Judgment:
Mehinder Singh Sullar, J.
1. As common questions of law and facts are involved in all the aforementioned reference petitions, therefore, we propose to decide the same by this single judgment, in order to avoid the repetition. However, for facilitation, the bare minimum facts that need a necessary mention, have been extracted from GSTR No. 14 of 2009 titled as 'H MT Limited, Pinjore v. State of Haryana'.
2. The matrix of the facts, culminating in the commencement of, relevant for disposal of these reference petitions filed by the petitioner-assessee M/s HMT Limited (for brevity 'the assessee') and emanating from the record, is that the assessee was engaged in manufacturing of agricultural tractors and machine tools. It was holding one registration certificate for the two divisions and registered as dealer for the purpose of assessment with the Assessing Authority, Panchkula, under the Haryana General Sales Tax Act, 1973 (for short 'the Act').
3. The assessee, during the relevant period of assessment years, made purchases of goods, both from within the State and from outside the State of Haryana for use in manufacturing of agricultural tractors and machine tools, separately in the two divisions. The goods, purchased for use in manufacturing, were clearly identifiable with the goods manufactured in the two divisions separately. Although the assessee maintained the separate accounts, in respect of purchase of the goods, their use in manufacture and disposal of the goods manufactured in the two divisions, but it (assessee ) filed a consolidated tax return for the two divisions, being single entity and holding one registration certificate under the Act.
4. The revenue claimed that as Section 15A of the Act and Rules 24A and 24B of the Haryana General Sales Tax Rules, 1975 (hereinafter to be referred as 'the Rules') contemplated a clear nexus between the goods purchased for use in manufacture and the disposal of the goods manufactured from those goods, for the purpose of computation of tax rebate, therefore, the Assessing Authority split the claim and turnover reflected in the returns into two parts, one relating to Tractor Division and another relating to machine tools Division and assessed the purchase tax on goods purchased without payment of tax and calculated the tax rebate, in respect of the goods purchased on payment of tax from within the State and used in manufacture of goods, which had been consignment transferred outside the State of Haryana, on pro-rata basis, separately for the two divisions and accordingly assessed its tax liability, vide order dated 23.8.2005 (Annexure A7).
5. Aggrieved by the order (Annexure A7) of the Assessing Authority, the assessee filed the appeal and the first Appellate Authority dismissed its appeal, vide order dated 15.3.2007 (Annexure A5).
6. The assessee did not feel satisfied with the order (Annexure A5) and filed the second appeal, which was partly accepted by the Haryana Sales Tax Tribunal, vide order dated 19.11.2008 (Annexure A3).
7. However, in the wake of reference petition filed by the assessee, the Tribunal referred the following question of law for determination by this Court:
Whether on the facts and circumstances of the case, tax rebate admissible to M/s H.M. T. Ltd., Pinj ore in terms of Section 15A of the Haryana General Sales Tax Act, 1973 read with rules 24A and 24B of the Rules made thereunder or the formula as per notification dated 19.10.2000 issued under Section 15A is to be computed separately for the two divisions of the company- Tractor division and Machine tools division when the manufacturing activity and the records maintained in respect of the two divisions are separate and the goods used in manufacturing are clearly identifiable with the goods manufactured in the two divisions separately or the same is to be calculated by clubbing the turnovers of the two divisions together for the reason that the company holds one registration certificate under the Act and has filed single return in respect of the two divisions.
8. At the very outset, it will not be out of place to mention here that in GSTR Nos.10 to 13 of 2003 and 20 to 23 of 2005, some other incidental, inter-connected and inter-related questions have been referred, but the answer/result of all these questions would depend upon and covered by the main above reproduced exhaustive question framed in GSTR No. 14 of 2009.
9. The learned Counsel for the assessee has vehemently contended that since the assessee being a single entity for the purpose of assessment and holding one registration certificate for the two divisions, so the method adopted by the Assessing Authority in segregating the accounts/turnover of the two divisions, was not valid, in view of Sections 27 and 28 (3) of the Act.
10. On the contrary, the learned State counsel has urged that the Assessing Authority has rightly adopted the legal procedure/formula in separately calculating the tax liability, in view of Section 15A of the Act read with Rules 24A and 24B of the Rules, which leaves no manner of doubt that the Assessing Authority has the power and correctly adjusted and calculated the tax liability.
11. We have heard the learned Counsel for the parties and have gone through the records of cases with their valuable help.
12. The main argument of the learned Counsel that since the assessee is a single entity, having one registration certificate, so its turnover will have to be clubbed together in a single assessment for the purpose of levy of tax, is neither tenable nor the observations of Allahabad High Court in case Ramesh Chandra Brick Kiln Owner v. Commissioner, Sales Tax, U.P. : (1988) 69 STC 52 (All.), relied upon on behalf of assessee, are at all applicable to the present controversy.
13. In the aforesaid case, the assessee carried on business of brick kiln up to 10th June, 1980 and then started a new kiln on a different location on 25th March, 1981. The Sales Tax Officer made a single assessment in regard to the turnover of both the businesses. The assessee was the proprietary concern. The contention of the assessee was that the turnover of two separate businesses should have been assessed separately under two assessment orders. Having interpreted the relevant provisions, the scheme of U.P. Sales Tax Act, 1948 and on the peculiar facts and circumstances of that case, it was held that 'a dealer has to be assessed for each year in respect of his aggregate turnover. Though the turnover may be of several businesses, so long as there is no change in the identity of a dealer, the turnover of all businesses carried on by him will have to be clubbed together in a single assessment.'
14. Possibly, no one can dispute with regard to the aforesaid observations, but the same would not come to the rescue of the assessee. In the present case, if the rebate is calculated by clubbing the turnover of two divisions for computing the benefit of adjustment of tax, then it would amount to cross subsidization of tax liability arising on account of local purchase of goods used in manufacture of tractors that had been consignment transferred outside the State, because clubbing would result in quantum jump in the figure of tax exemption to the assessee.
15. In the instant case, it is not a matter of dispute that the assessee has a factory at Pinjore, which has two separate divisions, one for manufacturing of agricultural tractors and second for manufacturing of machine tools. The assessee made purchases of inputs, both from within the State and from outside the State of Haryana, for use in manufacture of agricultural tractors and machine tools, separately in the two divisions. Meaning thereby, the goods purchased for use in manufacture of inputs were clearly identifiable with the goods manufactured in the two divisions separately. So much so, the assessee maintained the separate accounts in respect of purchase of the goods, their use in manufacturing and disposal of the manufactured goods in the two divisions. The Assessing Authority, while making the assessment for the relevant periods, split the turnover reflected in the return into two parts, one relating to agricultural tractor division and another relating to machine tool division and assessed the purchase tax on the goods purchased without payment of tax and calculated the tax rebate, in respect of the goods purchased on payment of tax from within the State and used in manufacture of goods, which had been consignment transferred outside the State of Haryana, on pro rata basis, separately for the two divisions, in view of Section 15A of the Act and Rules 24A and 24B of the Rules. The counsel for the assessee has not been able to point out any law, which debars the Assessing Authority from resorting to the method of segregation and split of turn over of two separate divisions, as adopted by him in the present case.
16. Again, it is not a matter of dispute that the assessee had received the inputs used in separate divisions from two sources, i.e. duty paid and non-duty paid from within the State and outside the State and had maintained two separate accounts of separate divisions. The raw material used in respect of one unit cannot be used as raw material in respect of other unit. The argument of learned Counsel for the revenue that the tax paid on input can only be reduced from tax payable on the sale of its output and the tax paid on inputs used in manufacture of agricultural tractors could only be reduced from the tax on the sale of tractors, has considerable force, because the adjustment of tax paid or payable on goods purchased from within the State could only be made against the tax payable on goods manufactured therefrom and that where identification of goods purchased from within the State with the goods manufactured therefrom and the manner of disposal of consignment transferred of those goods is not possible to make, then the only way to compute adjustment is on pro rata basis, as contemplated under Section 15A of the Act read with Rules 24A and 24B of the Rules, as tax was payable to the State of Haryana only when the goods manufactured were sold within the State or in the course of inter State trade, the tax paid on the goods purchased used in manufacture was made adjustable against the tax payable on the sale of manufactured goods, but since no tax was payable to the State of Haryana on the consignment transferred outside the State, so no adjustment was admissible.
17. Therefore, we are of the considered view that the Assessing Authority was legally justified in working out the rebate and liability of levy of tax after segregating the accounts of both the divisions, particularly when separate accounts had been maintained by the assessee, in this relevant connection as discussed here-in-above.
18. In the light of the aforesaid reasons, it is held that the Assessing Authority was correct in splitting and segregating the turnover reflected in the return of two divisions of the assessee for the purpose of calculating, rebate and levy of tax and rightly applied the indicated formula in this respect. Hence, the question of law is accordingly answered against the assessee. Sequelly, all the incidental questions of law framed in other reference petitions are also accordingly decided against the assessee as well.
19. For the reasons recorded above, all these reference petitions are disposed of accordingly.