Case Note & Summary
The applicant, M/s. Duphar Interfran Ltd., is a company engaged in the manufacture of pharmaceutical products. It purchased raw materials from outside the State of Maharashtra and used those raw materials in the manufacture of goods that were exported outside the territory of India. The Sales Tax Officer levied purchase tax under Section 13 of the Bombay Sales Tax Act, 1959 on these inter-State purchases. The applicant contended that the purchases were covered by Section 8(3)(b) of the Central Sales Tax Act, 1956, which provides for concessional rate of tax on inter-State sales of goods for use in manufacture of goods for export. The Tribunal, however, held that the purchases were not covered by Section 8(3)(b) and were liable to purchase tax. The applicant filed a reference under Section 61 of the Bombay Sales Tax Act, 1959. The High Court framed the question of law: whether the applicant is liable to pay purchase tax under Section 13 of the Bombay Sales Tax Act on inter-State purchases of raw materials used in the manufacture of goods exported outside India. The court heard the parties and reserved judgment.
Headnote
A) Sales Tax - Purchase Tax - Inter-State Purchases for Export - Section 13 of Bombay Sales Tax Act, 1959 and Section 8(3)(b) of Central Sales Tax Act, 1956 - The applicant, a manufacturer of pharmaceutical products, purchased raw materials from outside Maharashtra and used them to manufacture goods exported outside India. The question was whether such inter-State purchases attract purchase tax under the Bombay Sales Tax Act. The Tribunal held that the purchases were not covered by Section 8(3)(b) of the CST Act and thus liable to tax. The High Court framed the question of law for consideration. (Paras 1-5)
B) Sales Tax - Reference - Jurisdiction - Section 61 of Bombay Sales Tax Act, 1959 - The High Court, in a reference under Section 61, considered the question of law arising from the Tribunal's order. The court noted that the issue involved interpretation of provisions of the CST Act and the Bombay Sales Tax Act. (Paras 2-5)
Issue of Consideration
Whether the applicant is liable to pay purchase tax under Section 13 of the Bombay Sales Tax Act, 1959 on inter-State purchases of raw materials used in the manufacture of goods exported outside the territory of India, in light of the provisions of Section 8(3)(b) of the Central Sales Tax Act, 1956.
Final Decision
The High Court framed the question of law for consideration and reserved judgment. The court did not finally decide the reference but set it down for hearing.
Law Points
- Interpretation of Section 8(3)(b) of the Central Sales Tax Act
- 1956
- Levy of purchase tax under Section 13 of the Bombay Sales Tax Act
- 1959
- Inter-State purchase of raw materials for manufacture of exported goods
- Exemption from purchase tax on inter-State purchases used in exports
Case Details
Sales Tax Reference No. 9 of 2012
M.S. Sonak, Advait M. Sethna
Ishaan V. Patkar, Vinit V. Raje, Jyoti Chavan, Himanshu Takke
M/s. Duphar Interfran Ltd.
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Nature of Litigation
Sales Tax Reference under Section 61 of the Bombay Sales Tax Act, 1959
Remedy Sought
The applicant sought a reference to the High Court on the question of law regarding levy of purchase tax on inter-State purchases of raw materials used in manufacture of exported goods.
Filing Reason
The applicant was aggrieved by the order of the Maharashtra Sales Tax Tribunal dated 5 May 2010 which held that the inter-State purchases of raw materials used in manufacture of exported goods were liable to purchase tax under Section 13 of the Bombay Sales Tax Act, 1959.
Previous Decisions
The Maharashtra Sales Tax Tribunal by judgment and order dated 5 May 2010 held that the purchases were not covered by Section 8(3)(b) of the Central Sales Tax Act, 1956 and were liable to purchase tax.
Issues
Whether the applicant is liable to pay purchase tax under Section 13 of the Bombay Sales Tax Act, 1959 on inter-State purchases of raw materials used in the manufacture of goods exported outside India, in light of Section 8(3)(b) of the Central Sales Tax Act, 1956.
Submissions/Arguments
The applicant argued that the inter-State purchases of raw materials used in the manufacture of exported goods are covered by Section 8(3)(b) of the Central Sales Tax Act, 1956 and thus not liable to purchase tax under the Bombay Sales Tax Act.
The respondent, State of Maharashtra, supported the Tribunal's order that the purchases were not covered by Section 8(3)(b) and were liable to purchase tax.
Ratio Decidendi
The court did not deliver a final ratio as the judgment only framed the question of law and reserved the matter for hearing. However, the issue involves interpretation of Section 8(3)(b) of the Central Sales Tax Act, 1956 and Section 13 of the Bombay Sales Tax Act, 1959 regarding levy of purchase tax on inter-State purchases of raw materials used in manufacture of exported goods.
Judgment Excerpts
The Sales Tax Reference (“STR” for short) arises from judgment and order dated 5 May 2010 of the Maharashtra Sales Tax Tribunal at Mumbai.
Issue for Consideration: Whether the applicant is liable to pay purchase tax under Section 13 of the Bombay Sales Tax Act, 1959 on inter-State purchases of raw materials used in the manufacture of goods exported outside the territory of India, in light of the provisions of Section 8(3)(b) of the Central Sales Tax Act, 1956.
Procedural History
The Sales Tax Officer levied purchase tax on the applicant's inter-State purchases of raw materials used in manufacture of exported goods. The applicant appealed to the Maharashtra Sales Tax Tribunal, which by order dated 5 May 2010 upheld the levy. The applicant then filed a reference under Section 61 of the Bombay Sales Tax Act, 1959 to the High Court of Judicature at Bombay, which framed the question of law and reserved judgment on 21 November 2025.
Acts & Sections
- Central Sales Tax Act, 1956: Section 8(3)(b)
- Bombay Sales Tax Act, 1959: Section 13, Section 61
