INDIAN GAS CYLINDERS Vs. STATE OF HARYANA

JUDGEMENT

(1.) This order will dispose of Civil Writ Petition 6597 of 1986, 6180 of 1987 and 5753 of 1989 as these are between the same parties and question involved therein is identical. The facts are being taken from Civil Writ Petition No. 6597 of 1986.

(2.) Petitioner No. 1 is a partnership firm of which petitioner No. 2 is the Managing Partner. It owns a factory situated at Faridabad in the State of Haryana for the manufacture of gas cylinders and washing machines. The gas cylinders are manufactured by the firm for sale as also on job contract basis. The job contract for the manufacture of gas cylinders is entered into with the petitioner-firm by various Oil Corporations, such as Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum etc. etc. The petitioner-firm is registered Under Section 7 of the Central sales Tax Act, 1956 (hereinafter referred to as 'the Act'). The petitioner started making inter-State purchases of various raw materials and consumable stores required for the manufacture of gas cylinders from different parts of the country. The purchase of these raw-materials and consumable stores were divided into two categories, i.e. those required for the manufacture of gas cylinders sold by the petitioner to various Oil Companies and those purchased by the petitioner to enable the firm to execute the job contracts entered into with various Oil Corporations. Out of the consumables and raw material needed for executing job contracts, only steel sheets were supplied by the Corporation whereas rest of the consumables were purchased by the petitioner-firm on inter-State sale basis from various places outside Faridabad, It has been stated in the petition that a perusal of the list attached with the Certificate of Registration 'Annexure A' would show that a large number of articles were necessary raw-material for the purpose of manufacture of gas cylinders, particularly those in category 'B' of the list.

(3.) The case of the petitioner-firm is that right from 1969 to 1980, the Assessing Authority under the Act all along accepted the fact that the sales made in favour of the petitioner-firm during the period of 12 years satisfied the description of Sub-section (3) of Section 8 of the Act and, therefore, it was liable to attract sales tax only at the rate of 4 per cent. So far as the returns filed by the petitioners are concerned, it was clearly indicated impliedly and explicitly that central sales lax was paid at the rate of 4 per cent on all inter-Slate sales made in favour of the petitioner-firm both in respect of the consumables purchased for the manufactured of gas cylinders for sale and those manufactured for Oil Corporations on job work basis. However, some time in the year 1980, the Assessing Authority, Faridabad, issued a notice to the petitioner-firm to show cause why it may not be proceeded against for penal action Under Section 10(d) of the Act on the ground that it failed to make use of the goods for the purpose mentioned in Section 8(3) of the Act without any reasonable excuse. A comprehensive reply was submitted by the petitioner-firm stating that the registration certificate issued in its favour had been strictly adhered to by it and that there was no misuse or violation of the said certificate of registration. It was also brought to the notice of the Assessing Authority that the material sold to the petitioner-firm in the course of inter-State trade was intended for being used for packing of goods for sale, though such sales were made by the Oil Corporations and that the commodity sold was L.P. gas and the same was contained in the container manufactured by the petitioner-company. The Assessing Authority, however, did not agree with the petitioner-company and imposed a penalty of Rs. 2,00,000/- for the year 1980-81. Similarly, proceedings were also initiated for the years 1981-82 and 1982-83. In all, proceedings for as many as 9 years were initiated by the Assessing Authority both prior and subsequent to 1980-81. In ail these proceedings, a penalty of Rs. 19,85,000/-was imposed. The petitioner-firm filed appeals against the orders of the Assessing Authority and the Joint Excise and Taxation Commissioner (Appeals), Haryana, dismissed all the appeals. Second Appeals were filed before the Sales Tax Tribunal. The Tribunal, however, disposed of one appeal being S.T.A. No. 128/85-86 vide order dated 7th November, 1986 upholding the orders of the authorities below while the remaining appeals are still pending. In C.W.P. No. 6597 of 1986, the petitioner-firm sees quashment of the order of respondent No. 2 dated 7th November, 1986, passed by the Sales Tax Tribunal in sales Tax Appeal No. 128/1985-86.