Iqbal Singh, J.
1. This order will dispose of Civil Writ Petition 6597 of 1986, 6180 of 1987 and 5753 of 1989 as these are between the same parties and question involved therein is identical. The facts are being taken from Civil Writ Petition No. 6597 of 1986.
2. Petitioner No. 1 is a partnership firm of which petitioner No. 2 is the Managing Partner. It owns a factory situated at Faridabad in the State of Haryana for the manufacture of gas cylinders and washing machines. The gas cylinders are manufactured by the firm for sale as also on job contract basis. The job contract for the manufacture of gas cylinders is entered into with the petitioner-firm by various Oil Corporations, such as Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum etc. etc. The petitioner-firm is registered Under Section 7 of the Central sales Tax Act, 1956 (hereinafter referred to as 'the Act'). The petitioner started making inter-State purchases of various raw materials and consumable stores required for the manufacture of gas cylinders from different parts of the country. The purchase of these raw-materials and consumable stores were divided into two categories, i.e. those required for the manufacture of gas cylinders sold by the petitioner to various Oil Companies and those purchased by the petitioner to enable the firm to execute the job contracts entered into with various Oil Corporations. Out of the consumables and raw material needed for executing job contracts, only steel sheets were supplied by the Corporation whereas rest of the consumables were purchased by the petitioner-firm on inter-State sale basis from various places outside Faridabad, It has been stated in the petition that a perusal of the list attached with the Certificate of Registration 'Annexure A' would show that a large number of articles were necessary raw-material for the purpose of manufacture of gas cylinders, particularly those in category 'B' of the list.
3. The case of the petitioner-firm is that right from 1969 to 1980, the Assessing Authority under the Act all along accepted the fact that the sales made in favour of the petitioner-firm during the period of 12 years satisfied the description of Sub-section (3) of Section 8 of the Act and, therefore, it was liable to attract sales tax only at the rate of 4 per cent. So far as the returns filed by the petitioners are concerned, it was clearly indicated impliedly and explicitly that central sales lax was paid at the rate of 4 per cent on all inter-Slate sales made in favour of the petitioner-firm both in respect of the consumables purchased for the manufactured of gas cylinders for sale and those manufactured for Oil Corporations on job work basis. However, some time in the year 1980, the Assessing Authority, Faridabad, issued a notice to the petitioner-firm to show cause why it may not be proceeded against for penal action Under Section 10(d) of the Act on the ground that it failed to make use of the goods for the purpose mentioned in Section 8(3) of the Act without any reasonable excuse. A comprehensive reply was submitted by the petitioner-firm stating that the registration certificate issued in its favour had been strictly adhered to by it and that there was no misuse or violation of the said certificate of registration. It was also brought to the notice of the Assessing Authority that the material sold to the petitioner-firm in the course of inter-State trade was intended for being used for packing of goods for sale, though such sales were made by the Oil Corporations and that the commodity sold was L.P. gas and the same was contained in the container manufactured by the petitioner-company. The Assessing Authority, however, did not agree with the petitioner-company and imposed a penalty of Rs. 2,00,000/- for the year 1980-81. Similarly, proceedings were also initiated for the years 1981-82 and 1982-83. In all, proceedings for as many as 9 years were initiated by the Assessing Authority both prior and subsequent to 1980-81. In ail these proceedings, a penalty of Rs. 19,85,000/-was imposed. The petitioner-firm filed appeals against the orders of the Assessing Authority and the Joint Excise and Taxation Commissioner (Appeals), Haryana, dismissed all the appeals. Second Appeals were filed before the Sales Tax Tribunal. The Tribunal, however, disposed of one appeal being S.T.A. No. 128/85-86 vide order dated 7th November, 1986 upholding the orders of the authorities below while the remaining appeals are still pending. In C.W.P. No. 6597 of 1986, the petitioner-firm sees quashment of the order of respondent No. 2 dated 7th November, 1986, passed by the Sales Tax Tribunal in sales Tax Appeal No. 128/1985-86.
4. In C.W.P. No. 6180 of 1987 it has been stated by the petitioner that respondent No. 2, following its decision given in the appeal (S.T.A. No. 128/1985-86 relating to the year 1980-81, rejected the other appeals of the petitioner-firm for the years 1974-75 to 1979-80 and 1981-82 and 1982-83 by a Single order dated 11th November, 1986 (Annexure 'B' the C.W.P. No. 6180 of 1987). In C.W.P. No. 6180 of 1987, the petitioner-firm has challenged the validity of the order of respondent No. 2.
5. In C.W.P. No. 5753 of 1989 the petitioner-firm has challenged the order dated 13th January, 1989 (Annexure P-2 to C.W.P. No. 5753 of 1989) passed by the Assessing Authority-cum-Deputy Excise and Taxation Commissioner, Faridabad (respondent No. 3) whereby a penalty of Rs. 1,00,000/- has been imposed upon the petitioner-firm for the assessment year 1983-84.
6. In the return by the respondents (in C.W.P. No. 6597 of 1986) and stand is that the petitioner-firm filed a review petition bearing S.T.R. No. 27 of 1986-87 against the impugned order dated 7th November, 1986, and the same has not yet been decided. The petitioner, instead of awaiting the decision on its review petition, has rushed to this Court. It has also been stated that before filing the present petition, the petitioner-firm has not exhausted the alternative remedy of seeking a reference on a question of law to this Court.
7. On merits, it has been stated that Sub-section (1) of Section 8 of the Act provides that every dealer, who in the course of inter-State trade or commerce- (a) sells to the Government any goods, or (b) sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3), shall be liable to pay tax under this Act, which shall be 4 per cent of his turnover, It has been further stated that the question whether the petitioner had fulfilled the requirement of Clause (b) of Sub-section (3) of Section 8 of the Act was not before the Assessing Authority when he finalised the assessment of the petitioner prior to the year 1980. During the course of checking, it was noticed that the petitioner-firm had purchased raw material outside the State of Haryana on the strength of registration certificate and had used a part of the said material in the manufacture of gas cylinders on job work basis. Such cylinders were not sold either by the petitioner-firm or by the Oil Companies, for which the cylinders had been manufactured on job work basis. Therefore, the petitioner had contravened the provisions of Section 10(d) of the Act. The Assessing Authority accordingly initiated proceeding for imposition of penalty Under Section 10-A. of the Act. It has been stated that the penalty was rightly imposed. Respondents have further stated that it is not disputed by the petitioner-firm that the gas cylinders for the manufacture of which it had used the goods purchased from outside the Slate of Haryana, were not sold by the petitioner-firm or by the Oil Companies for whom it had manufacture the gas cylinders on job work basis. Thus, the petitioner did not fulfil the requirement of Section 8(3)(b) of the Act. It is the further case of the respondents that according to the Registration Certificate, Annexure 'A' to the writ petition, only four items find mentioned against entry D under the heading of 'Packing Material'. These items are; (1) corrugated paper sheets; (2) G.I. Wire; (3) Packing cases and (4) nails etc. The penalty imposed upon the petitioner-firm for contravention of the provisions of Section 8(3)(b) of the Act are not in relation to these 4 items. In fact, the penalty has been imposed as the petitioner-firm failed to show that after purchasing goods mentioned against entry 'B' of its Registration Certificate under the heading 'For the Purpose of manufacture' were sold by it, After purchasing such goods, the petitioner-firm had no reasonable excuse to show as to why it could not make use of such goods for the purposes specified in Section 8(3)(b) of the Act. It has been further stated that the two appellate authorities below found the aforesaid factual position to be correct and accordingly dismissed the appeals filed by the petitioner-firm. It has been also stated that the gas cylinders did not find mention in the registration certificate of the petitioner-firm nor did it had purchased the gas cylinders. The petitioner could purchase goods on the registration certificate only for two purposes, i.e. for wholesale or retail sale of the goods manufactured by it from such raw materials. The petitioner manufactured gas cylinders from such raw material but did not sell such cylinders itself nor were these cylinders sold by the Oil Companies for which it manufactured on job work basis.
8. In C.W.P. No. 5733 of 1989 respondents have filed a written statement on the similar lines as was filed in C.W.P. No. 6597 of 1986. No written statement has been filed by the respondents in C.W.P. No. 6180 of 1987.
9. We have heard the learned counsel for the parties.
10. Section 8 of the Act, for facility of reference, is reproduced below:-
'8. Rates of tax on sales in the course of inter-State trade or commerce - (1) Every dealer, who in the course of inter-State trade or commerce:-
(a) sells to the Government any goods; or
(b) sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3)
shall be liable to pay tax under this Act, which shall be four per cent of his turnover.
(2) The lax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-Stale trade of commerce not falling within Sub-section (1) -
(a) in the case of declared goods, shall be calculated at twice the rate applicable to the sale or purchase of such goods inside the appropriate State; and
(b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher;
and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay lax under the sales tax law of the appropriate Stale, notwithstanding that he, in fact may not be so liable under that law.
(2A) Notwithstanding anything contained in Sub-section (1A) of Section 6 or Sub-section (1) or Clause (b) of Sub-section (2) of this section the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales Lax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name), shall be nil, or as the case may be, shall be calculated at the lower rate.
Explanation - For the purposes of this Sub-section a sale or purchase of any goods shall not be deemed to be exempt from lax generally under the Sales Tax Law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale of purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods.
(3) The goods referred to in Clause (b) of Sub-section (1)
(a) Omitted w.e.f. April 1, 1993;
(b) are goods of the class or classes specified in the certificate specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.
(c) are container or other materials specified in the in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale;
(d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in Clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in Clause (c).
(4) The provisions of Sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner -
(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or
(b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government;
Provided that the declaration referred to in Clause (a) is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit.
(5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette and subject to such conditions as may be specified therein direct.
(a) that no tax under this Act shall be payable by any dealer having his place or business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes or goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in Sub-section (1) or Sub-section (2) as may be mentioned in the notification;
(b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the Notification, which are made, in the course of inter-State trade or commerce, by any dealer having his place of business in the Stale or in any class of such dealer as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in Sub-section (1) or Sub-section (2) as may be mentioned in the notification.'
11. A perusal of the above provisions shows that under Sub-section (1) of Section 8 of the Act every dealer, who in the course of inter-State trade or commerce - (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in Sub-section (3), shall be liable to pay tax at the rate of four per cent of his turn-over. It was not a question before the Assessing Authority whether the petitioner-firm fulfilled the requirement of Clause (b) of Sub-section (3) of Section 8 of the Act. The petitioner-firm purchased raw-material from outside the State of Haryana on the strength of Certificate of registration i.e. 'C' Form and this raw-material was utilised for the manufacture of gas cylinders for others for which it (petitioner-firm) received charges for the job work. Undisputedly, the petitioner-firm deals in the manufacture of gas cylinders for sale and also does job work for various Oil Corporations. The raw-material, purchased on the strength of 'C' Forms, used in the fabrication of gas cylinders for the various Oil Companies was in contravention of Section 10(d) of the Act as the goods purchased against 'C' Forms were not used for the purpose specified in Section 8(3)(b) of the Act.
12. The contention of the learned counsel for the petitioner-firm is that in Clause (b) of Sub-section (3) of Section 8 of the Act the words used 'intended for resale by him' mean the purchasing dealer himself. We find no force in this argument of the learned counsel. As regards the manufacture or processing of goods, the words used in Section 8(3)(b) of the Act are 'for use by him in the manufacture or processing of goods for sale'. The words 'by him;; do not occur in this expression after the words 'for sale' as they do occur in the case of goods intended for resale. The words 'intended for resale by him' mean the resale of goods purchased by the purchasing dealer himself; but the words 'for use by him in the manufacture or processing of goods for sale' mean not the sale by the purchasing dealer himself but the use by the purchasing dealer himself of goods purchased in the manufacture or processing of goods which should be meant for sale, irrespective of whether such sale would be by the purchasing dealer himself or by the others.
13. The other argument of the learned counsel for the petitioner-firm is that requirement of Clause (b) of Sub-section 8 of the Act would be satisfied if the material purchased on the strength of Certificate of Registration had been used by the petitioner-firm in the manufacture of goods i.e. gas cylinders intended for sale in the course of inter-State trade either by it or by the other dealers for whom they were manufactured. This argument would have impressed us if the cylinders were actually sold by the petitioner-firm or by other registered deafer for whom they were manufactured. There is nothing on the record that any of the Oil Companies, for whom gas cylinders were manufactured, sold these cylinders to their respective dealers. In fact, it is the liquified petroleum gas filed in the cylinders which is sold. It cannot be disputed that the gas cylinders are the property of the respective Oil Corporations and they remain with them. These are given to the consumers against cash security, on refundable basis. Neither the dealers nor the consumers can sold the gas cylinders; what is actually sold is the liquified petroleum gas and not the gas cylinders.
14. In view of the above, it is quite clear that the material purchased on the strength of Certificate of Registration i.e. 'C' Form, which had been used by the petitioner-firm in the manufacture of gas cylinders intended for safe in the course of inter-State trade, were actually neither sold by the petitioner-firm nor by the dealers for whom they were manufactured. Hence, the petitioner-firm committed a breach of the condition of Certificate of Registration, as discussed above, and the provisions of Section 8(3)(b) of the Act. Thus, there being contravention of the provisions of Section 10(d) of the Act, penalty Under Section 10-A of the Act was rightly imposed.
15. Consequently, we find no merit in these appeals and the same are hereby dismissed. Nos. Costs.