PANDIT BROTHERS Vs. UNION OF INDIA

JUDGEMENT

(1.) The short question raised in this petition under Article 226 of the Constitution of India is whether the sales of motor spare parts viz. spring leaves made by the petitioner were made at Bahadurgarh in the State of Havana in the course of inter-State trade or whether they were intra-State sales effected within the Union Territory of Delhi. The answer would depend on the nature of the transactions construed in the light of Section 3 of the Central Sales Tax Act, 1956 which provides as to when is a sale or purchase of goods said to take place in the course of inter-State trade or commerce in these words :

(2.) M/s. Pandit Brothers, the sole proprietorship concern of the petitioner is carrying on business of manufacture and sale of motor spring leaves within the Union Territory of Delhi in this way. The general administration of the business is carried on from the head office at Delhi but the actual manufacture is entirely done at its factory at Bahadurgarh in the State of Haryana. The petitioner is a registered dealer having registration certificate No. 21390 in the Union Territory of Delhi under the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi (hereinafter referred to as the Local Act) with effect from May 24. 1958. The registration originally was for the resale of motor parts. The petitioner is also a registered dealer under the Central Sales Tax Act, 1956 (hereinafter called the Central Act) vide registration No. 9610 since May 24, 1958 with the Sales-tax Authorities at Delhi. The petitioner started its own ' manufacturing at Bahadurgarh in the State of Haryana in the year 1966. when the registration certificate was accordingly amended as a manufacturer of motor spare parts, namely, spring leaves etc. The petitioner under the impression that the sales effected from its head office at Delhi were liable to tax in Delhi only had been filing sales tax returns with the authorities in Delhi and had been paying the full amount of the tax due according to the returns to the sales tax authorities both under the Local Act and under the Central Act. The Sales Tax Officer in Delhi had been framing assessments in pursuance of the returns. The .assessment orders both under the Local Act and the Central Act for the financial year 1966-67 were passed on March 15, 1971. for the financial year 1967-68 on January 3. 1972, for the financial year 1968-69 on May 31, 1972 and for .the financial year 1969-70 on March 15, 1974 by the Assessing and Notified Authority appointed under the Local Act and the Central Act. The assessments were framed as per the returns in which the petitioner had included the sale of goods produced at its factory at Bahadur garh but made from the head office at Delhi. The aforesaid four orders are now impugned in the petition on the main ground that the sales were inter-State sales assessable to sales tax under the Central Act by, tile sales tax authorities of Bahadurgarh.

(3.) In the meantime, the petitioner had to purchase for the purpose of manufacturing of goods in its factory at Bahadurgarh large quantities of material within the State of Haryana and, therefore, thought it fit to have it registered as a dealer under the Punjab Sales Tax Act, 1948 as applicable to the State of Haryana (hereinafter called the Haryana Act) also. The petitioner submitted on October 23, 1969 an application under the Haryana Act for registration as a dealer. On November 30, 1969 a registration certificate was issued to the petitioner as a result of which the petitioner became entitled to make tax free purchases for the purpose of manufacture of goods for sale of certain goods as specified in the registration certificate referred to it as a dealer in Haryana. The petitioner then started filing its returns with the authorities in Haryana and paying the tax due according to those returns which for some years included the transactions to which the movement of the goods was caused from Bahadurgarh to Delhi. By an order dated August 24, 1972, the Assessing Authority appointed under the Haryana Act fixed the liability of the petitioner to pay tax under the Haryana Act as well as under the Central Act with effect from September 29, 1966. Having fixed the liability of the petitioner to pay tax within the State of Haryana both under the Haryana Act and the Central Act, the Assessing Authority under the Haryana Act then proceeded to assess the petitioner for the year 1966-67. It was found that during the year 1966-67 no local sales were made and, therefore, the case was filed with no demand. , For the assessment year 1967-68, the Assessing Authority under the Haryana Act by its order dated September I, 1972 held that no local sales were made and filed the case with no demand. But the Assessing Authority at Haryana made an assessment under the Central Act by its order dated September 1, 1972 wherein it treated all the transfers to Delhi as inter-State sales from Bahadurgarh at Haryana and raised against the petitioner a demand of tax of Rs. 24,708.41 under the Central Act for the financial year 1967-68. In the same manner, the "Assessing Authority at Haryana assessed "for the assessment year 1968-69 similar transactions to tax under the Central Act vide its order dated September 1, 1972 and raised a demand against the petitioner of Rs. 32,484.77. Similarly, for the assessment year 1969-70, the Assessing Authority at Haryana again made an assessment under the Central Act vide its order dated January 9, 1973 and a demand of Rs. 47.5001- wa created against the petitioner. For all these years the Assessing Authorities under the Haryana Act rejected the contention of the petitioner that the citus of the sales was Delhi and not from Bahadurgarh. The petitioner filed appeals to the Deputy Excise & Taxation Commissioner, Rohtak. One of the grounds in the appeals was that in case it was finally held that the transfers from Bahadurgarh to Delhi were sales in the course of inter-State trade or commerce as within the meaning of the Central Act, then the 'C' Form which the petitioner had submitted to the sales tax authorities in Delhi be called for and central sales tax at Bahadurgarh be levied only at concessional rates. Another ground taken was that in case it was held to be a sale in the inter-State trade and commerce at Bahadurgarh. then the tax paid on the same transactions to the sales tax authorities at Delhi should be appropriated and not demanded^ twice over on the same transaction. The Deputy Excise & Taxation Commissioner vide his order dated April 3, 1973 after setting aside the orders under appeal directed the Assessing Authority under the Haryana Act-to call for the 'C' Forms from Delhi and then to complete the assessment pertaining to assessment years 1967-68, 1968-69 and 1969-70 after allowing the concessional rate of tax on the basis of 'C' Form filed. The contention of appropriation of the tax paid by the petitioner to the authorities at Delhi was, however, rejected. The assessment orders were subsequently passed on August 4, 1975 by the Assessing Authority under the Haryana Act. No credit was given to the petitioner for the sales tax paid at Delhi.