Civil Appeals Nos 85  389 of 1957
Appeal from the judgment and order dated August 26 1955 of the Calcutta High Court in Income tax References Nos 44 of 1954 and 17 of 1953
section Mitra and P K Mukherjee for the appellant in C A No 8557 N C Chatterjee and P K Ghosh for the appellant in C A No 38957
R Ganapathy Iyer R H Dhebar and D Gupta for the respondent
April 15
The judgment of Sinha and Kapur JJ was delivered by Sinha J Hidayatullah J delivered a separate judgment
SINHA J
The common question of law arising in these two appeals on certificates of fitness granted by the High Court of Calcutta under section 66A2 of the Indian Income tax Act 1922 is the effect and scope of the words  constituted under an instrument of partnership in section 26A of the Income tax Act which in the course of this judgment will be referred to as the Act
644 The facts of the two cases leading upto these appeals though not dissimilar are not identical
They are therefore set out separately
In Civil Appeal No 85 of 1957 Messrs R C Mitter and Sons 54 Rani Kanto Bose Street Calcutta claim to be a firm said to have been constituted in April 1948 with four persons whose names and shares in the nett profits of the partnership business are stated to be as under a Ramesh Chandra Mitter 40 per cent
of the nett profits
b Sudhir Chandra Mitter 30 per cent
of the nett profits
c Sukumar Mitter 20 per cent
of the nett profits
dSushil Chandra Mitter 10 per cent
of the nett profits
The firm intimated its bank the Bengal Central Bank Limited as it then was of the constitution of the firm as set out above by its letter dated April 15 1948
The letter also stated that a partnership deed Was going to be drawn up and executed by the partners aforesaid and that the deed so drawn up will be forwarded to the bank in due course
Though the firm is said to have come into existence in April 1948 the deed of partnership which is set out as annexure  A  at P 5 of the paper book was drawn up only on September 27 1949
This deed of partnership appears to have been registered under the provisions of the Indian Partnership Act on October 12 1949
It was also forwarded to the Bengal Central Bank Ltd Head Office at Calcutta as it appears from the seal of the bank and the signature dated December 7 1949
An application to register the firm under section 26A for the assessment year 1949 50 was made to the Income tax Authorities
The date of the said application does not appear from the record before us
The application was rejected by the Income tax Authorities
The firm preferred an appeal to the Income tax Appellate Tribunal which was also dismissed by the Tribunal by its order dated September 7 1953
The ground of the order of the Tribunal was that as the firm admittedly 645 was formed by a verbal agreement in April 1948 and not by or under an instrument in writing dated September 27 1949 and as the assessment was for the year 1949 50 for which registration of the firm was sought the registration could not be ordered
The Tribunal also referred to the letter aforesaid to the Bengal Central Bank and observed that the letter merely contained information as to the formation of the partnership and of the personnel thereof but it did not contain the terms on which the partnership had been formed
It also showed that a partnership had been created but not by deed
Hence the Tribunal further observed the letter might be useful for consideration on the question of the genuineness of the firm but it could not fulfil the requirements of section 26A namely that the firm should be constituted under an instrument of partnership
Therefore the Tribunal held that assuming the firm to be genuine it was not entitled to be registered under section 26A of the Act
Thereupon the assessee moved the Tribunal under section 661 of the Act
That application was granted by the order dated February 2 1954 and the case stated to the High Court for its decision on the following question   Whether the assessee firm which is alleged to have come into existence by a verbal agreement in April 1948 is entitled to be registered under section 26A for the purpose of assessment for 1949 50 where the Instrument of Partnership was drawn up only in September 1949 after the expiry of the relevant previous year 
The High  Court Bench presided over by Chakravarti C J by its judgment dated August 26 1955 answered the question in the negative
The learned Chief Justice considered the matter from all possible view points including grammatical etymological and textual matters and came to the conclusion that  constituted  meant created 
He also considered that the preposition under  is  obviously inappropriate after having convinced himself that  constituted could be equated with created
He also found no difficulty in observing that  some of the 646 paragraphs of the Form appear to be ill adjusted to the provisions of the Act and the Rules 
In the end therefore he concluded with the remarks  It appears to me to be desirable that the language of the section as also that of the Rules should receive legislative attention 
In Civil Appeal No 389 of 1957 Messrs D C Auddy  Brothers Calcutta claim to be a partnership consisting of Dulal Chand Auddy Prem Chand Auddy Gora Chand Auddy and Kalipada Nandy
The partnership business is said to have begun in June 1944
An application was made on August 241949 for the registration of the partnership
The Income tax Officer and the Appellate Assistant Commissioner were of the opinion that the partnership was not a genuine one and could not be registered
Another reason for not ordering registration was that the partnership deed having been executed on June 2 1948 could not be operative during the two years under consideration namely 1945 46 and 1946 47
On appeal the Income
tax Appellate Tribunal rested its decision on the finding that the alleged partnership had not been constituted under an instrument of partnership within the meaning of those words in section 26A of the Act
At the instance of the assessee the Tribunal framed the fol lowing question for determination by the High Court  Whether the assessee firm constituted orally in June 1944 can validly be registered in the assessment years 1945 46 and 1946 47 under Section 26A of the Indian Income Tax Act on the basis of a Memorandum of Partnership executed in June 1948
 The other parts of the statement of the case by the Tribunal refer to the merits of the assessment with which we are not concerned in this appeal
Hence it is not necessary to set out those facts
On this part of the statement of the case the High Court gave the same answer as in the other appeal
In this case also the High Court granted the necessary certificate under section 66A2 read with article 135 of the Constitution
As both the cases raise the same question of law they have been heard together and will be governed by this judgment
647 It is convenient at this stage to set out the relevant provisions of the Act
Section 26A is in these terms  26A Procedure in registration of firms I Application may be made to the Income tax Officer on behalf of any firm constituted under an instrument of partnership specifying the individual shares of the partners for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax
2 The application shall be made by such person or persons and at such times and shall contain such particulars and shall be in such form and be verified in such manner as may be prescribed and it shall be dealt with by the Income tax Officer in such manner as may be prescribed
 The section contemplates the framing of rules laying down the details of the Form in which the application has to be made and the particulars which should be stated in the application and other cognate matters
Section 59 of the Act authorizes the Central Board of Revenue subject to the control of the Central Government to make rules for carrying out the purposes of the Act and sub section
5 of section 59 provides that rules made under the section shall be published in the Official Gazette and  shall thereupon have effect as if enacted in this Act
Income tax Rules 2 to 6B lay down the details of the procedure for making an application for the registration of a firm as contemplated under section 26A quoted above
These rules have been amended extensively in 1952 but we are concerned in this case with the rules before those amendments
Rule 2 requires such an application to be signed by all the partners personally and to be made before the income of the firm is assessed for the year under section 23 of the Act
Rule 3 requires that the application be made in the Form annexed to the rule and that the application shall be accompanied by the original Instrument of Partnership under which the firm is constituted 
The Form appearing in r 3 requires the assessment year to be specified
Thus the registration is for a particular year of assessment and not for future years also and therefore the application for registration has 648 to be made every year which in fact means an application for renewal of the registration
Paragraph 3 of the Form requires a certificate to be signed by the applicants for registration to the effect that the profits or loss if any of the previous year were divided or credited as shown in Section B of the Schedule
The Form contains the Schedule in 7 columns which require the names of the partners their addresses the date of admittance to partnership their shares in the profits or loss etc to be filled in
Under the Schedule there are Section A and Section B Section A has to contain particulars of the firm as constituted at the date of the application and Section B has to contain the particulars of the apportionment of the income profits or gains or loss of the business in the previous year between the partners who in that previous year were entitled to share therein
Rule 4 provides that if the Income tax Officer
is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership and that the application has been properly made he has to enter a certificate at the foot of the Instrument of Partnership that the firm has been registered under section 26A of the Act and that the certificate of registration shall have effect for the assessment for the year specified therein
Rule 5 is as follows 5
The certificate of registration granted under Rule 4 shall have effect only for the assessment to be made for the year mentioned therein
And Rule 6 makes provision for the certificate of registration to be renewed for a subsequent year on an application being made in that behalf in accordance with the preceding Rules
It is manifest that for a true and proper construction of the relevant provisions of the Act relating to registration of firms sections 26 26A and 28 and the Rules summarized above have to be read together
So read it is reasonably clear that the  following essential conditions must be fulfilled in order that a firm may be held entitled to registration 1 That the firm should be constituted under an Instrument of Partnership specifying the individual shares of the partners
649 2 That an application on behalf of and signed by all the partners containing all the particulars as set out in the Rules has been made 3 That the application has been made before the assessment of the income of the firm made under section 23 of the Act omitting the words not necessary for our present purpose for that particular year 4 That the profits or loss if any of the business relating to the previous year that is to say the relevant accounting year should have been divided or credited as the case may be in accordance with the terms of the Instrument and lastly 5 That the partnership must have been genuine and must actually have existed in conformity with the terms and conditions of the Instrument
It is clear from what has been said above with reference to the relevant provisions of the Act that the certificate of registration has reference to a particular assessment year and has effect for the assessment to be made for that particular year
In other words the terms of the partnership should appear in the Instrument of Partnership in respect of the relevant accounting year
It is equally clear that the firm to be registered should have been in existence during the accounting year  constituted as shown in the Instrument of Partnership 
The Rules thus contemplate a document operative during the accounting year
We are not here concerned with the further question whether the document should be in existence at the very inception of the accounting year or before the year is out
The provisions of the Act set out above do not present any serious difficulty except for the words it constituted under an Instrument of Partnership  occurring in section 26A and the relevant Rules
On the interpretation of these words there has been a conflict of judicial opinion as will presently appear
On behalf of the assessee appellants it has been contended that so long as the assessment has not been made the assessees are entitled to have their firms registered in accordance with the terms of the Instrument of 82 650 Partnership irrespective of the year in which the Instrument may have come into existence
Strong reliance was placed upon the decision of the Bombay High Court Chagla C J and Tendolkar J in the case of Dwarkadas Khetan  Co vs Commissioner of Income tax Bombay City Bombay1 wherein the following observations have been made  Any firm can make an application under section 26A for registration and the two conditions that it has got to comply with are that it must be constituted under an instrument of partnership and the second condition is that the instrument of partnership must specify the individual shares of the partners
If these two conditions are satisfied it would be entitled to registration
The section does not say that the firm must be constituted by the instrument of partnership
It does not require that the firm must come into existence by reason of the instrument of partnership or that the firm should be the creature of the instrument of partnership or that the firm must not exist prior to the instrument of partnership being executed
In the case decided by the Bombay High Court the Instrument of Partnership had been executed on March 27 1946 with effect from January 1 1946
On an application made to the Department to register the firm the matter was determined by the Income tax Appellate Tribunal against the assessee on the ground that the partnership was in existence before the deed was executed and that therefore it could not be registered
Before the Bombay High Court reliance had been placed on behalf of the Department on the decision of the Calcutta High Court now before us in appeal as also on a decision of the Punjab High Court
The decision of the Calcutta High Court now under examination in the case of R C Mitter  Sons vs Commissioner of Income tax 2 takes the view that section 26A of the Act contemplates a firm created or brought into existence by an Instrument of Partnership which governs the distribution of shares in the relevant accounting period
Such a deed should have 1 1956  907
2  704 705
651 come into existence on or before the commencement of the relevant accounting period
The other decision relied upon in the Bombay High Court had been given by a Division Bench of the Punjab High Court reported in Padam Parshad Rattan Chand vs Commissioner of Income tax Delhi 1
On the other hand it has been contended on behalf of the Revenue that in order to entitle a firm to be registered the firm should have been created by an Instrument of Partnership or at any rate such an Instrument should be in existence during the relevant accounting year that is the year previous to the year of assessment in respect of which the application for registration has been made
For the first part of the submission on behalf of the respondent there is ample authority in the decision under appeal which bad been relied upon before the Bombay High Court
In that case R C Mitter  Sons vs Commissioner of Income tax supra 2  Chakravarti C J who delivered the opinion of the Court under section 661 of the Act after a very elaborate discussion came to the conclusion which may best be expressed in his own words as follows  If by the expression I constituted under an instrument of partnership  is meant a firm which originated in a verbal agreement but with respect to which a formal deed was subsequently executed there would be no room in the section for partnerships actually created by an instrument and such partnerships although most obviously entitled to registration would be excluded from the purview of the section
Even etymologically or textually I do Dot think that the word constituted  when used in relation to a firm or such other body can mean anything but I created when the reference is to some deed or instrument to which the inception of the firm or other body is to be traced  After having thus held that section 26A contemplated firms created or brought into existence by a deed in writing he had no difficulty in substituting  by  for  under  thus making the crucial words  constituted I 2  704 705 652 by  instead of  constituted under 
In our opinion the learned Chief Justice fell into the error of re constructing the provisions of the statute instead of construing them
The word  by  could be substituted for the word  under  in section 26A only if the words as they stand in the section were not capable of making sense and it would thus have been necessary to amend the wording of the section
Turning his attention from the wording of the section to that of the Rules and the Form appearing under the Rules he again came to the conclusion that  some of the paragraphs of the Form appear to be ill adjusted to the provisions of the Act 
Referring to other parts of the Rules he was constrained to observe that they would lend strong support to the view that what is meant by any firm constituted under an instrument of partnership  in section 26A is no more than a fir of which the constitution appears from an instrument in writing
It is obvious that if such be the meaning of the expression constituted under an instrument of partnership  the instrument need not be one by which the partnership was created 
But then he attempted to get over that difficulty by observing that the language of the Rules and the Form could not supersede a provision contained in the Act itself
He further opined that the language in para
41 is  un doubtedly unsatisfactory 
In our opinion any attempt to reconstruct the provisions of the relevant section and the Rules on the assumption that the intention of the legislature was to limit the registration of firms to only those which have been created by an Instrument of Partnership is with all respect erroneous
The proper way to construe the provisions of the statute is to give full effect to all the words of the relevant provisions to try to read them harmoniously and then to give them a sensible meaning
Hence we have to consider at the threshold the question whether the words  constituted under an Instrument of Partnership  have some meaning which can be attributed to them harmoniously with the rest of the relevant provisions
A partnership may be created or set up by a contract in writing 653 setting out all the terms and conditions of the partnership but there may be many cases and perhaps such cases are more numerous than the other class where a partnership has been brought into existence by an oral agreement between the parties on certain terms and conditions which may subsequently be reduced to writing which will answer the description of an Instrument of Partnership
Such an instrument would naturally record all the terms and conditions of the contract between the parties which
at the initial stages had not been reduced to writing
In such a case though the partnership had been brought into existence by an oral agreement amongst the partners if the terms and conditions of the partnership have been reduced to the form of a document it would be right to say that the partnership has been constituted under that instrument
The word  constituted  does not necessarily mean  created  or  set up  though it may mean that also
It also includes the idea of clothing the agreement in a legal form
In the Oxford English Dictionary Vol
II at pp
875  876 the word  constitute  is said to mean inter alia  to set up establish found an institution etc  and also  to give legal or official form or shape to an assembly etc 
Thus the word in its wider significance would include both the idea of creating or establishing and the idea of giving a legal form to a partnership
The Bench of the Calcutta High Court in the case of R C Mitter and Sons vs Commissioner of Income tax1 under examination now was not therefore right in restricting the word  constitute  to mean only  to create  when clearly it could also mean putting a thing in a legal shape
The Bombay High Court therefore in the case of Dwarkadas Khetan and Co vs Commissioner of Income tax Bombay City Bombay 2 was right in holding that the section could not be restricted in its application only to a firm which had been created by an instrument of partnership and that it could reasonably and in conformity with commercial practice be held to apply to a firm which may have come into existence earlier by an 1  704 705
2  907
654 oral agreement but the terms and conditions of the partnership have subsequently been reduced to the form of a document
If we construe the word  constitute  in the larger sense as indicated above the difficulty in which the learned Chief Justice of the Calcutta High Court found himself would be obviated inasmuch as the section would take in cases both of firms coming into existence by virtue of written documents as also those which may have initially come into existence by oral agreements but which had sub
sequently been constituted under written deeds
The purpose of the provision of the Income tax Acts
26A is not to compel the firms which had been brought into existence by oral agreements to dissolve themselves and to go through the formality of constituting themselves by Instruments of Partnership
If we construe the words  constituted under  in that wider sense we give effect to the intention of the legislature of compelling a firm which bad existed as a result of an oral agreement to enter into a document defining the terms and conditions of the partnership so as to bind the partners to those terms before they could get the benefit of the provisions of section 23 5 a
Section 23 5 a confers a privilege upon partners who may find it more worth their while to be assessed upon their individual total income than upon the total income of the partnership
It is therefore very important from the point of view of the Revenue that the Department should be apprised in time of the true constitution of the partnership the names of the true partners and the precise share of each of them in the partnership profits or loss if any
The very object of this provision will be defeated if the alleged partner ship is not genuine or if the true constitution of the partnership and the respective shares of the partners are not fully and correctly placed on record as soon as possible for the purpose of assessment
In this connection the provisions of section 282 of the Act are also worth noticing
That sub section provides that if the Income tax Officer or the Appellate Authorities under the Act are satisfied that the profits of a registered firm have been distributed otherwise than 655 in accordance with the shares of the partners as shown in the Instrument of Partnership registered under the Act and governing such distribution and that any partner has concealed any part of his profits the penalty prescribed therein may be imposed upon such a partner
Unless the Instrument of Partnership has been registered in respect of the accounting year and before the assessment has been done the penal provisions aforesaid cannot be enforced
It is therefore essential in the interest of proper administration and enforcement of the relevant provisions relating to the registration of firms that the firms should strictly comply with the requirements of the law and it is incumbent upon the Income tax Authorities to insist upon full compliance with the requirements of the law
But in our opinion there is no warrant in the words of the relevant provisions of the statute for restricting registration under section 26A of the Act to those firms only which have been created or brought into existence by an Instrument of Partnership
In our opinion it is more in consonance with the terms of the relevant provisions of the Act referred to above to hold that the words  constituted under an instrument of partnership  include not only firms which have been created by an Instrument of Partnership but also those which may have been created by word of mouth but have been subsequently clothed in legal form by reducing the terms and conditions of the partnership to writing
We have already indicated that there has been a conflict of judicial opinion in the different High Courts in India on the question now before us
But on a consideration of the facts in each case it will be found that the decision arrived at in most of the cases was correct though the reasons given appear to have gone beyond the requirements of the case
The decision of the Bombay High Court in Dwarkadas Khetan  Co vs Commissioner of Income tax Bombay City Bombay 1 discloses that the partnership then in question had come into existence with effect from the beginning of 1946 though the Instrument of Partnership 1 1956  907
656 was executed on March 27 1946
Thus the Instrument of Partnership came into existence during the accounting year whatever that year may have been because the year 1946 was the starting year of the partner Ship
Hence even the earliest assessment year presumably the year 1947 48 would be governed by the terms and conditions of the written Instrument of Partnership aforesaid
The decision of the Bombay High Court was followed by the same Bench of that Court in the case of Commissioner of Income tax Bombay North vs Shantilal Vrajlal  Chandulal Dayalal  Co 1
In the second case the learned Judges ruled that the second partnership deed of September 12 1951 which set out the names and shares of all the partners who constituted the partnership could be registered in respect of the accounting year November 1948 to October 1949
This conclusion was arrived at without even a mention far less a discussion of the relevant provisions of the Act
Apparently the matter was not critically placed before the learned Judges when they decided the second case
The con clusion in this case is with all respect apparently wrong in view of our conclusion that the Instrument of Partnership should have been in existence in the accounting year
In the High Court of Punjab the question was fully discussed in a judgment of a Division Bench given by one of us Kapur J as he then was in the case of Kalsi Mechanical Works Nandpur vs Commissioner of Income tax Simla 2
In that case the firm had come into existence by a verbal agreement in June 1944
The deed of partnership was drawn up as late as May 9 1949
The application for registration of the firm under section 26A for the assessment year 1949 50 was dismissed by the lncome tax Authorities as also by the Tribunal
The High Court after an elaborate examination of the relevant provisions of the Act including the Rules and the Forms upheld the orders of the Department
The conclusion of the Bench was in these terms  The sections of the Income tax Act show that 1 2  361 657 for the purpose of registration it is necessary that the firm should be constituted by an instrument of partnership and in my opinion the Rules read with Sections 26 and 28 of the Act indicate that such a firm as is constituted under an instrument of partnership should have been in existence during the account period and should not come into existence during the assessment year and if it was not in existence during the account period it cannot be registered so as to affect the liabilities of the partners for income tax accruing during the account period
 The conclusion reached is correct except with all respect for the observation that under section 26A it is necessary that the firm should be constituted  by  an instrument of partnership
That is the leading judgment in the High Court of Punjab
It was followed by another Division Bench of that Court in the case of Padam ParshadRattan Chand vs Commissioner of Income tax Delhito the effect that constituted under an instrument in section 26A meant created or formed by a formal deed
In this case the business of the firm had started from April 1 1947 but the Instrument of Partnership was executed on April 10 1950
The application for registration was made in respect of the assessment year 1948 49
It is clear with reference to these dates that the Instrument of Partnership was not in existence either during the accounting year or even during the assessment year and the Court therefore rightly held that the partnership could not be registered in respect of the assessment year but they proceeded further to observe that there was no objection to the firm being treated as having been constituted under the Instrument as from the date of the Instrument itself
The answer of the Court to the question posed was that the firm could be registered not in respect of the assessment year for which the application had been made but with effect from the date of the Instrument
Apparently the attention of the Court was not drawn to the Rules aforesaid particularly Rules 2 and 3 which require 1 83 658 that the application has to be made before the assessment is completed and for a particular assessment year
More or less to the same effect are two other Division Bench rulings Of that High Court in Bery Engineering Co Delhi vs Commissioner of Income tax Delhi 1 and Income tax Commissioner Delhi vs Messrs Birdhi Chand Girdhari Lal 2
In all these cases in the Punjab High Court the deeds came into existence later than the accounting year or the assessment year and therefore could not have been registered
The actual decisions in these cases were correct though there are orbiter dicta to the effect that section 26A requires that the firm should have been created or set up by an Instrument of Partnership
In the Patna High Court the very same question was discussed at great length by a Division Bench of that Court presided over by Ramaswami C J in the case of Khimji Walji  Co vs Commissioner of Income tax Bihar and Orissa 3
The learned Chief Justice after an elaborate examination of the relevant provisions of the Act came to the conclusion in these terms  It is necessary for the purpose of registration under Section 26A that the partnership should be constituted by an instrument of partnership and that such a partnership as is constituted under an instrument of partnership should have been in existence during the accounting year 
It is on the same lines as the leading judgment of the Punjab High Court supra
With reference to the dates given in the judgment the decision is right though in this case also the words  constituted under  have been construed as  constituted by  without discussing the necessity for so amending the words of the statute even as in the Punjab High Court decisions
As a result of the above discussion the conclusion is reasonably clear that unless the partnership business was carried on in accordance with the terms of an Instrument of Partnership which was operative during 1 2 3  470 659 the accounting year it cannot be registered in respect of the following assessment year
As in these cases the partnership did not admittedly function under such a deed of partnership the Department and the High Court were right in refusing registration
We would therefore dismiss these appeals but for different reasons to those given below
The respondent is entitled to his costs one set of hearing fees to be paid half and half by the appellants
HIDAYATULLAH J I have had the advantage of reading the judgment just delivered by my brother Sinha J
I agree that section 26A of the Indian Income tax Act must be read as it is
The words of the section as they stand are not meaningless and in view of the decision in Commissioners for special Purpose of the Income tax vs Pemsel 1 it is not possible to read for the expression  constituted under  the words constituted by 
I entertain however some doubt as to whether the instrument sought to be registered should be in existence in the accounting year before registration can be claimed
There is nothing in the Act which says this specifically
My brother has reasoned from the contents of the Act and the Rules that such a condition is implied
While I entertain some doubts I am not prepared to record a dissent more so as the Board of Revenue has issued instructions that all firms should be registered whether the documents under which they were constituted existed in the accounting year or not provided the Income tax Officer was satisfied about the genuineness of the firms
In the result I agree that the appeals should be dis
missed with costs
Appeals dismissed
1  542


Summary:
Petitioners firms were registered sales tax dealers
They manufactured and sold handicraft items
As they purchased raw material within the State against declaration forms ST 15 prescribed under Rule 21 of the Haryana general Sales Tax Rules read with Section 24 of the Haryana General Sales tax Act purchase tax was not paid
The petitioners sold the items of handicrafts to dealers in Delhi who exported the same out of India
As the Delhi dealers issued Form H prescribed under the Cectral Sales Tax Rules they did not pay tax on the said salepurchase
Following the High court decision in Ms Murli Manohar and company Panipat  ors
vs State of Haryana  Ors
CW P No 1227 of 1980
The Sales Tax Authorities levied purchase tax us 9 of the Haryana General Sales Tax Act for the assessment years in question on the purchase of raw material made by the petitioners computing the tax with reference  to the purchase value of the goods exported against Form H Hence the present writ petition before this Court was filed challenging 454 155 the impugned order of levying purchase tax
Meanwhile this court allowed the appeals preferred against the decision of the High Court in Murli Manohar and Company s case setting aside the judgment of the High Court
As a common question arose in this batch of writ petitions all petitions heard together
The petitioners contended that in view of the decision of this Court in Murli Manohar 1991 1 SCC 377 the writ petitions were to be allowed
Disposing of the writ petitions this Court section HELD 11
The decision in Murli Manohar says that there can be only three types of sales namely intra state sales inter state sales and export sales a nd no other
A sale to an exporter would be either at intrastate sale or an inter state sale in either case the decision says it does not attract the purchase taxon raw material under Section 9 of the Haryana General Sales Tax Act
However in the light of the decision in Hotel Balaji it must be held that there is one more category in addition to the three categories mentioned above
The fourth category is where a dealer in Haryana takes his goods out of Haryana without effecting a sale within the State and effects the sale in the other State
According to Section 9 of the Haryana Act as explained in Hotel Balaji purchase tax can be levied and collected on the raw material purchased by the manufacture within Haryana which was utilised for manufacturing the goods so sold in the other State
458 D F Murli Manohar case
  followed
Good year India Lid
and Ors
vs State of Haryana and Anr
  referred to
Hotel Balaji and Ors
vs State of Andhra Pradesh  ors
JT explained 21
In a petition under article 32 of the Constitution it is not the province of the Supreme Court to go into facts
As repeatedly emphasised by this Court the question whether a particular sale is an intra state sale an inter state sale an export sale within the meaning of Section 51 or a 456 penultimate sale within the meaning of section 53 or otherwise is always a question of fact to be decided by the appropriate authority in the light of the principles enunciated by Courts
459 C 22
In these circumstances it is directed that the matters be disposed of by the authorities under the Act in the light of the law declared by this Court in Murli Manohar Hotel Balaji and in this judgment
459 D