Case Note & Summary
The dispute involved K.B. Handicrafts Emporium and other firms, registered sales tax dealers in Haryana, who manufactured and sold handicraft items. They purchased raw materials within Haryana using declaration forms ST-15, which exempted them from paying purchase tax. The petitioners sold their manufactured goods to dealers in Delhi, who exported these items out of India, and neither party paid tax on these transactions. The Haryana Sales Tax Authorities levied purchase tax on the raw materials based on a previous High Court decision, leading to the present writ petition challenging this levy. The Supreme Court noted that the previous decision in Murli Manohar established that sales could only be classified as intra-state, inter-state, or export sales, and did not attract purchase tax. However, the court recognized a fourth category of sale where goods are taken out of Haryana without a sale occurring within the state, allowing for purchase tax on raw materials used for goods sold in other states. The court directed that the matters be resolved by the appropriate authorities under the Act, based on the clarified legal principles. The writ petitions were disposed of with no costs.
Headnote
A) Sales Tax - Purchase Tax - Levy on Raw Material - Haryana General Sales Tax Act, 1973, Section 9 - The court clarified that sales to exporters can be classified as either intra-state or inter-state sales, which do not attract purchase tax under Section 9. The court emphasized that a new category of sale exists where goods are taken out of Haryana without a sale occurring within the state, allowing for purchase tax to be levied on raw materials used for manufacturing goods sold in other states (Paras 458-459).
Issue of Consideration
Whether purchase tax is leviable on raw materials purchased for manufacturing goods sold to dealers who export them.
Final Decision
The Supreme Court clarified that sales to exporters could be classified as intra-state or inter-state sales, which do not attract purchase tax under Section 9 of the Haryana General Sales Tax Act. The court recognized a fourth category of sale where goods are taken out of Haryana without a sale occurring within the state, allowing for purchase tax to be levied on raw materials used for manufacturing goods sold in other states. The court directed that the matters be resolved by the appropriate authorities under the Act in light of the clarified legal principles.
Law Points
- Purchase tax
- Intra-state sale
- Inter-state sale
- Export sale
- Penultimate sale
- Haryana General Sales Tax Act
- 1973
- Article 32
- Central Sales Tax Act
