Kisan Tractors vs State of Harayana

M.M. Kumar, J.—The Sales Tax Tribunal, Haryana (for brevity, "the Tribunal") had dismissed the appeal of the dealer-assessee while deciding STA No. 285 of 1996-97 vide its order dated December 3, 1996 and the assessee-dealer had claimed that substantive questions of law would emerge from that order. Accordingly, the assessee-dealer filed an application u/s 42 of the Haryana General Sales Tax Act, 1973 (for brevity "the Act"). The Tribunal vide its order dated July 21, 1999 has referred the following questions of law in case STM No. 62 of 1996-97 in respect of the assessee for the assessment year 1984-85:

(i) Whether, the Sales Tax Tribunal is justified to hold that rate of tax on imported parts and components of a tractor assembled in the country with more than 2/3rd indigenous parts, to be eight per cent on the basis of Notification No. 50-79/HA-20/75-S-15/81, dated March 31, 1981?

(ii) Whether, on the facts and circumstances of the case, the commission amounting to Rs. 2,11,800 received by the assessee is part of turnover under the; provisions of the Haryana General Sales

Tax Act, 1973?

At hearing today only first question of law was pressed as counsel for the dealer-assessee has given up the second question of law. Accordingly we proceed to answer the aforesaid question.

Brief facts of the case necessary for disposal of the aforesaid question are that the dealer-assessee was a sole proprietorship concern held through Sh. Harjeet Singh son of Kartar Singh. He started his business in September, 1984 on allotment of agency of tractors manufactured by ESPI Corporation. Unfortunately after about one and half months of the start of the agency, the then Prime Minister of the country Smt. Indira Gandhi was assassinated due to which riots broke out in Delhi and its adjoining areas falling in Haryana. Shri Harjeet Singh, who was the proprietor and a Sikh, also become victim of a mob attack and he was stated to have sustained serious injuries. He fled away from Faridabad and came to Patiala where he took refuge with his relatives. Registration certificate of the firm was applied on September 14, 1984 on the start of the business and the same was prepared by the office on December 11, 1984 after he had fled away from Faridabad to save his life. In the riots all his books of account and stock including the business premises were damaged.

On October 14, 1987 the Assessing Authority issued a notice in form ST XXV but it could not be served because the business premises of the dealer were closed. The notice sent by registered post at Lakhmir Kheri address was also received back with the remarks that no such person was available. Then a notice was served on the surety thereafter. The surety had intimated to the Department that the dealer was killed during riots. Accordingly, ex-parte assessment was framed vide order dated December 24, 1987. The petitioner came to know about the assessment and then filed an appeal before the Joint Excise and Taxation Commissioner (A), Faridabad who vide his order dated February 10, 1989 set aside the ex parte order dated December 24, 1987 passed by the Assessing Authority and remanded the matter back for hearing the same on merits afresh after affording a reasonable opportunity of hearing to the dealer-assessee. The Assessing Authority vide order dated October 16, 1989 held that the dealer-assessee had filed proof from M/s. ESPI Industrial Corporation, Faridabad as well as the pamphlet concerning the tractors. He accordingly recorded the satisfaction that the tractors were manufactured in India and tax at the rate of four per cent was chargeable which applies to the indigenous manufactured tractors. Accordingly assessment was framed and additional demand of Rs. 3,224 was raised which stood paid by the assessee.

The Deputy Excise and Taxation Commissioner (I), however subsequently invoked revisional jurisdiction by initiation of suo motu proceedings and issued a notice to the dealer alleging that the rate of tax was 8.08 per cent and certain commission received by him was also part of the turnover. Accordingly ex parte assessment was framed on July 30, 1992 by charging tax at 8.08 per cent and interest from September 1984 to July 30, 1992. Accordingly demand of Rs. 1,03,223 along with interest amounting to Rs. 1,43,448 was raised against the dealer-assessee. The dealer-assessee challenged that order before the Tribunal and the Tribunal in its order dated December 3, 1996 has referred to the Notification No. SO-79/HA-20/73/S-15/81 dated March 31,1981 issued u/s 15 of the Act and held that indigenous parts of the tractor are exigible to sales tax at four per cent and imported parts/components were chargeable to sales tax at eight per cent. The view of the Tribunal is discernible from paras 7, 8 and 9 which read thus:

In a situation as in current case it would sound quite logical if indigenous parts and components are subjected to sales tax at four per cent and imported parts and components are subjected to sales tax at eight per cent. In my view the words ''tractors imported from outside India (in their assembled or unassembled form)'' would cover imported parts and components used in the manufacture of tractors. Therefore, it will be quite logical if turnover pertaining to imported parts and components is subjected to sales tax at eight per cent and the balance turnover is subjected to tax at four per cent. As far as imposition of interest is concerned, relating to J.K. Synthetics Limited and Birla Cement Works and another Vs. Commercial Taxes Officer, State of Rajasthan and another, is quite clear that interest is to be levied on such amount as is not deposited but is due according to the returns.

The order dated July 30, 1992 of DETC-cum-Revisional Authority has gone beyond the aforesaid observations as there is no justification to impose interest in view of J.K. Synthetics Limited and Birla Cement Works and another Vs. Commercial Taxes Officer, State of Rajasthan and another, . Similarly, there is also no justification to impose sales tax at 8.08 per cent on the financial cost of the indigenous inputs. Only imported parts and components will be subjected to tax at 8.08 per cent and indigenous parts and components and other indigenous inputs will be subject to tax at four per cent under the entry as stated vide notification.

In view of my opinion expressed in the preceding paragraph the order dated July 30, 1992 is set aside and the case is remanded to DETC, Faridabad (West) to make the assessment afresh in the light of the aforesaid observations. The appellant is directed to appear before the Deputy Excise and Taxation Commissioner (West), Faridabad on December 16, 1996 with relevant record and such evidence as he wishes to rely upon in support of his case. The Deputy Excise and Taxation Commissioner (West), Faridabad is directed to finalise the fresh assessment by January 31, 1997 positively. The appellant is also directed to co-operate with the DETC (West), Faridabad, in the matter of assessment.

Having heard the learned Counsel for the parties and perusing the paper book with their able assistance we are of the view that it would be necessary firstly to read the notification dated March 31, 1981. Relevant part of the same reads thus:

The rate of tax on tractors manufactured in India shall be ''(four paise in a rupee and the rate of tax on tractors imported from outside India in their assembled or unassembled form)'' shall be eight paisa in a rupee.

The aforesaid notification has been issued u/s 15 of the Act. A perusal of the extracted portion of the notification shows that the rate of tax on tractors manufactured in India has to be four per cent whereas tax on tractors imported from outside India in their assembled or un-assembled form has to be eight per cent. There is no further classification whether component of tractors or part used in it, if imported from foreign country, was to attract different rate of tax as has been opined by the Tribunal. If any component or a part of the tractor is imported from foreign country then it cannot be concluded that the tractor has not been manufactured in India. Therefore, to assess the tractor using the imported component separately and by bifurcating a tractor for the purpose of assessing sales tax, on the language of the statutory instrument, cannot be regarded as lawful. It would be doing violence to the language of the statutory instrument if it is to be interpreted to mean that separate assessment in respect of imported and indigenous components could be made. It is a conceded position that the tractor in question has been assembled with 2/3rd indigenous components. It is well-settled interpretation of statute that charging section has to be construed according to the plain language used. It is only in case of any ambiguity in the language used that the courts can step in to ascertain the true meaning of the provision which could be other than the one given in the provision. Therefore, we are of the view that the Tribunal has not correctly applied the entry in the notification dated March 31, 1981 to frame the assessment. Accordingly the first question pressed by the dealer-assessee is liable to be answered in favour of the dealer-assessee and against the Revenue.

Regarding question No. (ii)

This question has not been pressed by the counsel for the dealer-assessee and therefore the same is returned unanswered.

As a sequel to the above discussion, question No. (i) is answered in favour of the dealer-assessee and against the Revenue.