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Rikhi Ram Ram Gopal Cotton Ginning Factory Vs. the State of Haryana and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ No. 2706 of 1971
Judge
Reported in[1974]33STC376(P& H)
AppellantRikhi Ram Ram Gopal Cotton Ginning Factory
RespondentThe State of Haryana and anr.
Appellant Advocate Bhagirath Dass,;N.K. Sodhi;and S.K. Hirajee, Advs.
Respondent Advocate S.P. Jain, Adv. for Adv.-General
DispositionPetition dismissed
Cases ReferredM.A. Khader and Co. v. Deputy Commercial Tax Officer
Excerpt:
.....of a party, who is remiss in seeking a remedy that was available to it. therefore, knowledge whether actual or construction of the order passed by the state or regional transport authority should result in commencement of the period of limitation. thus,. in cases where the state or regional transport authority has not communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order......and cotton seeds, in which the petitioner-firm deals, are commodities of special importance in inter-state trade or commerce and are declared as such under section 14 of the central act. in the course of its business during the assessment years 1967-68 and 1968-69, the firm sold cotton to various dealers in the state of haryana, who further sold the same in the course of inter-state trade or commerce to persons outside the state of haryana. a dealer in the state of haryana is liable to pay tax under the punjab act for the sales and purchases of cotton and cotton seeds, but when the goods sold are declared goods and are further sold in the course of inter-state trade or commerce, the tax so levied is liable to be refunded to him under section 15 of the central act. in order to.....
Judgment:

P.S. Pattar, J.

1. This is a petition filed by Messrs. Rikhi Ram Ram Gopal Cotton Ginning Factory, Narwana, District Jind, under Articles 226 and 227 of the Constitution of India to quash the impugned notices (annexures A, B and D) attached to the writ petition and to declare that Rule 48(2) of the Punjab General Sales Tax Rules, 1949, as applicable to Haryana, is ultra vires the provisions of Section 12 of the Punjab General Sales Tax Act, 1948, and Section 15 of the Central Sales Tax Act, 1956, and that the respondent, the State of Haryana, may be prohibited from making any assessments against the petitioners on the basis of the aforesaid notices.

2. The facts of this case are that the petitioner-firm Messrs. Rikhi Ram Ram Gopal is running a cotton ginning and pressing factory at Narwana, District Jind, and deals in the sale and purchase of cotton and cotton seeds in the State of Haryana. This firm is registered as a dealer both under the Central Sales Tax Act, 1956 (hereinafter called the Central Act) and under the Punjab General Sales Tax Act, 1948 (hereinafter called the Punjab Act). The cotton and cotton seeds, in which the petitioner-firm deals, are commodities of special importance in inter-State trade or commerce and are declared as such under Section 14 of the Central Act. In the course of its business during the assessment years 1967-68 and 1968-69, the firm sold cotton to various dealers in the State of Haryana, who further sold the same in the course of inter-State trade or commerce to persons outside the State of Haryana. A dealer in the State of Haryana is liable to pay tax under the Punjab Act for the sales and purchases of cotton and cotton seeds, but when the goods sold are declared goods and are further sold in the course of inter-State trade or commerce, the tax so levied is liable to be refunded to him under Section 15 of the Central Act. In order to implement the scheme of Section 12 of the Punjab Act, the State of Haryana framed rules under the Punjab Act. The Assessing Authority, Jind, issued notices under Sections 11 and 14 of the Punjab Act to the petitioners to furnish returns regarding their dealings for the years ending 31st March, 1968, and 31st March, 1969, and the copies of these notices are annexures A and B attached to the petition. Again, notice dated 27th May, 1971, whose copy is annexure D was issued to them to show cause why penalty should not be imposed on them under Section 10 of the Punjab Act. Feeling aggrieved, the petitioner-firm filed this writ petition as mentioned above.

3. Shri M.L. Kapoor, Excise and Taxation Officer, Jind, respondent No. 2, filed return, wherein he admitted the material facts stated in the petition. He maintained that the impugned notices were validly issued to the petitioners and they were liable to pay the sales tax for the disputed period. Rule 48(2) of the Rules framed by the Haryana Government was alleged to be valid and legal.

4. Before dealing with the contentions of the learned counsel for the petitioners, we may refer to the relevant provisions of the Central Act and the Punjab Act and the Rules. Section 15 of the Central Act reads as follows:

Every sales tax law of a State shall, in so far 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....

(b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State.

5. Section 12 of the Punjab Act reads as follows:

Refunds. -- The Assessing Authority shall in the prescribed manner refund to a registered dealer applying in this behalf any amount of tax paid by such dealer under this Act --

(a) if the amount of tax so paid is in excess of the amount due from him under this Act; or

(b) if the amount of tax so paid is in respect of the sale or purchase of any declared goods and such goods are sold in the course of inter-State trade or commerce;

either by a refund voucher or at the option of the dealer by deduction of the tax so paid from the amount of tax due from him in respect of any other period:

Provided that the refund under Clause (b) shall be subject to such conditions as may be prescribed:

Provided further that no refund under this section shall be allowed unless a claim for refund is made within a period of three years from the date on which such claim accrues.

Explanation. -- For the purposes of this section the expressions 'declared goods' and 'in the course of inter-State trade or commerce' shall have the meaning assigned to them by Clause (c) of Section 2 and Section 3 respectively of the Central Sales Tax Act, 1956.

6. Rule 48(2) of the Punjab General Sales Tax Rules, 1949, as introduced by the State of Haryana reads as follows:

48. (2) Where the refund of tax is claimed in respect of any declared goods, sale or purchase of which has been subjected to tax under the Act prior to the sale of such goods in the course of inter-State trade or commerce, the dealer who effected the inter-State sale of such goods, shall make an application of refund in form S.T. XXXII and append thereto the following documents:

(a) certificate(s) in form S.T. XXXII-A in respect of each transaction from the dealer who paid tax at the point of first stage or purchase in the State;

(b) a copy of the return in form S.T. VIII or S.T. VIII-A or both, as the case may be, for the period during which the exemption under Section 5(2)(a)(v) or 5(2)(a)(vi) was claimed by him;

(c) a copy of the Central sales tax return in form I for the said period; and

(d) such other documents or evidence as the Assessing Authority may require for his satisfaction that tax has been levied on such goods under the Act and the goods in respect of which the refund is claimed were subsequently sold in the course of inter-State trade or commerce.

7. By Section 30 of the Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1967, new Schedules C and D were substituted for the old Schedule C and the stage of levy of sales or purchase tax on cotton was changed from the last purchase to the first sale or purchase within the State of Haryana by a dealer liable to pay tax under the Punjab Act. This stage of levy of tax on cotton was changed with effect from 14th November, .1967.

8. Mr. Bhagirath Dass, the learned counsel for the petitioners, contended that Rule 48(2) of the Haryana Rules is ultra vires the provisions of Section 12 of the Punjab Act and Section 15 of the Central Act inasmuch as the provisions of this rule entitle a person different from the person so entitled under Section 12 of the Punjab Act to reclaim the refund and thus this rule is outside the scope of the rule-making authority, because it entitles the dealer who effected an inter-State sale to claim refund in respect of the levy already made on declared goods under the Punjab Act, while Section 12 itself lays down that the dealer who has paid the tax under the State Act alone is entitled to make an application for refund of the tax. In support of this contention, he relied upon M.A. Khader and Co. v. Deputy Commercial Tax Officer [1970] 25 S.T.C. 104, wherein it was held as under by the Madras High Court:

Section 15(b) of the Central Sales Tax Act, 1956, postulates the levy of a local tax as also a Central tax on inter-State sales in relation to declared goods, but with the condition that the tax levied by the State shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State. But the person who is to apply for refund and who is entitled to such refund is the person who has paid the local tax. In common law, only a person who has paid a tax can ask for refund, if he is statutorily entitled to it. If a dealer, who paid the Central sales tax, is not the person who paid the State sales tax, it would be strange if he is permitted to obtain a refund of the State tax which he did not pay. If the declared goods are subject to the local tax at the point of purchase and if such purchaser who has suffered the local tax himself effected an inter-State sale, then he might be entitled to the refund prescribed by the section. But if the local tax is levied on the seller and if the purchaser effected an inter-State sale, then the person who has suffered the local tax would be one different from the person who effected the inter-State sale and in such a case, it would be unreasonable to hold that the last dealer who sold the goods in the course of inter-State trade or commerce would be entitled to the refund when the law is otherwise.

Rule 23 of the Madras General Sales Tax Rules, 1959, has prescribed the person entitled to the refund, which is opposed to the common law principles, and, therefore, that rule and, consequently, form A-4 also, are inoperative and illegal.

9. This authority supports the contention of the counsel for the petitioners. However, the Central Sales Tax Act was amended by the Central Act No. 61 of 1972 and its Section 12, which amended Section 15 of the principal Act, i.e., the Central Sales Tax Act, 1956, reads as follows:

In Section 15 of the principal Act, in Clause (b), --

(a) for the words 'the tax so levied', the words 'and tax has been paid under this Act in respect of the sale of such goods in the course of inter-State trade or commerce, the tax levied under such law' shall be, and shall be deemed to have been, substituted, with effect from the 1st day of October, 1958;

(b) for the words 'shall be refunded to such person', the words 'shall be reimbursed to the person making such sale in the course of inter-State trade or commerce' shall be substituted.

10. This amendment was made retrospectively with effect from the 1st day of October, 1958. For the words 'the tax so levied', the words 'and tax has been paid under this Act in respect of the sale of such goods in the course of inter-State trade or commerce, the tax levied under such law' were substituted. For the words 'shall be refunded to such person', the words 'shall be reimbursed to the person making such sale in the course of inter-State trade or commerce' were substituted. The effect of this amendment is that the refund can only be claimed by the person, who effected the inter-State sale and by no other person. Admittedly, the petitioners did not effect the inter-State sale of the goods. Thus, according to this amendment, the contention of the counsel for the petitioners is without any force and is rejected. The petitioners are liable to pay the sales tax and the impugned notices were validly issued to them. There is no substance in this writ petition and the same is dismissed. There will be no order as to costs.

D.K. Mahajan, J.

11. I agree.


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