SABYASACHI MUKHARJI - (1.) EXCEPT Civil Appeals Nos. 41620-63 of 1988, in these appeals along with the special leave petitions and the writ petition, we are concerned with Sections 9(1) and 24(3) as well as the penalty proceedings initiated under Section 50 of the Haryana General Sales Tax Act, 1974 (hereinafter referred to as 'the Act'). So far as Civil Appeals Nos. 4162-63 of the 1988 are concerned, these involve the scope, effect and validity of Section 13AA of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the Bombay Act) as introduced by the Maharashtra Act No. XXVIII of 1982. It will, therefore, be desirable first to deal with the question of the Act, and then with the provisions of the Bombay Act as mentioned hereinbefore.
(2.) THE appellant/ petitioner - Goodyear India Ltd., was engaged at all relevant times, inter alia, in the manufacture and sale of automobile tyres and tubes. It manufactured the said tyres and tubes at its factory at Ballabhagarh in the district of Faridabad in the State of Haryana. For the said manufacturing activity the appellant had, from time to time to purchase various kinds of raw materials both within the State and outside the State. It is stated that about 7 to 10% of the total needs of raw materials on an all India basis were locally procured by the appellant from Haryana itself. THE raw materials purchased in Haryana were: (1) pigments (partly), (ii) chemicals (partly), (iii) wires (partly), (iv) carbon black (partly), (v) rubber (partly); and (vi) fabric (partly). THE rest of the requirements were imported from other States. THE appellant had its depots at different places in the State of Haryana as well as in other States. After manufacturing the said tyres and tubes, about 10 to 12% of the total manufactured products used to be sold in the State of Haryana either locally or in the course of inter-State trade and commerce or in the course of export outside the country and also sold locally against Declaration Form No. ST-15. It was stated that at the relevant time the local sales including sales in the course of inter-State trade and commerce and in the course of export from the State of Haryana was about 30 to 35%. THE appellant was a registered dealer both under the Haryana Act and the Central Sales Tax Act, and had been submitting its quaterly returns and paying the sales-tax in accordance with law, according to the appellant. In 1979, the assessing authority, Faridabad, imposed upon the appellant the purchase tax under Section 9 of the Act for the assessment year 1973-74 and subsequently for the years 1974-75 and 1975-76 as well on the despatches made by the appellant on the manufactured goods to its various depots outside the State. Subsequently, the, relevant revenue authorities sought to impose purchase tax under Section 9(1) of the Act and imposed purchase tax on despatches of manufactured goods, namely, tyres and tubes, to its various depots in other States. This led to the filing of various writ petitions in the Punjab and Haryana High Court by the appellant/ petitioner. In respect of the assessment years 1976-77 to 1979-80, these questions were considered by the Punjab and Haryana High Court, and the writ petitions were decided in favour of the appellant on 4/12/1982. The said decision being the decision in Goodyear India Ltd. v. The State of Haryana is reported in (1983) 53 STC 163. The Division Bench of the High Court in the said decision held that both on principle and precedent, a mere despatch of goods out of the State by a dealer to his own branch while retaining both title and possession thereof, does not come within the ambit of the phrase "disposes of the manufactured goods in any manner otherwise than by way of sales", as employed in Section 9(1)(a)(ii) of the Act. The High Court further held that the decision of this Court in The State of Tamil Nadu v. M.K. Kandaswami, (1975) 36 STC 191: (AIR 1975 SC 1871), was no warrant for the proposition that a mere despatch of goods was within the ambit of. disposing them of. The High Court also distinguished the decision of this Court in Ganesh Prasad Dixit v. Commr of Sales Tax, M.P. (1969) 24 STC 343 : (AIR 1969 SC 1276), and held that Notification No. S.O.119/ H.A.20/ 73/ Ss. 9 and 15/ 74 dated 19/07/1974 issued under Section 9 (prior to its amendment by Act No. 11 of 1979) was ultra vires of Section 9 of the Act. It was held that wheres the section provided only for the levy of purchase tax on the disposal of manufactured goods, the impugned notification by making a mere despatch of goods to the dealers themselves taxable, in essence, legislates and imposes a substantive tax which it obviously could not. It was held that this was contrary to and in conflict with the provisions of Section 9. The High Court referred to the relevant portion of unamended Section 9 of the Act with which it was confronted and the notification. In order to appreciate the said decision and the position, it will be appropriate to set out the said provisions, namely, the unamended provisions of Section 9 as well as the notifiction: "9. Where a dealer liable to pay tax under this Act 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 within the meaning of sub-section (1) of Section 5 of the Central Sales Tax Act, 1956, 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, of subject to the provisions of Section 17, a tax on the purchase of such goods at such rate as may be notified under Section 15." The relevant notification was as follows: "Notification No. S.O. 119/ H.A.20/ 73/ Ss. 9 and 15/ 74 dated the 19/07/1974. In exercise of the powers conferred by Section 9 and sub-section (1) of Section 15 of the Haryana General Sales Tax Act, 1973, the Governor of Haryana hereby directs that the rate of tax payable by all dealers in respect of the purchases of goods other than goods specified in Schedules C and D or goods liable to tax at the fisrt stage notified as such under Section 18 of the said Act, if used by them for purposes other than those for which such goods were sold to them, shall be the rate of tax leviable on the sale of such goods: Provided that where any such dealer, instead of using such goods for the purpose for which they were sold to him, despatches such goods or goods manufactured therefrom at any time for consumption or sale outside the State. of Haryana to his branch or commission agent or any other person on his behalf in any other State and such branch, commission agent or other person is a registered dealer in that State and produces a certificate from the assessing authority of that State or produces his own affidavit and the affidavit of the consignee of such goods duly attested by a Magistrate or Oath Commissioner or Notary Public in the form appended to this notification to the effect that the goods in question have been so despatched and received and entered in the account books of the consignee, the rate of tax on such goods shall be three paise in a rupee on the purchase value of the goods so despatched."
(3.) THE High Court, as stated before, referred to Section 9 and held that the expression 'disposes of was not basically a term of legal art and, therefore, it was proper and necessary to first turn to its ordinary meaning in order to determine whether a mere despatch of goods by a dealer to himself would cannot disposal of such goods by him. THE High Court referred to the dictionary meaning of 'disposes of ' in Webster's Third New International Dictionary. Reference was also made to 27 Corpus Juris Secundum, p. 345, and ultimately it came to the conclusion that the phrase 'disposes of' or 'disposal' cannot be possibly equated with the mere despatch of goods by a dealer to himself. After referring to the relevant provisions with which this Court was concerned in Kandaswami's case (AIR 1975 SC 1872) (supra), the High Court held that that case was no warrant for construing the expression 'despatch' as synonyous to 'disposal'. On the other hand, the court held that the decision of this court emphasises that the expression 'disposal' of goods is separate and distinct from despatch thereof. According to the High Court, the same position was applicable to Ganesh Prasad Dixit's case (AIR 1969 SC 1276) (supra), and in those circumstances held that the term 'disposes of' cannot be synonymous with 'disposal', and once that is held then the notification mentioned above travelled far beyond what is provided in Section 9 of the Act, while the said provision provided only for levy of purchase tax on disposal of manufactured goods. The High Court observed as follows: "Once it is held as above, the impugned Notification No. S.O. 119/11.A.20/73/Ss. 9 and 15 /74 dated 19/07/1974 (Annexure P-2), plainly travels far beyond the parent Section 9 of the Act. Whereas the said provision provided only for the levy of a purchase tax on the disposal of manufacatured goods, the notification by making a mere despatch of goods to the dealers themselves taxable in essence, legislates and imposes a substantive tax which it obviously cannot. Indeed, its terms run contrary to and are in direct conflict with the provisions of Section 9 itself. There is thus no option but to hold that the notification, which is a composite one, is ultra vires of Section 9 of the Act and is hereby struck down," ;