LexM/S. MONGA RICE MILL versus STATE OF HARYANA AND ANR.
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MIS. MONGA RICE MILL A v. STATE OF HARYANA AND ANR. APRIL 13, 2004 [RUMA PAL AND S.H. KAPADIA, JJ.] B Haryana General Sales Tax Act, 1973: Sections 6 and 17 and Schedule D. Sales Tax-AYs 1996-97 to 1999-2000-Export sale-Exemptions from 0 sales tax-Rice miller bought paddy, produced rice therefrom within the State and sold it to the exporter within the State-Held: Such a sale was a local sale which did not fall under S. 5(3) of the Central Sales Tax Act-Hence, purchase of paddy by the miller not exempt from levy of sales tax-Central Sales Tax Act, 1956, Ss. 5 & 15(a) & (ca). • . D Words & Phrases: "Stage"-Meaning of-In the context of S. 15(a) of the Central Sales Tax Act, 1956. The appellant-miller purchased paddy, processed it and produced rice therefrom within the State and sold it to the exporter within the State. The appellant claimed that in view of Article 286 of the Constitution and Section 5(3) and 15(ca) of the Central Sales Tax Act, 1956, the State was not competent to levy purchase tax on the paddy purchased by it for sale E of rice to the exporter. However, the High Court held that the purchase F ' of paddy by the appellant for sale of rice to the exporter was exigible to the levy of purchase tax under Sections 6 and 17 read with Schedule D of the Haryana General Sales Tax Act, 1973. Hence the appeals. The following question arose before the Court :- Whether the State has power and competency to levy tax on paddy, purchased by the miller for sale of rice to the exporter, in view of Section 5(3) read with Section 15(ca) of the Central Sales Tax Act, 1956? Dismissing the appeals, the Court 145 G H 146 SUPREME COURT REPORTS (2004] SUPP. I S.C.R. A HELD: 1. Section 5 of the Central Sales Tax Act, 1956 lays down the principles for determining as to when a sale or purchase takes place in the course of export. It defines constitutional inhibition of Article 286(l)(b), namely, that no law of a State shall impose tax on sale or purchase which takes place in the course of import of goods into or export of goods out of India. Section 5(1) covers direct export sale, whereas B Section 5(3) applies to penultimate sale or purchase, which is .deemed to be sale or purchase in the course of export and consequently falls under Section 5(1) of the 1956 Act Therefore, in cases where a sale is not directly connected with exports and where between the seller and the ultimate buyer, intermediaries are involved, such a sale, if not covered under C Section 5(3), cannot occasion any export and, therefore, such a transaction would not fall under Section 5(1). There is a difference between sale for export and sale which occasions export. When the assessee buys paddy and converts it into rice, which is sold to the exporter, although purchase of paddy is a transaction for export, such a transaction does not occasion export and consequently it does not fall within Section 5(3). Under Section D 5(3), a penultimate local sale is deemed to be an export sale under Section 5(1) only if such a local sale occasions export [154-D-G) 2.1. In the present case, appellant is a miller within the State; it buys paddy and procures rice therefrom within the State and sells it to the E exporter within the State and as such it is a local sale, which does not fall under Section 5(3). It is a sale for export and not a sale which occasions export (157-G; 158-A] 2.2. Under Section 15(a) of the 1956 Act, as it stood at the ~aterial time, the State could levy tax either at the sale end or purchase end of the F transaction in case of declared goods. Consequently, under Sections 6 and 17 read with Schedule D of the Haryana General Sales Tax Act, 1973, there is a single point levy of tax and not tax at multiple points. It is the last purchase of paddy, which is made taxable under the 1973 Act The single ·point levy envisages tax at either ends of the same transaction provided that the identity of the goods remains unchanged. It is a tax on one single G commodity. Section 15(a) of the 1956 Act inter a/ia states that the tax payable under the State law shall not be levied at more than one stage. The word "stage" in Section 15(a) refers to stages of successive sales and purchases and not to stages, which raw material undergoes, resulting in the manufacture of a different commercial commodity. The reason is not H far to see. Under the 1973 Act, rice and paddy are two different MONG A RICE M
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