- (1.) IN this bunch of 26 writ petitions (C. W. P. Nos. 835, 444, 658, 716, 1059, 1099, 1114, 1169, 1243, 1244, 1574, 1827, 1869, 1870, 2209, 2373, 2376, 2574, 3745, 5683, 6318, 7072, 7073, 7601 of 1987 and 5598, 6781 of 1986) challenge is made to the constitutional validity of entry 2-B of Schedule D and Section 17 of the Haryana General Sales Tax Act, 1973 (hereinafter referred to as "the Act") and they seek to quash the instructions dated May 15, 1985, issued by the Commissioner, Excise and Taxation, Haryana and the orders/notices passed/issued by the authorities. Factual matrix shall be provided by C. W. P. No. 835 of 1987 : The petitioner is a registered dealer under the Act and is engaged in the business of sale and purchase of paddy and rice at Karnal. The petitioner filed the returns for the assessment year 1982-83 in accordance with Section 25 of the Act and deposited the tax in accordance with the returns. The Assessing Authority issued notice under Section 28 of the Act for finalisation of the assessment. During the course of assessment proceedings, the petitioner was told that the Assessing Authority wanted to levy tax on sales of paddy made to Messrs. Subhash Cereals and Pulses Processing Institute, Karnal (and other exempted dealers), who were granted registration certificates and were exempted from payment of tax under Section 13 of the Act. The sale of paddy to these exempted units amounted to Rs. 11,30,733. 35 on which tax at the rate of 4 per cent would come to Rs. 45,229. 32. Rice and paddy are declared goods under Section 14 of the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Act") and are also mentioned in Schedule D to the Act and there is only single point tax on paddy and rice and the same can be levied only on the "last purchase in the State by a dealer liable to pay tax under the Act". In the scheme of single point tax the levy is confined to a single point in a series of sales or purchases by successive dealers. The petitioner during the assessment year 1982-83, sold rice to the District Food and Supplies Controller under the Rice Procurement Levy Order, 1979, prior to the enforcement of the Forty-sixth amendment of the Constitution and definition of expression "sale" amended by Haryana Act 11 of 1984. In law, these transactions would not amount to sale. So, the inclusion of the "sale of rice" under the Rice Procurement Levy Order in the expression "taxable turnover" was without jurisdiction. The Excise and Taxation Commissioner, Haryana, had issued instructions dated May 15, 1985, to all the assessing and subordinate authorities to examine all the cases of sales by the dealers of rice and paddy to exempted units. A copy of these instructions has been appended as annexure P-2 in C. W. P. No. 716 of 1987. Since the instructions had been issued by the Excise and Taxation Commissioner, Haryana, the petitioner did not expect that the authorities under the Act will be able to decide the matters uninfluenced by those instructions. The petitioner has invoked the extraordinary jurisdiction of this Court without availing of the alternative remedies of appeal, second appeal or revision provided by the Act. It has been pleaded that the provisions of entry 2-B in Schedule D to the Act are vague. They do not clearly spell the taxing event, indeed, has been specified but the provisions are still vague as to the person by whom the tax is to be paid. The provisions, thus, offend Articles 14 and 286 of the Constitution. A person who is granted exemption from payment of tax under Section 13 of the Act cannot be termed as a dealer who is not liable to pay tax. Such a person still remains liable to pay tax in accordance with entry 2-B in Schedule D read with Section 17 of the Act. Last purchase in the State is by the dealers who have been exempted from payment of sales tax but they are still dealers liable to pay tax and it is they (the exempted dealers) being the last purchasers who are liable to pay tax. The petitioner had sold paddy to the exempted dealers. They do not remain the last dealers liable to pay tax in the State. Cases cannot be reopened on the basis of instructions or objections raised during audit. Facts in the other writ petitions are similar to the facts of C. W. P. No. 835 of 1987.
(2.) THE writ petitions have been resisted by the respondents. It is pleaded, inter alia, that Section 17 read with entry 2-B of Schedule D to the Act merely defines the stage of levy of tax on paddy. It is last purchase in the State by a dealer liable to pay tax under the Haryana Act. The petitioner has shown sales of paddy to Subhash Cereals and Pulses Institute, Karnal, which unit was found to be not engaged in any manufacturing activities according to Khadi Gram Udyog Commission, Ambala Cantt. , who conducted an enquiry against this unit in 1982 and came to the conclusion that the sale transactions to it were only paper transactions. The exemption certificate to this unit was issued on the recommendations of the Khadi Gram Udyog Commission. It was entitled to purchase and sell goods without payment of tax. Accordingly, the said exempted unit was not a dealer liable to pay tax on paddy. The petitioner was, therefore, the last purchaser of paddy liable to pay tax and has accordingly been taxed vide assessment order dated November 2, 1986. It was further alleged that the transactions of sale of paddy by the petitioner to Subhash Cereals and Pulses Processing Institute, Karnal, were bogus and only paper transactions, in order to claim deduction from the turnover and evade payment of tax. It was admitted that a Division Bench of this Court in Food Corporation of India v. State of Haryana [1987] 66 STC 7, has held that the Food Corporation of India was not liable to pay tax. It was further averred that the writ petitions of private rice shellers (C. W. P. Nos. 4283 and 4165 of 1986 and others) had been decided on February 11, 1987 Shiam Lal Sunder Lal v. State of Haryana, [1987] 66 STC 37 (Pandh) Shiam Lal Sunder Lal v. State of Haryana [1987] 66 STC 37 (Pandh ). , and it was held that the rice shelter owners were liable to pay tax even for the sale of rice in pursuance of the Haryana Rice Procurement Levy Order, 1979. It was contended that the impugned provisions were legal, valid and constitutional. The stage of levy of tax on paddy was on a dealer if it answers the following requirements : (a) that he must be the last purchaser of paddy within the State of Haryana ; (b) that he must be a dealer liable to pay tax under the Act.
(3.) THE purchaser of paddy from the petitioner was Subhash Cereals and Pulses Processing Institute, Karnal, who were exempted from payment of tax under Section 13 of the Act. They were not liable to pay tax although they were the last purchasers of paddy in this case. In the case of a sale to an exempted unit, it is not liable to pay tax ; rather the immediately preceding dealer is liable to pay tax. In this case, the taxable event is the last purchase of paddy within the State of Haryana. The taxable person is the dealer liable to pay tax under the Haryana Act. The rate of tax stands specified at 4 per cent of the purchase value of the paddy. There is no vagueness in the charging provision. Purchaser of paddy from the petitioner is exempted from payment of tax. That being so, the purchaser of paddy from the petitioner is not liable to pay tax under the Haryana Act. It is averred that the instructions dated May 15, 1985, are only elucidation of entry 2-B of Schedule D to the Haryana Act and are, therefore, legal in every respect. These instructions give full freedom and discretion to the Assessing Authorities to arrive at independent conclusions as is evident from the following extract from the instructions : "in view of the above, it is very essential that each and every transaction of sale of paddy by the rice sheller owners to the exempted units under Section 13 should be thoroughly scrutinised and the conclusion drawn on merits after taking into account the relevant factors such as those mentioned in 3rd proviso to Section 27 (1) (a) (iii) of the Haryana Act ibid. and the capacity of the purchasing unit concerned, the period for which it actually worked, the units of electricity consumed by it, etc. , etc. " In order to judge whether the impugned provisions suffer from the vice of vagueness and ambiguity, it is apposite to read the provisions of Section 17 and entry 2-B of Schedule D to the Act at the very outset : "section 17. Tax on declared goods.--Tax on declared goods shall be leviable and payable at the stage of sale or purchase, as the case may be, under the circumstances specified against such goods in Schedule D. " Name of Circumstances Stage of levy. "seri declared under which tax to al goods. be levied. No. 2-B. Paddy In all cases Last purchase in the State by a dealer liable to pay tax under this Act. " A perusal of the above provisions makes it clear that all the requirements of a valid charging section have been incorporated in the impugned provisions. The commodity to be taxed has been mentioned. The circumstances under which tax is to be levied have been spelt out. The stage of levy of tax and the person liable to pay tax have been defined. The last purchase in the State of Haryana by a dealer liable to pay tax under this Act is also defined. It takes care of the stage at which the tax has to be paid and the person who is to pay the tax.;