BATA INDIA LIMITED Vs. STATE OF HARYANA

JUDGEMENT

(1.) WHETHER the mere despatch of manufactured goods to a place outside the State, is synonymous or analogous to the "consignment of goods in the course of inter-State trade or commerce", as specified in entry No. 92-B of List I of the Seventh Schedule to the Constitution of India (recently inserted by Section 5 of the Constitution (Forty-sixth Amendment) Act, 1982) and therefore, is now within the legislative competence of Parliament alone for the levying of tax, to the total exclusion of the State Legislature, has come to the fore as the spinal question in this set of twenty-one writ petitions.

(2.) THE background in which this issue has come to be raised calls for a brief resume at the very outset. The State of Haryana, in the purported exercise of its power under Section 9 of the Haryana General Sales Tax Act (hereinafter called "the Act") had issued the notification, annexure P-2, dated 19th July, 1974, inter alia imposing the incidence of tax on the despatch of the manufactured goods to a place outside the State to its branch or commission agent or any other person on behalf of the manufacturer. This imposition was assailed by a number of manufacturers in this Court and ultimately, a Division Bench in Goodyear India Limited v. State of Haryana 1983 RLR 68 struck down the notification aforesaid as ultra vires of Section 9 of the Act. To override the effect of said judgment, the Governor of Haryana issued Ordinance No. 1 of 1983 on 13th January, 1983, whereby Section 9 of the Act was sought to be amended with retrospective effect to include within its sweep the despatch of manufactured goods to a place outside the State in any manner otherwise than by way of sale and the impugned notification, annexure P-2, was also validated. Meanwhile, the Constitution (Forth-sixth Amendment) Act, 1982, which had been passed much earlier was enforced with effect from 2nd February, 1983. Thereby inter alia entry No. 92-B in List I of the Seventh Schedule to the Constitution was inserted. The meaningful effect of this and other provisions of the Constitution (Forty-sixth Amendment) Act, 1982, would necessarily call for detailed notice hereafter. Later, the Haryana General Sales Tax (Amendment and Validation) Act, 1983 (Haryana Act No. 3 of 1983), was enacted by the Haryana Legislature and enforced with effect from 31st March, 1983. The said (Act) replaced and repealed the earlier Ordinance. The prsesent writ petitions inter alia seek to assail the amending Haryana Act No. 3 of 1983 with particular reference to the imposition of tax on despatches of manufactured goods to a place outside the State in any manner otherwise than by way of sale including despatches by a manufacturer to his own branches and offices and equally challenge the validation of the earlier notification (annexure P-2) and the action taken thereunder.

(3.) THE factual matrix lies in a narrow compass and is not in serious dispute any may be noticed from C. W. P. No. 5503 of 1982. M/s. Bata India Limited is the well-known concern engaged in the business of manufacture and sale of various types of shoes and has a manufacturing unit at Faridabad within the State of Haryana. It has various depots and branches spread out over the whole of the country as also within the State of Haryana itself. It is averred that for the manufacture of canvas shoes in the State of Haryana, the petitioner-company purchases rubber from various dealers outside the State of Haryana. However, within the State of Haryana, it purchases packing materials for the packing of the end-product (of manufactured shoes) and lubricating oil which is used in the machines during the manufacturing process. It is the stand that the petitioner-company does not purchase any other raw material within the State of Haryana except packing material and lubricating oils aforesaid.