State of H.P. and ors. Vs. Peter(S) India Ltd. and ors. - Court Judgment

Excerpt:
- [k.s. paripoornan,; k. venkataswami and; b.n. kirpal, jj.] - sales tax — concession/exemption/rebate — entitlement to, under section. 6(3)(a)(ii) of h.p. general sales tax act — three prerequisites, stated -- for the sale amount in that regard, annexure p-14, demand for payment of sales tax, was raised against the respondents-assessees. the high court took the view that the sales effected by the forest department to the respondents-assessees is exempt under section 6(3) of the himachal pradesh general sales tax act and held that the demand made against the assessees-respondents is impermissible or unsustainable.k.s. paripoornan,; k. venkataswami and; b.n. kirpal, jj.1. special leave granted.2. the forest department, in the state, sold timber to the respondents. for the sale amount in that regard, annexure p-14, demand for payment of sales tax, was raised against the respondents-assessees. they contended, that the turnover relating to timber sold by the forest department is to be deducted from the “taxable turnover” of the dealer, namely the state government and so no tax is payable by the respondents-assessees. the respondents moved the high court and assailed the notice of demand raised against them and also the recovery proceedings in writ proceedings under article 226 of the constitution of india. the high court took the view that the sales effected by the forest department to the respondents-assessees is exempt under section 6(3) of the himachal pradesh general sales tax act and held that the demand made against the assessees-respondents is impermissible or unsustainable. the three orders so passed are dated 28-11-1990. the state has come up in appeals against the aforesaid orders/judgments after obtaining special leave from this court.3. we heard counsel.4. the main statutory provision relied upon by the high court and also by the assessees before us is the deduction from the gross turnover of the dealer certain transactions specified in section 6(3)(a)(ii) of the act, which it is pleaded, should enure to the benefit of the assessees.5. section 6(3)(a) of the himachal pradesh general sales tax act is as follows:“6. (3) in this act, the expression ‘taxable turnover’ means that part of dealer's gross turnover during any period which remains after deducting therefrom—(a) his turnover during that period on—(i) the sale of goods declared tax-free under section 7;(ii) sales to a registered dealer of goods, other than sales of goods specified in schedule ‘c’ or of goods liable to tax at the first stage under sub-section (2), declared by him in a prescribed form as being intended for resale in the union territory of himachal pradesh or in the course of inter-state trade or commerce or sale in the course of export of goods out of the territory of india or of goods specified in his certificate of registration for use by him in the manufacture in himachal pradesh of any goods, other than goods declared tax-free under section 7 for sale in the union territory of himachal pradesh and on sales to a registered dealer of containers or other materials for the packing of such goods:”(emphasis supplied)6. it is common ground that the certificate of registration of the assessees was not produced before the high court. the high court took the view that annexure p-6 i.e. letter of the divisional forest officer and clause 7 of annexure p-1 agreement would show that the goods purchased by the assessees are for use in the manufacture and sale, of the manufactured goods in the state.7. a reading of section 6(3)(a)(ii) of the act would show that in order to claim exemption under this limb of the sub-section the assessees have to substantiate the following amongst others:(i) the goods for which deduction is claimed should be one which is specified in the certificate of registration of the assessees for use by them in the manufacture in the state of any goods.(ii) the goods so manufactured should be goods other than those declared tax-free under section 7.(iii) the goods manufactured should be for sale in the state.8. with regard to the above factors there is no material available in the case (as disclosed in the paper-book filed). even the high court has not relied upon any proper or reliable material to find the existence of the above factors. the adjudication of the controversy raised in these cases based on section 6(3)(a)(ii) of the act, must necessarily disclose the presence of the above three factors. that is totally absent. the judgment of the high court has not referred to these aspects. it appears that the primary documents in that regard were not produced before the high court. the judgments of the high court, which are appealed against are, therefore, in the circumstances, unsustainable in law. we set aside all the three judgments appealed against, and remit the matters to the high court for a proper investigation and disposal in accordance with law. parties are allowed to file additional documents or affidavits before the high court.9. the respondents-assessees had a plea that in view of certain factors, the state is precluded by the principle of estoppel from raising the demand. the high court did not go into this aspect since it found that it is unnecessary to do so in the way section 6(3)(a)(ii) of the act was interpreted. it is open to the assessees to urge this plea again and also produce relevant documents in support thereof.10. the appeals are allowed accordingly.11. no costs.ca no. 2703 of 1997 [slp (c) no. 8685 of 1991]12. special leave granted.13. the learned counsel for the appellant in the appeal preferred in slp (c) no. 8685 of 1991 prays that he may be permitted to withdraw the appeal. the prayer is granted. the appeal is dismissed as withdrawn.14. no costs.