Civil Writ Petitions No.2392 of 2007(O&M) -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petitions No.2392 of 2007(O&M) Date of decision: 25.3.2011 M/s Dwarka Dass Trading Co. ...Petitioner Versus State of Haryana etc. ...Respondents and other connected petitions being Civil Writ Petitions No.15206 of 2006, 2333 and 2401 of 2007. CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Avneesh Jhingan, Advocate for the petitioner Mr. Gagndeep Wasu, Deputy Advocate General, Haryana ADARSH KUMAR GOEL, J. (Oral) 1. This order will dispose of Civil Writ Petitions No.15206 of 2006, 2333, 2392 and 2401 of 2007 as as it is stated by learned counsel for the parties that question of law involved in these petition is common. 2. In Civil Writ Petition No.2392 of 2007 prayer is for quashing of orders passed under the provisions of Haryana General Sales Tax Act, 1973 (for short “the Act”) to the extent of including turnover of sale of declared goods in taxable turnover contrary to the statutory scheme under Section 27(1)(b) of the Act. 3. The petitioner is a registered dealer under the Act. It Civil Writ Petitions No.2392 of 2007(O&M) -2- **** purchased cotton in the State and sold the same to a dealer at Bombay who exported the same. 4. The reason given by the Tribunal for not accepting the plea of the petitioner and upholding the orders of lower statutory authorities is that the goods did not qualify for being treated to be in the course of export. Relevant observations are :- “In our opinion transactions cannot be viewed as the transactions effected by the exporter through the Commission Agency of the dealer. These transactions were the purchases of the dealer in his own account as the purchase of cotton made by the dealer was made by the dealer and sold in the course of export under section 5(3) of the Central Sales Tax Act on the strength of H forms. Even otherwise this point that the purchase of cotton by this dealer as Commission Agent were for and on behalf of the exporter and these purchases were not in the own account of the dealer was not raised before the Assessing Authority and as such this point cannot be gone into now. For the reasons given above it emerges that these transactions are not covered by Section 5(3) of the Central Sales Tax Act or Section 3 of the Central Sales Tax Act. These transactions cannot Civil Writ Petitions No.2392 of 2007(O&M) -3- **** be treated as inter state sales calling for deduction under section 27(1)(b)(A)(ii) of the Haryana General Sales Tax Act, 1973 as inter state sales are deemed exports as defined in section 3 of the Central Sales Tax Act, 1956 covered by section 3. Deemed exports cannot be viewed as interstate sales. This appeal fails and is dismissed.” 5. We have heard learned counsel for the parties. 6. Learned counsel for the petitioner submits that even if the goods are not sold in the course of export, turnover of sale in the course of inter-State sale has to be deducted from the taxable turnover. Reliance has been placed upon the order of this Court dated 15.7.2010 in LPA No.227 of 2010 M/s Mahavir Parsad Lakshmi Chand Vs. The State of Haryana and others wherein identical issue was decided in favour of the assessee after analyzing the provisions of Sections 6 and 27 of the Act. The said provisions are as under:- “Section 6 : (1) Subject to other provisions of this Act, every dealer whose gross turnover during the year immediately preceding the 27th day of May, 1971 and every other dealer shall on the expiry of thirty days after the date on which his gross turnover first exceeds the taxable quantum, be liable to pay tax under this Act on the sale or purchase of goods by him in the State at the stage hereinafter provided. (a) on declared goods at the stage specified under Civil Writ Petitions No.2392 of 2007(O&M) -4- **** Section 17; (b) on goods notified under Section 18 at the stage of first sale as specified under that section; (c) on all other goods at the stage of (i)last sale when the goods are sold to any person other than a registered dealer who furnishes declaration as specified under Section 27 or as notified under Section 13 or as prescribed under Section 13 B of this Act. (ii)Last purchase in all other cases except when the purchase is made on payment of tax. Section 27: Taxable Turnover: (1) In this Act, the expression, “taxable turnover” means that part of a dealer's gross turnover during any period which remains after deducting therefrom his turnover during that period. (a) xxxxx xxxxx xxxxx (b) on account of purchase of goods which are specified in Schedule C or D and are liable to tax at the stage of last purchase as specified in Schedule C or Schedule D or the first proviso to Section 17- (A) which are sold during the year (i)to a registered dealer other than a registered dealer with whom composition under Section 26 has been made and is in force. Civil Writ Petitions No.2392 of 2007(O&M) -5- **** Provided that in the case of sale to a registered dealer, a declaration as referred to in {the second proviso to sub clause (ii) of clause (a) of sub sectin (1) of this Section} given to him by the dealer to whom the goods are sold, is furnished by the dealer in the manner prescribed; (ii) in the course of inter State trade or commerce within the meaning of Section 3 of the Central Sales Tax Act, 1956. (iii) in the course of export out of the territory of India within the meaning of sub section (1) of Section 5 of the Central Sales Tax Act, 1956. (iv)to a dealer who is exempted under Section 13 of this Act. (B) xxxxx xxxxx xxxxx 7. In the above order this Court held:- “9. The question for consideration, thus, is whether purchase turnover of the assessee is liable to be excluded to the extent of inter State sale under Section 27 or the said benefit could be denied on the ground that inter State sale was not taxable ? 10. In our view, answer has to be in favour of assessee on plain interpretation of Section 27. There is no reason to ignore plain language of the statute. The purchase turnover has to be excluded from the taxable turnover if qualifications laid down in the section are fulfilled one of Civil Writ Petitions No.2392 of 2007(O&M) -6- **** which is inter State sale. There is no question of double benefit as sought to be projected on behalf of the Revenue.” xxx xxxx xxx “13. Since it is not disputed that the turnover in question is covered by taxable turnover under Section 6, only question to be considered is whether the same is excluded under Section 27. The mandate of Section 27 is “to exclude turnover” on account of purchase of goods specified in Schedule D liable to tax at the stage of last purchase and sold in the course of inter State trade. 14. Contention on behalf of the revenue that benefit under the Central Act have already been taken in respect of inter State sale or on account of export by the purchasing dealer, Section 27 will not be attracted, is not born out by the provision or by any principle of interpretation or by any case law. On the contrary, the turnover of inter State sale being outside the purview of the State law, only relevant taxable turnover is the turnover of purchase which is liable to be excluded to the extent of sale in the course of inter State trade.” 8. Learned counsel for the State has not been able to show any distinction to exclude the applicability of ratio of above case to the present case. The matter is, thus, covered in favour of the petitioner by the above order. Civil Writ Petitions No.2392 of 2007(O&M) -7- **** 9. In view of above, these petitions are allowed and the impugned orders are quashed. 10. A photocopy of this order be placed on the file of each of the connected cases. (Adarsh Kumar Goel) Judge March 25, 2011 (Ajay Kumar Mittal) Pka Judge