Civil Writ Petition No.5153 of 1987 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.5153 of 1987 Date of decision: 5.1.2011 Food Corporation of India ...Petitioner Versus The State of Haryana and others ...Respondents CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. V.S.Rana, Advocate for the petitioner. Mr. Vinod S. Bhardwaj, Advocate for the respondents **** ADARSH KUMAR GOEL, J ( Oral) 1. This order will dispose of Civil Writ Petition Nos.5153, 9778 of 1987, 3110, 7961 of 1988 and 1110 of 1989 as it is stated that all the petitions involve common questions. 2. Prayer in CWP No.5153 of 1987 is for quashing of order dated 10.6.1987 passed by the Assessing Authority under the provisions of Haryana General Sales Tax Act, 1973. Prayer has also been made for declaring explanation to section 2(p) and sections 4,5,7,11 and 14 of the Haryana General Sales-tax Amendment and Validation Act, 1990 as unconstitutional and for directing the respondents to refund the amount of tax, interest and penalty. 3. The petitioner is a statutory entity and is registered under the Act as a dealer. Its case is that it purchased wheat and paddy Civil Writ Petition No.5153 of 1987 -2- **** and got the paddy converted into rice. Its transactions attract tax under the Act. During the assessment it raised objections to the inclusion of following items in its turn over:- “i) On the value of rice bran which the shellers kept with them when they shelled paddy and gave 55 percent of the weight of paddy as rice; ii) On the bardana which were the containers in which wheat and rice had been supplied by the Corporation to the nominees of the Haryana Government under the scheme 'Food for work/National Rural Employment Programme' which wheat, rice was exempted from tax; iii) On on the incidentals, treating it as part of the turnover.” 4. The said objections were not accepted and assessment was made. The petitioner did not take remedy of appeal on the ground that the said remedy was onerous requiring payment of assessed tax and penalty. After filing of the petition, amendment was made to challenge levy of purchase tax in view of the judgment of the Hon'ble Supreme Court in Goodyear India Limited V. State of Haryana and another (1990) 76 STC 71 striking down the levy of purchase tax. In the amended petition following substantial questions of law were framed:- “i). Whether the amended sub-section (5) of section 39 of the Haryana General Sales Tax Act, by Haryana Act No.10 of 1987 is unconstitutional and ultra vires Civil Writ Petition No.5153 of 1987 -3- **** and has to be struck down being arbitrary and totally unsupportable piece of legislation which negatives the right to file an appeal against an illegal and arbitrary order of the Assessing Authority; ii) Whether the Assessing Authority could include the price of rice, bardana and the incidentals for bringing them to take in view of the submissions made above? iii) Whether by the retrospective amendment any legal sanctity can be conferred on the orders passed and whether any such retrospective legislation is permissible and is not violative of the rights of the petitioners as guaranteed under Articles 14 of the Constitution of India; iv) Whether Haryana Act No.1 of 1990 envisages/imposes an indirect barrier or inter-State trade or commerce, which is hit by Articles 301 to 304 of the Constitution of India, and whether by amending the Act by Haryana Act No.1 of 1990 the Haryana Legislature has laid down unreasonable restriction on the freedom of trade, commerce or intercourse with or within the State, and whether in doing so the Haryana Legislature has tried to undo the judgment of Hon'ble Supreme Court (1990 76 Civil Writ Petition No.5153 of 1987 -4- **** STC 72) in an illegal manner; v) Whether the Amending Act No.1 of 1990 violates Article 19(1)(g) of the Constitution of India as it imposes an unreasonable restriction on trade; vi) Whether the Amending Act is a colourable exercise of legislation and whether the Haryana Legislature is competent to legislate in a manner so as to impede the free flow of trade; vii) Whether the declaration ST-XV is ultra vires the Constitution of India; viii) Whether the Haryana Legislature has not amended the Act in such a manner as to bring the same in conformity with the judgment of the Hon'ble Supreme Court; and whether the present legislative enactment suffers from the same infirmity as the earlier Act; ix) Whether inter-state trade and commerce is one of the basic structure of our Constitution and by the present enactment the basic structure itself is being shaken and is being violated; x) Whether the Haryana legislature in passing the impugned enactment has violated the Constitutional rights of the petitioners as guaranteed under Articles 14 and 19(1)(g) and Articles 301 to 304 of the Constitution.” Civil Writ Petition No.5153 of 1987 -5- **** 5. In reply filed on behalf of the State, it was stated that after the judgment of Goodyear India Ltd. retrospective amendment vide Act No.1 of 1992 had been made. Requirement of pre-deposit for filing appeal had been defended on the ground that appeal was creature of statute. As regards inclusion of disputed items in the turn over, stand taken is that assessing authority was justified in including the said item. 6. We have heard learned counsel for the parties. 7. Since the learned counsel for the petitioner has not been able to advance any argument, learned counsel for the State has been called upon to assist the Court. He submits that issue of levy of purchase tax has since been concluded by the judgment of the Supreme Court in Hotel Balaji Vs. State of A.P. AIR 1993 SC 1048 reversing the earlier view taken in Goodyear India Limited. Accordingly, question Nos. (iii) to (x) stand covered against the petitioner. Question No. (i) is covered against the assessee by the judgment of Hon'ble Supreme Court in State of Haryana Vs. Maruti Udhyog Limited 2000(7) Supreme Court Cases 348. Question No.(i) has, thus, to be decided against the petitioner. As regards question (ii), it is pointed out that in the case of the petitioner itself the matter has been decided by this Court on 19.3.2009 in G.S.T.R. NO.14 of 1990 (M/s Food Corporation of India, Ferozepur Vs. State of Punjab). It was held that expenditure incurred by the petitioner after purchasing the goods and before delivery and the price of gunny bags had to be included in the turn over. Only market Civil Writ Petition No.5153 of 1987 -6- **** fee was not to be included in the turnover. The observations therein are as under:- “A close scrutiny of the aforesaid provision shows that emphasis has been made to include any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof. It follows that after the agricultural produce has been purchased by the dealer in inter se bidding then for taking its delivery it has to incur certain expenditure, which are either on or before the delivery. The provision is illustrative with regard to the aggregate of the amounts of purchases and parts of purchases actually made by any dealer. Therefore, it would include the price of bag, labour charges, stitching charges, price of jute thread, dammi and carriage etc. In that regard, the contention of the learned State counsel deserves to be accepted that there is no delivery taken before weighment, which is not possible without packing the agricultural produce in a gunny bag. We also find substance in the contention of the learned counsel that even stitching and labour incurred for all these activities have to be included for effective delivery of the goods, which would include carriage also.”....... “Similar view has been taken by Hon’ble the Supreme Court in the case of Co-Operative Company Limited v. Commissioner of Trade Tax, (2007) 4 SCC 480. There Civil Writ Petition No.5153 of 1987 -7- **** is no dispute that the price of gunny bags was included in the total consideration amount. Hence, it has to be regarded as ‘sale’.” ...... “Therefore, once the element of market fee is not to form part of the consideration then it cannot be included in the total turnover for the purposes of realising the tax.” In view of the above submission made on behalf of the State, the issues of constitutionality having already been settled and other issues also being prima-facie covered against the petitioner, instead of finally taking decision in the matter, the petitioner is relegated to remedy of appeal. If an appeal is filed by the petitioner within one month from the date of receipt of certified copy of this order, the same may not be dismissed on the ground of limitation. It is made clear that the petitioner will be at liberty to raise such points as may be available to it under the law. The petitions stand disposed of accordingly. (Adarsh Kumar Goel) Judge January 05,2011 (Ajay Kumar Mittal) Pka Judge