- (1.) All these appeals and writ petitions raise a common question regarding the interpretation of S. 9 (1 of theharyana General Sales Tax Act, 1973 (hereinafter referred to as 'the Act'). Counsel state that the facts in all these appeals are identical and that the only facts necessary (or, at least, on record before us) , on the basis of which the issue before us is to be decided, are these: Each of the appellants/petitioners (hereinafter referred to compendiously as 'assessees') , is a registered dealer in the State of Haryana. He purchased certain raw materials in the State without paying tax thereon, in view of the provision contained in S. 24 of the Act. He then manufactured certain goods in the State with the aid of said raw materials. He then sold the manufactured goods to dealers who, in turn, exported those goods out of India. On these facts, it is claimed, the assessee is not liable to pay the purchase tax on the raw materials imposed under S. 9 (1 of the Act. This claim has been rejected by the taxing authorities and the High court and hence these appeals. The writ petitions have been filed directly in this court in view of a learned Single Judge of the High court having decided the issue against the assessees as early as 25/11/1980 in C. W. P. No. 1227 of 1980, which was also affirmed by a division bench later.
(2.) The Act is a much-amended one and some of its provisions have been recently amended with retrospective effect from 27/05/1971, a point of time when actually a predecessor Act (the Punjab General Sales Tax Act, 1948 had been in force. The provisions of the statue, relevant for our purpose, and their relevant amendments may be noticed first: I. S. 2 (e) (A) Originally S. 2 (e) defined 'export' to mean "the taking out of goods from the State to any place outside it otherwise than by way of sale in the course of inter-State trade or commerce", (B) Act 44 of 1976, added, at the end of the above definition, the following words w. e. f. 1/04/1976: "or in the course of export out of the territory of India. " Ii. S. 2 (p) (A) S. 2 (p) defined the expression 'turnover' as including "the aggregate of the amounts of the sales and purchases. . made by any dealer" in any capacity during a given period. Explanation 2 to the second definition provided: "Explanation 2 : The proceeds of the sale of any goods on the purchase of which tax is leviable under this Act or the purchase value of any goods on the sales of which tax is leviable under this Act, shall not be included in the turnover, but the purchase value of the goods liable to tax under S. 9 shall be included. " (B) Act 13 of 1989 amended the Explanation by inserting, in it, after the words "section 9", the words "or S. 24". (C) Act 1 of 1990 has amended the above Explanation retrospectively to say that the words "but the purchase value of the goods liable to tax under S. 9 or S. 24 shall be included" shall be omitted and shall be deemed always to have been omitted with effect from 27/05/1971. So we have to proceed on the basis that the underlined words never were there in clause (p) of S. 2. The 1990 Act also inserted an Explanation 6 to the clause w. e. f. 31/03/1983 which reads: "Explanation 6: The purchase of barley or of goods used in the manufacture of guar gum, scientific goods, utensils and metal handicrafts shall not form part of the turnover of a dealer for the period he is entitled to purchase the goods on the authority of his certificate of registration without payment of sales tax under S. 24, provided these are used exclusively for the specified purposes. " Iii. S. 6 Section 6, the charging section, read as under: "6.Incidence of taxation.- (1 Subject to other provisions of this Act, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on all sales and purchases effected after the coming into force of this Act: Provided that this S. shall not apply to a dealer who deals exclusively in goods specified in Schedule B. (2 Every dealer to whom Ss. (1 does not apply shall, subject to other provisions of this Act, be liable to pay tax under this Act on the expiry of thirty days after the date on which his gross turnover during any year first exceeds the taxable quantum: Provided that this Ss. shall not apply to a dealer who deals exclusively in goods specified in Schedule B: Provided further that. . . * * Explanation. FOR the purposes of Ss. (1 and (2 "purchase" shall mean the purchase of declared goods, goods specified in Schedule C and goods falling under S. 9. " (B) S. 6 was amended by Act 1 of 1990 to read as follows with retrospective effect from 27/05/1971: "6.Incidence of taxation. (1 Every dealer whose gross turnover during the year immediately preceding the coming into force of the provisions of this S. exceeded the taxable quantum shall be liable to pay tax on all sales and purchases effected after the coming into force of the provisions of this section: Provided that this Ss. Shall not apply to a dealer who deals exclusively in goods specified in Schedule B. (2 Every dealer to whom Ss. (1 does not apply shall be liable to pay tax on all sales and purchases effected on the expiry of thirty days after the date on which his gross turnover during any year first exceeds the taxable quantum: Provided that this Ss. shall not apply to a dealer who deals exclusively in goods specified in Schedule B: Provided further that. . . . " The earlier Explanation, however, is omitted with the same retrospective effect. Iv. S. 9 (a) S. 9 (1 has undergone several amendments: by Act 44 of 1976, Act 11 of 1979, Act 3 of 1983, Act 11 of 1984, Act 16 of 1986 and Act 1 of 1988. Act 1 of 1990 has also an impact, as we shall indicate later. The S. originally read thus: "9.Liability to pay purchase tax. Where a dealer purchases goods other than those specified in Schedule B from any source in the State and- (A) uses them in the State in the manufacture of- (I) goods specified in Schedule B, or (Ii) any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the State or in the course of inter-State trade or commerce or in the course of export out of the territory of India; (B) exports them in the circumstances in which no tax is payable under any other provision of this Act, there shall be levied, subject to the provisions of S. 17, a tax on the purchase of such goods at such rate as may be notified under S. 15. " (B) Act 44 of 1976 made two amendments to this sub-section. The first amendment was to insert, after the opening words, "where a dealer", the words "liable to pay tax under this Act". The second amendment, which is crucial for the purposes of this case, is the addition at the end of sub-clause (17 of clause (a) above, the words: "within the meaning of Ss. (1 of S. 5 of the central Sales Tax Act, 1956. " These amendments were effective from 1/04/1976. (C) Act 11 of 1979 redrafted the above provision, excluded milk from clause (b) and added clause (c). After this amendment, effective from 9/04/1979, the provision read thus: "9.(1- Where a dealer liable to pay tax under this Act,- (A) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B; or (B) purchases goods, other than those specified in Schedule B except milk, from any source in the State and uses them in the State in the manufacture of any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the State or in the course of inter-State trade or commerce or in the course of export out of the territory of India within the meaning of Ss. (1 of S. 5 of the central Sales Tax Act, 1956; or (C) purchases goods, other than those specified in Schedule B, from any source in the State and exports them, In the circumstances in which no tax is payable under any other provision of this Act, there shall be levied, subject to the provisions of S. 17, a tax on the purchase of such goods at such rate as may be notified under S. 15. " (D) A doubt had arisen whether the words "disposes of" used in clause (a) (ii) later, clause (b) above was comprehensive enough to include cases of despatches by a dealer of the manufactured goods otherwise than by way of sale as, for example, by way of stock transfer. The State government had issued a notification dated 19/07/1974 (even before the 1976 amendment) clarifying the position with an answer to the question in the affirmative but this notification as well as the interpretation favoured by it were quashed by a decision of the High court reported as Goody ear India Ltd. v. State of Haryana. This led to the amendment of S. 9 (1 by Act 3 of 1983. This amendment substituted a new clause (b) for the earlier one w. e. f. 27/05/1971, inserted a new clause (bb) w. e. f. 9/04/1979 and added a proviso. Actually clauses (b) and (bb) are identical, except that the latter excludes milk from its purview w. e. f. 9/04/1979. However, to avoid confusion both the clauses may be set out here: "(B) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter-State trade or commerce or in the course of export outside the territory of India within the meaning 384 of Ss. (1 of S. 5 of the central Sales Tax Act, 1956; or (Bb) purchases goods, other than those specified in Schedule B except milk, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter-State trade or commerce or in the course of export outside the territory of India within the meaning of Ss. (1 of S. 5 of the central Sales Tax Act, 1956; or. "the proviso added was in the following terms: "Provided that no tax shall be leviable under this S. on scientific goods and guar gum, manufactured in the State and sold by him in the course of export outside the territory of India within the meaning of Ss. (3 of S. 5 of the central Sales Tax Act, 1956. " (E) Act 11 of 1984 effected no material change. The exclusion of milk was decided to be dropped and so all that this amendment did was to roll both clauses (b) and (bb) into one clause, reading thus: "4.Amendment of S. 9 of Haryana Act 20 of 1973.- For clauses (b) and (bb) of Ss. (1 of S. 9 of the principal e Act, the following clause shall be substituted, namely:- (B) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter-State trade or commerce or in the course of export outside the territory of India within the meaning of Ss. (1 of S. 5 of the central Sales Tax Act, 1956; or" (F) Amendment Act 8 of 1986 substituted, in the proviso to S. 9 (1, the words "scientific goods, guar gum, utensils and handicrafts" in place of "scientific goods and guar gum" w. e. f. 26/02/1986. (G) The amendment to S. 9 (1 by Act 16 of 1986 is not relevant for our purposes and we pass on to the two relevant amendments effected by Act 1 of 1988. The first was to change the marginal heading of the S. to read thus: "9. (l) Liability to pay tax on purchase value of goods". The second was to omit the words "sub-section (1 of" at the end of clause (b). The relevant part of clause (b) , as thus amended, will, therefore, read: ".. Despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale. . in the course of export outside the territory of India within the meaning of S. 5 of the central Sales Tax Act, 1956;. "these amendments became effective from 31/12/1987. V. S. 24 (a) S. 24 is the next S. relevant for our purposes. After its amendment by Act 44 of 1976, it read thus, w. e. f. 28/11/1976: "24.Rights of registered dealer.- Every dealer registered under this Act shall be entitled to purchase, without payment of sales tax, the following goods within the State, on the authority of his certificate of registration by giving to the dealer, from whom the goods are purchased, a declaration, duly filled and signed by him, containing such particulars, on such form, obtained from such authority, as may be prescribed, and in case such form is not available with such authority, in such manner as may be prescribed,- (A) any goods, other than those leviable to tax at first stage of sale under S. 17 or S. 18, for the purpose of- (I) resale in the State; or (Ii) sale in the course of inter-State trade or commerce; (B) containers and packing materials and other goods (excluding those liable to tax at the first stage of sale under S. 17 or S. 18, specified in his certificate of registration for use by him in the manufacture, in the State, of any goods other than those specified in Schedule B, for the purpose of- (I) sale in the State; or (Ii) sale in the course of inter-State trade or commerce; or (Iii) sale in the course of export out of the territory of India within the meaning of Ss. (1 of S. 5 of the central Sales Tax Act, 1956. " (B) Act 3 of 1983 renumbered the above as S. 24 (1 and added, with effect from 31/03/1983, a proviso each, to clauses (a) and (b). These provisos read thus. The proviso to clause (a) was: "Provided that a dealer registered under this Act, shall also be entitled to purchase barley, without payment of sales tax on the authority of his certificate of registration, on furnishing to the selling registered dealer, a declaration referred to above, for sale by him in the course of export outside the territory of India within the meaning of S. 5 of the central Sales Tax Act, 1956. "and that to clause (b) read: "Provided that a dealer registered under this Act, shall also be entitled to purchase, without payment of sales tax, on the authority of his certificate of registration, goods mentioned in clause (b) above, on furnishing to the selling registered dealer a declaration referred to above, for use by him in the manufacture, in the State, of scientific goods and guar gum for the purpose of sale by him in the course of export outside the territory of India within the meaning of Ss. (3 of S. 5 of the central Sales Tax Act, 1956. "it also inserted, with retrospective effect from 1/04/1976, the following sub-section: "(2 Notwithstanding anything contained in form S. T. 15 or the certificate of registration issued under this Act or the Rules made thereunder, no dealer shall be entitled to claim the right envisaged in Ss. (1 so renumbered, for the period from the first day of April, 1976, to the third day of September, 1979 in contravention of the provisions of Ss. (1 so renumbered. "the Act also contained a S. (Section 8 validating the notification issued under S. 9 read with S. 15 and also validating all levy, assessment and collection of taxes under S. 9 notwithstanding any judgment, decree or order of any court or other authority. (c) Act 11 of 1984 changed the marginal heading of the S. as "rights and liabilities of registered dealers". It added a clause (c) to Ss. (1 relating to use of the goods in the execution of works contract in the State, with which we are not concerned. However, it added a new Ss. (3 with retrospective effect from 27/05/1971, to the following effect: "(3 Notwithstanding any other provisions of this Act or any judgment decree or order of any court or other authority to the contrary, if a dealer who purchases goods, without payment of tax, under Ss. (1 and fails to use the goods so purchased for the purposes specified therein, he shall be liable to pay tax, on the purchase value of such goods, at the rates notified under S. 15, without prejudice to the provisions of S. 50: Provided that the tax shall not be levied where tax is payable on such goods under any other provision of this Act. " (d) An amendment 'of 1986 expanded the proviso to S. 24 (l) (6 by adding "utensils and metal handicrafts" to "scientific goods and guar gum", as in S. 9 (1 proviso. (c) Act 1 of 1988, effective from 31/12/1987, omitted the words "sub-section (1 of" in S. 24 (l) (b) (ii). It also omitted the proviso to the said clause. VI. S. 27 S. 27, which defines "taxable turnover" is not quite relevant for our purposes. We should only like to mention that the provisos to S. 27 (a) (iv) , S. 27 (b) (iii) and S. 27 (c) (ii) inserted by Act 44 of 1976 w. e. f. 1/04/1976 all make specific reference to sales "in the course of export out of the territory of India within the meaning of Ss. (1 of S. 5 of the central Sales Tax Act, 1956". The provisos to S. 27 (a) (iv) , in particular, make a clear contrast between sales falling under Ss. (3 and those falling under Ss. (1 of S. 5 of the C. S. T. Act. VII. Valida on provision Act 1 of 1990 effected no amendments to S. 24 or 27. But S. 14 of this Act (which is a validation S. on the same lines as those contained in the earlier amendment Acts) has been referred to in the course of the arguments before us and can be usefully extracted. It reads: "14.Notwithstanding any judgment, decree or order of any court or tribunal or other authority to the contrary, any levy, assessment, re-assessment or collection of any amount by way of tax made or purporting to have been made and any action taken or things done or purporting to have been taken or done before the commencement of the Haryana General Sales Tax (Amendment and Validation) Act, 1990, in relation to such levy, assessment, re-assessment or collection made under the provisions of S. 9 or Ss. (3 of S. 24 of this Act shall be deemed to be as valid and effective as if such levy, assessment, re-assessment or collection had been made or action taken or things done under the provisions of clause (p) of S. 2, S. 6, S. 15-A, S. 17, S. 27 and Schedule D appended to this Act and as amended by the provisions of the Haryana General Sales Tax (Amendment and Validation) Act, 1990 and shall not be called in question in any court or tribunal or other authority and accordingly. (I) all acts, proceedings or things done or action taken by the State government or by any officer of the State government or by any authority, in connection with the levy, assessment, re-assessment or collection of such a tax shall, for all purposes be deemed to be, and to have always been done or taken in accordance with law; (Ii) no suit or other proceedings shall be maintained or continued in any court or before any authority for the refund of any such tax so collected; and (Iii) no court or authority shall enforce a decree or order directing the refund of any such tax so collected. These, then, are the relevant provisions of the Act.
(3.) Before turning to the question posed for our consideration, it is necessary to refer to S. 5 (1 of the central Sales Tax Act, 1956. This Ss. read as follows: "5.When is a sale or purchase of goods said to take place in the course of import or export. (1a sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. "this Ss. came up for the consideration of this court in Mohammed Sirajuddin v. State of Orissa. In that case the appellant's goods were exported out of India. The course of the transaction was that the appellant sold goods to the State Trading Corporation (STC) but, to the knowledge of both these parties, the goods were to be exported to fulfil contracts entered into by the STC with foreign buyers, the terms of such contracts between the foreign buyers and the STC being referred to in, and part of, the appellant's contracts with the STC. The appellant claimed its sales to be "sales in the course of export" and hence exempt under S. 5 of the CST Act. This court, Khanna, J. dissenting, held that the sales of the appellant were not exempt under S. 5 (1. The appellant had agreed to sell his goods only to the STC and there was no privity of contract between him and the foreign buyer. The court held that the movement of goods outside India was occasioned by the contract between the STC and the foreign buyer and not by that between the appellant and the STC. The decision caused several practical difficulties and called for an amendment of the CST Act. The object and reasons of the CST (Amendment) Act (Act 103 of 1976, may be usefully extracted. It said: "According to S. 5 (1 of the central Sales Tax Act, a sale or purchase of goods can qualify as a sale in the course of export of the goods out of the territory of India only if the sale or purchase has occasioned such export or is by a transfer of documents of title to the goods after goods have crossed the customs frontiers of India. The Supreme court had held (vide: Mohd. Sirajuddin v. State of Orissa) that the sale by an Indian exporter from India to a foreign importer alone qualifies as a sale which has occasioned the export of the goods. According to the Export Control Orders, exports of certain goods can be made only by specified agencies such as the State Trading Corporation. In other cases also, manufacturers of goods, particularly in the small scale and medium sectors, have to depend on some experienced export house for exporting the goods because special expertise is needed for carrying on export trade. A 389 sale of goods made to an export canalising agency such as the State Trading Corporation or to an export house to enable such agency or export house to export those goods in compliance with an existing contract or order is inextricably connected with the export of the goods. Further, if such sales do not qualify as sales in the course of export, they would be liable to State sales tax and there would be a corresponding increase in the price of the goods. This would make our exports in competitive in the fiercely competitive markets. It is, therefore, proposed to amend, with effect from the beginning of the current financial year, S. 5 of the central Sales Tax Act to provide that the last sale or purchase of any goods preceding the sale or purchase occasioning 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. "s. 5 (3, inserted by 'the above Amendment Act w. e. f. 1/04/1976, reads thus: "5.(3 Notwithstanding anything contained in Ss. (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. "now, coming to the facts of the present case, the assessees purchased raw materials inside the State of Haryana but paid no tax thereon, as they were registered dealers and furnished the declaration forms prescribed under S. 24. Their sales of the manufactured goods are to persons who have exported the goods outside India and so, they claim, they are not liable to pay the tax sought to be imposed on them under S. 9 (1. The department, however, has denied the relief on the short ground that the sales effected by the appellants are not sales in the course of export outside India within the meaning of S. 5 (1 of the C. S. T. Act. They are only "penultimate" sales; they may be deemed to be 'export sales' because of the fiction created under S. 5 (3 of the C. S. T. Act but that is not enough to escape from the clutches of the charge in S. 9 (1.;