the Haryana General Sales Tax Act, 1973 (in short 'the Act') and rule 24A of the Haryana General Sales Tax Rules, 1975 (in short 'the Rules') were enacted. These provisions at that relevant time read, were as under:- "[Section 15A as substitut....
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....ds manufactured or processed therefrom, when sold within the State or in the course of inter-State trade or commerce, or in the course of export outside the territory of India; and (i) When no tax is payable on sale of such goods other than those specified in Schedule B, the full amount of tax paid at the first stage (ii) When the tax paid at the first stage exceeds the tax payable, the amount of excess tax; and (iii) When the tax paid goods are sold to Government or to an organisation, sales to which are either exempt from payment of tax or are leviable to tax at a lower rate, the full amount of tax paid at the first stage if the sale is exempt from tax, or the difference between the amount of tax at the first stage and the tax calculated on sales to Government or to such organisation; shall be refundable to the dealer on appending with the return, in form S.T. 9 and, wherever applicable, in form I under the Central Sales Tax Act, 1956, an application in form S.T. 33 on furnishing a certificate in form S.T. 14 in proof of payment of tax by the selling registered dealer at the first stage: Provided that no deduction of refund shall be admissible ....
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....e P-III) 4. Learned counsel for the petitioner has referred to Division Bench judgment passed by this Court in the case of Sharda Cotton Ginning & Pressing Factory vs. State of Haryana and others [2011] 123 STC 449 (P&H) wherein this Court was examining the issue of rebate of tax paid on the raw material. In that case, the assessing authority allowed only proportionate rebate under rule 24-A of the Haryana General Sales Tax Rules, 1975 instead of full rebate on the cotton seeds, on the ground that "khal" obtained in the process of manufacture of cotton seed oil was a tax free item. The Tribunal also held against the dealer. The Division Bench of this Court allowed the petition and quashed the impugned order with a direction to the Tribunal to decide the appeals filed by the petitioner afresh after passing a speaking order, by holding that the Tribunal had misread the decision of the Supreme Court in Bharat Petroleum Corporation Ltd.'s case [1992] 85 STC 220 where the Court had held that for claiming exemption, it was not necessary for the assessee to prove that the entire raw material had been used only for the manufacture of taxable goods. The relevant para is as under:- ....
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...., suppose the cotton purchased is utilised partly for manufacture of cloth that is taxable and partly for manufacture of cloth that is not taxable or partly for the manufacture of yarn which is taxable and is sold and partly for manufacture of cloth which is not taxable. In these instances, it is clear that only some of the cotton is utilised for the first purpose and some for the second purpose and so only the purchase tax paid in respect of the quantity utilised for the first purpose will be eligible for set-off. But the type of user with which we are concerned is a composite one in which it is not possible to correlate any part of the purchased goods as having gone in for the purpose of manufacture of taxable goods. The position is picturesquely brought out in the case of Bharat Petroleum. The entire sulphuric acid purchased has no doubt been used in the manufacture of kerosene though perhaps not a drop of acid clings to the kerosene manufactured. Equally, the entire sulphuric acid has gone into the composition of the acid sludge. The 3,048.760 M.T. of acid have dissolved the impurities in the crude oil and conglomerated with them to constitute 3,541.485 M.T. of acid sludge. Hav....