- (1.) The petitioner,, an association of petroleum dealers, in the State of Haryana, prays for, issuance of a writ of mandamus declaring Explanation (v) to section - 2(1)(zg) of the Haryana Value Added Tax Act, 2003 (hereinafter referred to as "the Act") ultra vires of the Constitution of India, being violative of article 246 read with entry 54 of List II of the Seventh Schedule appended to the Constitution of India, and for issuance of a writ of certiorari quashing section 2 of the Notification No. Leg. 22/2011 : , dated September 29, 2011 (annexure P2), whereby the Act had been amended, vide Amending Act No. 17 of 2011. The petitioner also prays that a direction may be issued to respondents Nos. 3 to 5 not to charge value added tax (hereinafter referred to as "the VAT") in excess of the actual sale price for which goods are being sold by members of the petitioner-association. The petitioner's grievance briefly put, is that the State Legislature is not empowered to charge tax on any other amount except the actual sale price agreed between the oil companies and the retail outlets. The Explanation introduced by way of an amendment is beyond legislative competence in view of entry 54 of List II of the Seventh Schedule, appended to the Constitution of India. By enacting that tax shall be levied on the price at which petrol products are sold to consumers, the amendment includes the commission payable to retail dealers, for sale of petroleum products.
(2.) The counsel for the petitioner submits that the State of Haryana has issued Notification No. Leg. 22/2011 : , dated September 29, 2011, amending section 2(1)(zg) of the Act, modifying the definition of "sale price" by adding Explanation (v). The effect of the amendment is that petroleum companies would be collecting tax not on the actual price of sale made by them to dealers but upon the expected final sale price of such products, to consumers thereby including the commission payable to a dealer.
(3.) It is further contended that entry 54 empowers a State to levy tax on "sale" or "purchase" of goods subject to provisions of entry 92A of List I which in turn deals with matters relating to tax on sale or purchase of goods in the course of inter-State trade or commerce. While calculating tax liability under section 2(1)(u) of the Act, an assessee is required to calculate his gross turnover, i.e., the aggregate of the sale prices received or receivable in respect of any goods sold. Section 2(1)(u) of the Act, reads as follows: (u) 'gross turnover' when used in relation to any dealer means the aggregate of the sale prices received or receivable in respect of any goods sold, whether as principal, agent or in any other capacity, by such dealer and includes the value of goods exported out of the State or disposed of otherwise than by sale; Explanation: (i) The aggregate of prices of goods in respect of transactions of forward contracts, in which goods are actually not delivered, shall not be included in the gross turnover. (ii) Any amount received of receivable or paid or payable on account of variation, escalation or de-escalation in the price of any goods sold previously to any person but not exactly determinable at that time, shall, subject to such conditions and restrictions, as may be prescribed, be included in, or excluded from, the gross turnover, as the case may be, in the manner prescribed. (iii) Any amount collected by the dealer by way of tax shall not be included in the gross turnover and where no tax is shown to have been charged separately, it shall be excluded from the taxable turnover (denoted by "ITO') taxable at a particular rate of tax in per cent (denoted by 'r') by applying the following formula: Illustration-If ITO is 220 and r is 10 (per cent), tax will be 20.;