DALMIA DADRI CEMENT LTD Vs. STATE OF HARYANA

JUDGEMENT

(1.) THIS reference under Section 22 of the Punjab General Sales Tax Act, 1948 (hereinafter called the "act"), has been made by the Sales Tax Tribunal, Haryana, by order dated 4th September, 1973. The assessment years in question are 1964-65 and 1965-66. During those years, the petitioner-company made sales of cement to the Punjab State Electricity Board of the value of Rs. 2,60,259. 32 (1964-65) and Rs. 4,35,444. 63 (1965-66) and claimed deductions under Section 5 (2) (a) (iv) of the Act on the ground that cement was sold against the certificates issued by the Executive Engineers of the Punjab State Electricity Board to the effect that it was required for use in the generation and distribution of electrical energy. The Assessing Authority allowed the deductions while making assessment orders. The Deputy Excise and Taxation Commissioner (Appeals), Rohtak, exercising the powers of the Commissioner, started suo motu proceedings under Section 21 of the Act, and, after hearing the petitioner, disallowed the deductions to the tune of Rs. 1 lakh for the year 1964-65 and Rs. 2 lakhs for the year 1965-66 on the ground that a part of the cement was used for the construction of office building, residential bungalows and other staff quarters and no deduction in respect of that cement could obviously be allowed under Section 5 (2) (a) (iv) of the Act because it was not connected directly with the generation and distribution of electrical energy. The additional demands of Rs. 6,000 for the year 1964-65 and Rs. 12,000 for the year 1965-66 were created by orders dated 18th September, 1970. Against those orders, appeals were filed before the Sales Tax Tribunal, Haryana, which were rejected. The petitioner-company then filed an application under Section 22 of the Act for making a reference to the court on certain points of law arising out of the orders passed in appeals. The Tribunal has consequently referred the following points of law for decision to this court : (1) Whether, on a true construction of the provisions of Section 5 (2) (a) (iv) of the Act, the applicant-assessee, who made the sales to the Punjab State Electricity Board on the basis of the certificate that the cement was required for use in the generation and distribution of electrical energy, is required to further prove that the same was actually so used ? (2) Whether, on the facts and in the circumstances of the case, disallowance of sales to the extent Rs. 1 lakh in 1964-65 and Rs. 2 lakhs in 1965-66 without any evidence and purely on guess-work is valid and justified ?

(2.) THE provisions of Section 5 (2) (a) (iv) of the Act are as under : 5. (2) In this Act the expression 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom (a ). . . (iv) sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910 (9 of 1910), of goods for use by it in the generation or distribution of such energy. . .

(3.) THE requirements of the clause are : (a) that the sales must have been made to an undertaking supplying electrical energy to the public ; (b) the undertaking must hold a licence or sanction under the Indian Electricity Act, 1910 ; and (c) the goods must be sold to the undertaking for use by it in the generation or distribution of such energy.