vil Appeal No 6202 NT of 1983
From the Judgment and Order dated 32
1981 of the Punjab and Haryana High Court in LPA No 128of 1981
Raja Ram Aggarwal Arvind Minocha HK Singh SK Bagga SC Patel and SK Gambhir for the Appellants
Kapil Sibal Additional Solicitor General SP Goel A Subba Rao CVS Rao Mahabir Singh Bishambher Lal and KC Dua for the Respondents
The Judgment of the Court was delivered by RANGANATHAN J
1
All these appeals and writ petitions raise a common question regarding the interpretation of s 91 of the Haryana Sales Tax Act 1973 hereinafter re ferred to as the Act 
Counsel state that the facts in all these appeals are identical and that the only facts neces sary or atleast on record before us on the basis of which the issue us is to be decided are these Each of the appellants petitioners hereinafter referred to compendi ously as assessees  is a registered dealer in the State of Haryana
He purchased certain raw materials in the State without paying tax thereon in view of the provision con tained in section 24 of the Act
He then manufactured certain goods in the State with the aid of said raw materials
He then sold the manufactured goods to dealers who in turn exported those goods out of India
On these facts it is claimed the assessee is not liable to pay the purchase tax on the raw materials imposed under section 91 of the Act
This claim has been rejected by the taxing authorities and the High Court and hence these appeals
The writ petitions have been filed directly in this Court in view of a learned single Judge of the High Court having decided the issue against the assessees as early as 2511
1980 in CWP 122780 which was also affirmed by a Division Bench later 2
The Act is a much amended one and Some of its provi sions have been recently amended with retrospective effect from 27th May 1971 a point of time when actually a prede cessor Act the Punjab General Sales Tax Act 1948 had been in force
The provisions of the statute relevant for our purpose and their relevant amendments may be noticed first 347 1
Section 2e a Originally section 2e defined export  to mean the taking out of goods from the State to any place outside it otherwise than by way of sale in the course of inter State trade or commerce
 b Act 44 of 1976 added at the end of the above definition the following words wef
141976 or in the course of export out of the territory of India
Section 2p a section 2p defined the expression turnover  as includ ing the aggregate of the amounts of the sales and purchases   made by any dealer in any capacity during a given period
Explanation 2 to the second defini tion provided 2 The proceeds of the sale of any goods on the purchase of which tax is leviable under this Act or the purchase value of any goods on the sales of which tax is leviable under this Act shall not be included in the turnover but the purchase value of the goods liable to tax under section 9 shall be included
 b Act 13 of 1989 amended the Explanation by inserting in it after the words section 9 the words or section 24
c Act 1 of 1990 has amended the above Explanation retrospectively to say that the words but the purchase value of the goods liable to tax under section 9 or section 24 shall be included shall be omitted and shall be deemed always to have been omitted with effect from 275
So we have to proceed on the basis that the underlined words never were there in el
p of section 2
The 1990 Act also inserted an Explanation 6 to the clause wef 313
1983 which reads 6 The purchase of barley or of goods used in the manufac ture of guar gum scientific goods utensils and metal handicrafts shall not form part of the turnover of a dealer for the period he is entitled to purchase the goods on the authority of his certificate of registration without payment of sales tax under section 24 provided these are used exclusively for the specified purposes
 348 111
Section 6 Section 6 the charging section read as under 6
Incidence of taxation 1 Subject to other provisions of this Act every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum Defined in section 7 shall be liable to pay tax under this Act on all sales and purchases effected after the coming into force of this Act
Provided that this section shall not apply to a dealer who deals exclusively in goods specified in Schedule B Goods on which no tax is leviable section 6 read with section 15
2 Every dealer to whom sub section 1 does not apply shall subject to other provisions of this Act be liable to pay tax under this Act on the expiry of thirty days after the date on which his gross turnover during any year first exceeds the taxable quantum Provided that this sub section shall not apply to a dealer who deals exclusively in goods specified in Schedule B Provided further that  
XXX XXX XXX Explanation For the purposes of sub section 1 and 2 purchased shall mean the purchase of declared As defined in section 2c of the  goods speci fied in Schedule C and goods falling under section 9
b section 6 was amended by Act I of 1990 to read as follows with retrospective effect from 275
1971 section 6 Incidence of taxation 1 Every dealer whose gross turnover during the year immediately preceding the coming into force of the provisions of this section exceeded the taxable quantum shall be liable to pay tax on all sales and purchases effected after the coming into force of the provi sions of this section
349 Provided that this sub section shall not apply to a dealer who deals exclusively in goods specified in Schedule B 2 Every dealer to whom sub section 1 does not apply shall be liable to pay tax on all sales and purchases effected on the expiry of thirty days after the date on which his gross turnover during any year first exceeds the taxable quantum
Provided that this sub section shall not apply to a dealer who deals exclusively in goods specified in Schedule B Provided further that  
XXX XXX XXX The earlier Explanation however is omitted with the same retrospective effect
Section 9 a section 91 has undergone several amendments by Act 44 of of of of of 1986 and Act 1 of of 1990 has also an impact as we shall indicate later
The section originally read thus section 9 Liability to pay purchase tax Where a dealer pur chases goods other than those specified in the Schedule B from any source in the State and a uses them in the State in the manufacture of i goods specified in Schedule B or ii any other goods and disposes of the manufac tured goods in any manner otherwise than by way of sale whether within the State or in the course of inter State trade or commerce or in the course of export out of the territory of India 350 b exports them in the circumstances in which no tax is payable under any other provision of this Act there shall be levied subject to the provisions of section 17 a tax on the purchase of such goods at such rate as may be notified under section 15
 b Act 44 of 1976 made two amendments to this sub section
The first amendment was to insert after the open ing words where a dealer the words liable to pay tax under this Act
The second amendment which is crucial for the purposes of this case is the addition at the end of sub clause ii of clause a above the words within the meaning of sub section 1 of section 5 of the 
 These amendments were effective from 141976
c Act 11 of 1979 redrafted the above provision ex cluded milk from clause b and added clause c
After this amendment effective from 941979 the provision read thus 91 Where a dealer liable to pay tax under this Act a purchases goods other than those specified in Schedule B from any source in the State and uses them in the State in the manufacture of goods specified in Schedule B or b purchases goods other than those specified in Schedule B except milk from any source in the State and uses them in the State in the manufacture of any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the State or in the course of inter State trade or commerce or in the course of export out of the territory of India within the meaning of sub section 1 of section 5 of the  or c purchases goods other than those specified in Schedule B from any source in the State and exports them in the circumstances in which no tax is payable under any 351 other provision of this Act there shall be levied subject to the provisions of section 17 a tax on the purchase of such goods at such rate as may be notified under section 15 d A doubt had arisen whether the words disposes of used in clause aii later clause b above was compre hensive enough to include cases of despatches by a dealer of the manufactured goods otherwise than by way of sale as for example by way of stock transfer
The State Government had issued a notification dated 19774 even before the 1976 amendment clarifying the position with an answer to the question in the affirmative but this notification as well as the interpretation favoured by it were quashed by a decision of the High Court reported as Goodyear India Ltd vs State 1982 53 STC 163
This led to the amendment of section 91 by Act 3 of 1983
This amendment substituted a new clause b for the earlier one wef
27571inserted a new clause bb wef
9479 and added a proviso
Actually clauses b and bb are identical except that the latter excludes milk from Its purview wef 9479
However to avoid confusion both the clauses may be set out here b purchases goods other than those specified in Schedule B from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of subsection 1 of section 5 of the Central Sales Tax Act 1956or bb purchases goods other than those specified in Schedule B except milk from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufac tured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of sub section 1 of section 5 of the  or
352 The proviso added was in the following terms Provided that no tax shall be leviable under this section on scientific goods and guar gum manufactured in the State and sold by him in the course of export outside the territo ry of India within the meaning of sub section 3 of section 5 of the  e Act 11 of 1984 effected no material change
The exclusion of milk was decided to be dropped and so all that this amendment did was to roll both clauses b and bb into one clause reading thus 4
Amendment of section 9 of Haryana Act 20 of 1973 For clauses b and bb of sub section 1 of section 9 of the principal Act the following clause shall be substituted namely b purchases goods other than those specified in Schedule B from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or dispatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of subsection 1 of section 5 of the Central Sales Tax Act 1956or
f Amendment Act 8 of 1986 substituted in the proviso to section 9 1  the words scientific goods guar gum uten sils and handicrafts in place of scientific goods and guar gum wef 26286
The amendment to section 91 by Act 16 of 1986 is not relevant for our purposes and we pass on to the two relevant amendments effected by Act 1 of 1988
The first was to change the marginal heading of the section to read thus 91 Liability to pay tax on purchase value of goods
The second was to omit the words sub section 1 of at the end of clause b
The relevant part of clause b as thus amended will therefore read despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale   in 353 the course of export outside the territory of India within the meaning of section 5 of the  These amendments became effective from 3112
V Section 24 section 24 is the next section relevant for our purposes
After its amendment by Act 44 of 1976 it read thus wef 281176 24
Rights of registered dealer Every dealer registered under this Act shall be entitled to purchase without pay ment of sales tax the following goods within the State on the authority of his certificate of registration by giving to the dealer from whom the goods are purchased a declara tion duly filled and signed by him containing such partic ulars on such form obtained from such authority as may be prescribed and in case such form is not available with such authority in such manner as may be prescribed a any goods other than those leviable to tax at first stage of sale under section 17 or section 13 for the purpose of i resale in the State or ii sale in the course of inter State trade or commerce b containers and packing materials and other goods excluding those liable to tax at the first stage of sale under section 17 or section 18 specified in his certificate of registration for use by him in the manufac ture in the State of any goods other than those specified in Schedule B for the purpose of i sale in the State or ii sale in the course of inter State trade or commerce or iii sale in the course of export out of the territory of 354 India within the meaning of sub section 1 of section 5 of the 
 b Act 3 of 1983 renumbered the above as section 241 and added with effect from 31383 a proviso each to clauses a and b
These provisions read thus
The proviso to clause a was Provided that a dealer registered under this Act shall also be entitled to purchase barley without payment of sales tax on the authority of his certificate of registra tion on furnishing to the selling registered dealer a declaration referred to above for sale by him in the course of export outside the territory of India within the meaning of section 5 of the  and that to clause b read Provided that a dealer registered under this Act shall also be entitled to purchase without payment of sales tax on the authority of his certificate of registration goods mentioned in clause b above on furnishing to the selling registered dealer a declaration referred to above for use by him in the manufacture in the State of scientific goods and guar gum for the purpose of sale by him in the course of export outside the territory of India within the meaning of sub section 3 of section 5 of the  It also inserted with retrospective effect from 1476 the following sub section 2 Notwithstanding anything contained in form ST 15 or the certificate of registration issued under this Act or the Rules made thereunder no dealer shall be entitled to claim the right envisaged in sub section 1 so renumbered for the period from the first day of April 1976 to the third day of September 1979 in contravention of the provisions of sub section 1 so renumbered The Act also contained a section section 8 validating the notification issued under section 9 read with section 15 and also validating all levy assessment and collection of taxes under section 9 notwithstanding any judgment decree or order of any court or other authority
355 c Act 11 of 1984 changed the marginal heading of the section as Rights and liabilities of registered dealers
It added a clause c to sub section 1 relating to use of the goods in the execution of works contract in the State with which we are not concerned
However it added a new sub section 3 with retrospective effect from 275
1971 to the following effect 3 Notwithstanding any other provisions of this Act or any judgment decree or order of any court or other authority to the contrary if a dealer who purchases goods without payment of tax under sub section 1 and fails to use the goods so purchased for the purposes specified therein he shall be liable to pay tax on the purchase value of such goods at the rates notified under section 15 without prejudice to the provisions of section 50 Provided that the tax shall not be levied where tax is payable on such goods under any other provision of this Act
 d An amendment of 1986 expanded the proviso to section 24Ib by adding utensils and metal handicrafts to scientific goods and guar gum as in section 91 proviso
e Act 1 of 1988 affecting from 31121987 omitted the words sub section 1 of in section 24Ibii
It also omitted the proviso to the said clause
Section 27 Section 27 which defines taxable turnover is not quite relevant for our purposes
We should only like to mention that the provisoes to section 27aiV section 27biii and section 27cii inserted by Act 44 of 1976 wef 1476 all make specific reference to sales in the course of export out of the territory of India within the meaning of sub section 1 of section 5 of the 
The provisoes to section 27aiv in particular make a clear contrast between sales falling under sub section 3 and those failing under sub section 1 of section 5 of the CST Act
Validation provision Act 1 of 1990 effected no amendments to section 24 or 27
But section 14 of 356 this Act which is a validation section on the same lines as those contained in the earlier amendment Acts has been referred to in the course of the arguments before us and can be usefully extracted
It reads 14
Notwithstanding any judgment decree or order of any court or tribunal or other authority to the contrary any levy assessment re assessment or collection of any amount by way of tax made or purporting to have been made and any action taken or things done or purporting to have been taken or done before the commencement of the Haryana General Sales Tax Amendment and Validation Act 1990 in relation to such levy assessment re assessment or collection made under the provisions of section 9 or subsection 3 of secton 24 of this Act shall be deemed to be as valid and effective as if such levy assessment re assessment or collection had been made or action taken or things done under the provisions of clause p of section 2 section 6 section 15 A section 17 section 27 and Schedule D appended to this Act and as amended by the provisions of the Haryana General Sales Tax Amendment and Validation Act 1990 and shall not be called in question in any court or tribunal or other authority and accordingly i all acts proceedings or things done or action taken by the State Government or by any officer of the State Government or by any authority in connection with the levy assessment re assessment or collection of such a tax shall for all purposes be deemed to be and to have always been done or taken in accordance with law ii no suit or other proceedings shall be main tained or continued in any court or before any authority for the refund of any such tax so collected and iii no court or authority shall enforce a decree or order directing the refund of any such tax so collected
These then are the relevant provisions of the Act
Before turning to the question posed for our considera tion it is necessary to refer to section 51 of the 
Thus sub section read as follows 357 5
When is a sale or purchase of goods said to take place in the course of import or export 1 A sale or purchase of goods shah be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India
 This sub section came up for the consideration of this Court in Mohammed Sirajuddin vs State 1975 Supp 1 SCR 169
In that case the appellant s goods were exported out of India
The course of the transaction was that the appellant sold goods to the State Trading Corporation STC but to the knowledge of both these parties the goods were to be exported to fulfill contracts entered into by the STC with foreign buyers the terms of such contracts between the foreign buyers and the STC being referred to in and part of the appellant s contracts with the STC
The apppellant claimed its sales to be sales in the course of export and hence exempt under section 5 of the CST Act
This Court Khanna J dissenting held that the sales of the appellant were not exempt us 51
The appellant had agreed to sell his goods only to the STC and there was no provity of contract between him and the foreign buyer
The court held that the movement of goods outside India was occasioned by the contract between the STC and the foreign buyer and not by that between the appellant and the STC
The deci sion caused several practical difficulties and called for an amendment of the CST Act
The object and reasons of the CST Amendment Act Act 103 of 1976 may be usefully extracted
It said According to section 51 of the  a sale or purchase of goods can qualify as a sale in the course of export of the goods out of the territory of India only if the sale or purchase has occasioned such export or is by a transfer of documents of title to the goods after gods have crossed the customs frontiers of India
The Su preme Court had held vide Mohd Serajuddin vs State of Orissa 36 STC 136 that the sale by an Indian exporter from India to a foreign importer alone qualifies as a sale which has occasioned the export of the goods
According to the Export Control Orders exports of certain goods can be made only by specified agencies such as the State Trading Corporation
In other cases also manufacturers of goods particularly in the small scale and medium sectors have to 358 depend on some experienced export house for exporting the goods because special expertise is needed for carrying on export trade
A sale of goods made to an export canalising agency such as the State Trading Corporation or to an export house to enable such agency or export house to export those goods in compliance with an existing contract or order is inextricably connected with the export of the goods
Fur ther if such sales do not qualify as sales in the course of export they would be liable to State sales tax and there would be a corresponding increase in the price of the goods
This would make our exports incompetitive in the fiercely competitive markets
It is therefore proposed to amend with effect from the beginning of the current financial year section 5 of the to provide that the last sale or purchase of any goods preceding the sale or purchase occasioning export of those goods out of the terri tory of India shall also be deemed to be in the course of such export if such last sale or purchase took place after and was for the purpose of complying with the agreement or order for or in relation to such export section 53 inserted by the above Amendment Act wef 141976 reads thus 3 Notwithstanding anything contained in sub section 1 the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export if such last sale or purchase  took place after and was for the purpose of complying with the  agreement or order for or in relation to such export Now coming to the facts of the present case the asses sees purchased raw materials inside the State of Haryana but paid no tax thereon as they were registered dealers and furnished the declaration forms prescribed under section 24
Their sales of the manufactured goods are to persons who have exported the goods outside India and so they claim they are not liable to pay the tax sought to be imposed on them under section 91
The department however has denied the relief on the short ground that the sales effected by the appellants are not sales in the course of export outside India within the meaning of section 5I of the CST Act
They are only penultimate sales they may be deemd to be e xport sales  because of the fiction created under section 53 of the 359 CST Act but that is not enough to escape from the Clutch es of the charge in section 91
Sri Rajaram Agarwal learned counsel for the assessees contended that the effect of section 53 of the CST Act is to expand the scope of section 51 and include within the concept of sales in the course of export outside India also the penultimate  sales dealt with in Mohd Sirafuddin s case supra A reference to and the meaning of section 51 cannot be understood without a reference to section 53
As a result of section 53 such penultimate sales become export sales falling beyond the purview and competence of State legislatures
The provisions in section 91 of the Act need to be interpreted harmoniously and consistently with the con stitutional scheme
section 91 is a charging section
Purchases of raw materials in the State used in the manufacture of goods inside the State attract the tax under section 91 unless those manufactured goods are dealt with in one of three ways 1 disposed of by way of sale inside the State 2 despatched to a place outside the State but by way of a sale in the course of inter State trade or commerce or 3 despatched to a place outside the State but by way of sale in the course of export outside the territory of India
He submitted that the transactions in the present case fail under category 3 above
In the alternative he submitted that clearly as the assessees had sold goods to other parties in India those sales must be either local sales falling under category 1 or inter State sales failing under category 2
In any view of the matter therefore the assessee s purchases of raw materials would not attract tax under section 91
On the other hand Sri Gupta learned counsel for the State
submitted that there were no facts on record to substantiate the claim on behalf of the assessee that the sales in question fulfilled the conditions set out in section 53 of the CST Act as claimed
He submitted that even if the claim were to be accepted the assessees would be in no better position
He fully supported the reasoning of the High Court and urged that full effect should be given to the words within the meaning of sub section I of section 5 which found a place in section 91b till they were dropped by Act 1 of 1988
If due regard be given to these words he pointed out the assessees would be entitled to an exemption from the impugned purchase tax only if their sales 360 were export sales within the meaning of section 51 of the CST Act which they admittedly were not
He submitted that the argument that to levy the tax imposed by section 91 in cases covered by section 53 but not section 51 of the CST Act would violate Article 286 of the Constitution
was misplaced and overlooks the vital circumstances that what section 91b taxes are the purchases of raw materials and not the manufactured goods that were eventually exported
Alterna tively he submits section 91b has been declared unconstitu tional by this Court in the Goodyear case  and therefore the assessees can seek no implied exemption from its language
If section 9 is left out he says the lan guage of section 6 as amended which brings to charge all pur chases and sales in the State would be attracted and so the impugned taxation of the purchases would be in order
For these reasons he submits that the writ petitions were rightly rejected by the
High Court and that the appeals as well as writ petitions before us deserve to be dismissed
It will be convenient first to dispose of the contention dealt with by the High Court
For the purposes of this argument we shall assume that the sales made by the asses sees were penultimate sales  which would fall within the purview of section 53 of the CST Act
The argument on behalf of the Revenue which has found favour with the High Court is that section 91 exempts only sales made in the course of export within the meaning of section 51 of the CST Act but not those under section 53 of the said Act
After careful consideration we think that this argument was rightly accepted by the High Court
In the first place there is no dispute before us that section 53 covers a category of cases which would not otherwise have come within the purview of section 51 as explained in Mohd Sirajuddin s case
The language of section 91aii later 91b using the words within the meaning of sub section 1 of section 5 of the  have to be given full meaning in other words the exemption under section 91 has to be restricted only to export sales falling within the scope of section 51
It seems clear from the circumstances referred to below that the legisla ture deliberately used these words and intended to give a restricted operation to section 91aiib
These cir cumstances are 1 Section 91aii as originally framed merely uses the words in the course of export outside the territo ry of India
Clause 91b referred to cases where raw materials were purchased and exported and the word export  was defined in section 2c as meaning the taking out of the goods from the 361 State to any place outside it otherwise than by way of sale in the course of inter State trade or commerce Act 44 of 1976 amended the definition of export  in section 2c by adding the wide words or in the course of export out of the territory 01  India wef 14
But the same Act narrowed down the scope of clause aii by adding the restrictive words at the end of the clause
2 If a reference is made to section 24 one finds that section 241iii refers again to sub section 1 of section 5 of the only
However the language of the two provisoes simultaneously introduced in section 241a and b by Act 3 of 1983 makes interesting reading
The proviso to clause a refers only to sale by him in the course of export outside the territory of India within the meaning of section 5 of the  whereas the proviso to clause b refers to sale by him in the course of export outside the territory of India within the meaning of sub section 3 of section 5 of the 
Thus the statute within the same provision has made a distinction between a sale in the course of export within the meaning of section 5 and such a sale within the  meaning of section 53
3 When we turn to section 27 next we find two provisoes introduced in section 271iva by Act 44 of 1976 the same amending Act that introduced the extra words at the end of section 91aii
These provisoes make a marked contrast between sates failing under sub sections 1 and those falling under subsection 3 of section 5 of the CST Act
4 As will be seen from the extract of the legisla tive amendments set out earlier the legislature has subse quently deleted the reference to sub section 3 of section 5 in section 91b
However this amendment which has been made both in section 9 and in section 24 by Act 1 of 1988 has not been given any retrospective effect
Considering that the legislation is replete with instances of retrospec tive effect in some cases even to as early as a date as 791955 the failure or omission to give any retrospective effect to the amendment to section 9 in this regard is an eloquent pointer to the intention of the legislature
In view of the circumstances outlined above we are of the opinion that the High Court was right in concluding that the assessee 362 was not entitled to the exemption under section 9because the sales made by him were not sates in the course of export outside the territory of India within the meaning of section 51 of the 
Shri Rajaram Agarwal learned counsel for the assessees raised a new contention before us which we have already referred to as an alternative contention
This contention which really seems to be unanswerable appears to have been missed at the stage of the High Court but this contention is purely one of law and merits consideration
The point made by him was this
There is no dispute that the assessees have transferred the manufactured goods by way of sale and that these goods have been despatched to various ports of India
The exact terms of despatch are not clear and there are no facts on record which will help us to understand the course of transactions in the several cases before us
But Shri Agarwal submitted that the sales made by the assessees can only fall within one of three categories
They are either local sales or inter State sales or export sales
Each of the assessee have sold its goods to another dealer If that dealer is also a resident of Haryana and has taken delivery of the goods in Haryana and exported them thereafter the assessees  sales would be local sales
If the purchaser dealer of the manufactured goods is in some other State and the goods have been moved out of Haryana in pursuance of that sale they would be inter State sales
The goods which have been sold by the assessee must have been delivered to the dealer in pursuance of the sale either within the State or outside the State in India
In either event it would be a sale covered by the exceptions in section 91
It would be a local sale or inter State sale
The only third possi bility is that assessee sold the goods to a dealer outside India and exported the goods in pursuance of that sale in which event it would be a sale within the meaning of section 51 of the 
We think Shri Agarwal is right in saying that any sale effected by the assessees in the circumstances which have been set out by us earlier must fall in one of three cate gories
We are unable to conceive of a fourth category of sale which could be neither a local sale nor an inter State sale nor an export sale
Shri Gupta on behalf of the State contended that the goods might have been directly moved by the assessee to a port for shipment abroad in pursuance of an export contract entered into by the dealer who purchased from the assessee
Even in such a case if the transport of goods from the assessee s place of business to the port is in pursuance of the terms of the sale the movement of the goods would be occasioned by the sale made by the assessee and would be an inter State sale
If on the other hand the goods were sent 363 to the port by the assessee subsequent to and independent of the sale made by him then for the purpose of that trans port the assessee
would only be an agent of the purchaser and the movement of the goods in pursuance of the contract of sale entered into by the purchaser and would be one in the course of export within the meaning of section 51 of the CST Act
As pointed out by Sri Agarwal even in Mohd Sirajuddin s case supra although the exemption claimed for the sales as export sales was denied the conclusion of the High Court that the sales to STC were inter State sales chargeable under section 51 of the CST Act was upheld
We are therefore of the opinion that this alternative contention urged by the learned counsel for the assessee has to be accepted and it has to be held that since the sales effected by the assessees fall within one of the three exempted categories set out in section 91b there can be no levy of purchase tax under section 91 of the Act
Faced with this situation Shri Gupta for the State contended that this argument will not avail the assessees as according to him section 91b of the Act has been de clared unconstitutional by this Court and is therefore non est
It is somewhat curious that such contention should come from the department which has charged the assessees on the basis of section 91b
Nevertheless we proceed to consider this contention as Sri Gupta says he can support the as sessments alternatively under section 6 of the Act without any aid from section 9 at all
This contention it seems to us proceeds on a misconception of the issue before and the ratio of the decision of this Court in the Goodyear case  That was a case in which certain dealers having purchased raw materials and manufactured goods inside the State despatched those goods outside the State otherwise than by way of sale
The State levied a purchase tax on the raw materials us 91
Thereupon the assessee contended that the levy of tax in the circumstances was in truth and substance the levy of a tax on the manufactured goods on the event of their consignment outside the State otherwise then by way of sale and that the State legislature was not compe tent to levy such a tax
This contention was accepted by this Court
What was declared unconstitutional by this Court was therefore only the levy of a tax where raw materials are purchased and used inside the State for the manufacture of finished goods which are then simply and without any sale despatched rather consigned outside the State
There is however nothing unconstitutional about the two other consequences that flow on the language of the clause one express and the other implied one in favour of the Revenue and the other in favour of the assessee viz 364 1 that there will be a tax on the purchase of the raw materials if the manufactured goods are disposed of in the State itself otherwise than by way of sale and 2 that there will be no tax on the purchase of the raw materials if the manufactured goods are despatched from the State consequent on a i local sale ii inter State sale or iii a sale in the course of export
It seems that these two aspects of section 91b survive even after the judgment of this Court in the Goodyear case  Shri Gupta however drew our attention to certain sentences in the headnote as well as the body of the above decision where certain wider expressions have been used such as s 91b was ultra vires section 91 and 243 are constitutionally invalid section 91c is ultra vires and   the latter part of section 91b is ultra vires and void
As pointed out above section 91 is both a charging and exempting section
Even after the decision the charge under a part of clause b still survives and so also the exemption provided in the latter part of clause b
But let us examine what the position would be if we hold as con tended by Shri Gupta that the effect of the decision is that the words or despatches the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce or in the course of export outside the territory of India within the meaning of sub section 1 of section 5 of the Central Sales tax Act 1956 in section 91b should be deemed to have been deleted from the statute
Shri Gupta contends that if section 91 is left out of account for this reason the pur chases of raw materials by the assessee would be liable to tax under section 6 of the Act
This argument will now be consid ered
The contention of Shri Gupta on this aspect proceeds thus section 6 which is the charging section both originally and after its retrospective amendment in 1990 imposes a tax on all sales and purchases effected by a dealer
In the original section there was an Explanation which restricted the meaning of purchases for the purposes of the section
It provided that only purchases of declared goods goods speci fied in 365 Schedule C and goods falling under section 9 would be part of the turnover 
In other words purchases which did not fall under section 9 ie which could not be taxed under section 9 could not be taxed then under section 6 either
But the 1990 amendment has omitted this Explanation retrospectively
The result is that all purchases are now taxable in the State
This contention is an interesting one but it overlooks the effect of section 2p read with section 15 of the Act
Though section 6 as amended purports to make dealers liable to pay tax on their sales as well as purchases the actual charge of tax under section 15 is only imposed on the sales and purchases that form part of his taxable turnover
To ascertain what this one has to turn to section 2p of the Act
This definition includes within the definition of turnover  the purchase value of goods liable to tax under section 9 but the goods presently in question are not laible to tax under section 9 not only as contended for the assessees and held by us above but also on the hypothesis as to the invalidity of section 91b on which the present argument on behalf of the Revenue pro ceeds
The definition also excludes from its purview the sale proceeds of goods on which purchase tax is leviable under this Act and the purchase value of any goods on the sales of which tax is leviable under this Act
There can be no dispute that a tax is leviable under the Act on the goods in question when they are sold by a dealer and indeed the assessees would have had to pay tax on the sales made to the purchases effected by them but for a claim for exemption under section 24
The definition of turnover  clearly postulates that goods are either to be taxed at the point of purchase or sale and the same transaction cannot be taxed as a sale in the hands of the dealer who sells to the assessees and as a purchase in the hands of the assessees
The only exception was the limited class of goods covered by section 9 but even this exception has been left out with complete retro spective effect
We do not therefore think that Sri Gupta is right in arguing that the purchase tax on the raw materi als can be upheld under section 6 itself even if the charge under section 9 fails
Explanation 6 inserted in section 2p read with the provisoes inserted in section 241 wef
3131983 and their amendment in 1986 have also a bearing in the cases of raw materials purchased for manufacture of guar gum and utensils where the purchase is exempt even if purchased by a registered dealer for the purpose of export within the meaning of section 53 of the CST Act 1956 and some of the assessees before us are such manufacturers out we leave these amendments out of account as they are relevant only for purposes of later assessment years
The raw materials purchased by the assessees are goods on the sales of which tax is leviable under the Act though the assessees are 366 exempt from payment of such tax by reason of section 241
The value of the purchases cannot therefore be included Within the definition of turnover and consequently section 6 will not come to the aid of the Revenue to support the levy of the impugned sales
We may also make a reference to sub section 3 of s 24 inserted with retrospective effect from 2751971 which taxes the purchase of raw materials when the dealer who purchases them had claimed exemption under section 241 but is found not to have used the goods for the purposes speci fied therein ie for the manufacture of goods for the purpose of a local sale b inter State sale or c sale in the course of export outside the territory of India within the meaning of sub section 1 of section 5 of the CST Act
This provision will not help the Revenue for two reasons i As held earlier while discussing the alternative con tention of Shri Agarwalsales in the course of export within the meaning of section 51 of the CST Act 1956
It may be pointed out that after Act I of 1988 this provision does not tax purchases even in cases where the manufactured goods are disposed of only by way of penultimate sales falling under section 53 but not under section 51 of the CST Act 1956 but this amendment came later and will have to be left out of account for the purpose of these cases ii This provi sion has been held to be ultra vires in the Goodyear case supra
We have therefore reached the conclusion that the purchases of raw materials by the assessees are not charge able to tax either us 91 or section 6 or section 243
The appeals and petitions are therefore allowed
The relevant assess ments to tax will be computedmodified accordingly
We however make no order regarding costs
RSS Appeals  Petitions allowed


Summary:
Each of the appellantspetitioners is a registered dealer in the State of Haryana
He purchased certain raw materials in the State without paying purchase tax thereon in view of the provision contained in section 24 of the Haryana Sales Tax Act 1973
He manufactured certain goods in the State with the aid of the said raw materials
He then sold the manufactured goods to dealers who in turn export ed those goods out of India
On these facts the assessee claimed that he was not liable to pay the purchase tax on the raw materials imposed under section 91 of the Sales Tax Act
The Department denied the relief on the short ground that the sales effected by the appellants were not sales in the course of export outside India within the meaning of section 51 of the 
Ac cording to the Department they were only penultimate sales which may be deemed to be export sales  because of the fiction created under section 53 of the CS Act 1956 but that was not enough to escape from the clutches of the charge in section 91
Accordingly the claim of the asses see was rejected by the taxing authorities
The High Court also rejected the assessee s petition
Before this Court it was contended on behalf of the assessees that the effect of section 53 of the CST Act was to expand the scope of section 51 and include within the concept of sales in the course of export outside India also the penultimate  sales that a reference to and the meaning of section 51 could not be understood without a reference to section 53 and that as a result of section 53 such penultimate sales became export sales falling beyond the purview and competence of State legislature
It was further submitted that purchases of 344 raw material used in the manufacture of goods inside the State attracted the tax under section 91 unless those manufactured goods were dealt with in one of three ways 1 disposed of by way of sale inside the State 2 despatched to a place outside the State but by way of a sale in the course of inter State trade or commerce or 3 despatched to a place outside the State but by way of sale in the course of export outside the territory of India
In the alternative it was contended that as the asses see had sold goods to other parties in India those sales must be either local sales or inter state sales and that in any view of the matter it would be a sale covered by the exceptions in section 91 and the assessee s purchases of raw material would not attract tax under section 91
On the other hand on behalf of the State it was inter alia contended that there were no facts on record to sub stantiate the claim on behalf of the assessee that the sales in question fulfilled the conditions set out in section 53 of the CST Act
It was submitted that the assessees would be entitled to an exemption from the impugned purchase tax only if their sales were export Sales within the meaning of section 51 of the CST Act which they admittedly were not
Alternatively it was submitted that section 91b had been declared unconstitutional by this Court in the Goodyear case  and the assessee could seek no implied exemption from its language
Therefore if section 9 was left out the language of section 6  as amended which brought to charge all purchases and sales in the State would be attracted and so the impugned taxation of purchases would be in order
Allowing the appeals and the petitions this Court HELD 1 The language of section 91aii later section 91 b using the words within the meaning of sub section 1 of section 5 of the  have to be given full meaning in other words the exemption under section 91 has to be restricted only to export sales failing within the scope of section 51
360F G Mohammed Sirajuddin vs State 1975 Supp 1 SCR 169 re ferred to
2 The language of the two provisions simultaneously introduced in section 241a and b makes interesting reading
The proviso to 345 clause a refers only to sale by him in the course of export outside the territory of India within the meaning of section 5 of the  whereas the proviso to clause b refers to sale by him in the course of export outside the territory of India within the meaning of sub section 3 of section 5 of the 
Thus the statute within the same provision has made a distinction between a sale in the course of export within the meaning of section 5 and such a sale within the meaning of section 53
361C D 3 The High Court was right in concluding that the assessee was not entitled to the exemption under section 9 because the sales made by him were not sales in the course of export outside the territory of India within the meaning of section 51 of the 
362A 4 What was declared unconstitutional by this Court when it declared section 91b of the Act unconstitutional in Goodyear case was only the levy of a tax where raw mate rials were purchased and used inside the State for the manufacture of finished goods which were then simply and without any sale despatched rather consigned outside the State
There is however nothing unconstitutional about the two other consequences that flow on the language of the clause one express and the other implied one in favour of the Revenue and the other in favour of the assessee viz 1 that there will be a tax on the purchase of the raw materials if the manufactured goods are disposed of in the State itself otherwise than by way of sale and 2 that there will be no tax on the purchase of the raw materials if the manufactured goods are despatched from the State conse quent on a i local sale ii inter State sale or iii a sale in the course of export
These two aspects of section 91b survive even after the judgment of this Court in the Goodyear case
363G H 364A C Goodyear case   explained
5 Section 91 is both a charging and exempting sec tion
Even after the decision in Goodyear case the charge under a part of clause b still survives and so also the exemption provided in the latter part of clause b
364E C 6 Since the sales effected by the assessee fail within one of the three exempted categories set out in section 91b there can be no levy of purchase tax under section 91 of the Sales Tax Act
363C 7 The purchase of raw materials by the assessees are not 346 chargeable to tax either under section 91or section 6 or section 243
366G