K.B. HANDICRAFfS EMPORIUM AND ORS. ETC. v. STATEOFHARYANA AND ORS.

The Judgment of the Court was delivered by E 8.P. JEEVAN REDDY.J. A common question arises in this batch of writ petitions. We may take the facts in writ petition (C) No. 9835 of 1983 filed by M/s K.B. Handicrafts Emporium & Ors .• as representative of the facts in all the cases. The petitioners are firms engaged in the manufacture and sale of handicrafts items. They are registered Sales Tax Dealers in the State of Haryana. They --- purchased raw material within the State against declaration forms ST-15 pre- scribed under Rule 21 of the Haryana General Sales Tax Rules read with Section 24 of the Act. By issuing Form S.T.15, the petitioners undertook that the goods manufactured by them out of the said raw material would be sold by them either within the State or in the course of inter-state trade and commerce or in the course of export within the meaning of Section 5(1) of the Central Sales Tax Act. A dealer issuing the said Form need not pay the purchase tax on such raw material. After manufacturing the items of handicrafts, the petitioners say, they sold them to dealers in Delhi who, in tum, exported them out of India. At the time of sale of handicrafts to Delhi dealers, the Delhi dealers issued Form-H, prescribed under the Central Sales Tax Rules which means that the goods purchased were meant for ff export. Neither party paid tax on the said sale/purchase.

HANDICRAFfS EMPORIUM "· STA TE OF HAR YANA [B.P. JEEWAN REDDY]" 457 .

For the assessment years in question, the Sales Tax Authorities of Haryana A levied purchase tax on the purchase of -raw material made by tb~ petitioner, following the decision of the Punjab and Haryana Higp Court in Mis ..Murli. Manohar and Company, Panipat & Ors. v..State of Haryana &: oi-s.. (Civil Writ· Petition No. l 227of 1980), under section 9 of the Haryana General~ 1.les Tax.Act,

1973. However, the assessing authority compute(i the taxwitb _reference to the· purchase value of the goods exported against Form~H. The pc:titioners· dicl. not B choose to file an appeal but directiyapproached this Court :by way of this writ petition on the ground that in view of the decision of the Punjab ~d Haryana.High Court in M11rli Manolwr there was no point in their pursuing "t'1e rem~d_ies under the Act in that State.

-· Appeals were preferred in this court against the decision:of the Punjab and Haryana High Court in Murli manohar which have qeen dispqsed of by this Court c

on October.is. f990 (reported in [1991] l S.C.C. 377). Tbis.¢ourt.allowed the appeal and set aside the judgment of the High Cou.rt. . . .

When these writ petitions came up for heai"i:ng, it was· urged by the learned· D · counsel for the petitioners th.at in view 6f the decision of this Cou_~l"in Mu rli 0

Mano/Jar the writ petitions must be allowed striaghtway. This was demurred to by the learned Solicitor General appearing for the resporicJent-State. ·

We are of the opinion that the decision of thi~ :Court in Murli Ma,;ohardoes . E cover the point raised in these appeals but it is necesary to acid a clarification. · Before we do that, it is necessary to state a little backg·round. Earlier io the. rendering of the decision in Murli Manohar, a Be_nch of this Court cornparising Sabyasachi Mukharji and Ranganathan, JJ. held in Goodyear India Ltd, and Ors. v. State ofHaryanaandAnr. [ 19_90] 2 S.C.C:7 lthatwhere the goods manufactured· are taken out of Hary(lna (without effecting a sale)to the br~ch office'or depot of .F the Manufacturer or to the office or depot of his agent, no purchase tai\ can be levied under section 9 of the Act. on the raw material purchased withln t'1e State anG m;ed in the manufacture of such goods~ I_t was ·he\d that imposing· sucti tax. would amount to levying tax on consignment. which the State Leg"islaiure was not· competent to do. Section 9, as it then stood, stated·express!y that no such pur~~ase tax on raw material was. Jeviable, if the goods rrianufaetured out o.f -such raw G material were sold either \Vi thin the State or were sold in th~ . course . of.inter--st~te. . Trade and Commerce or were sold in the course of export "'.'ithin the meaning· or . Section 5(l)oftheCentral Sales Tax Act. MurliManoharwas decided in tile lighi · of the law declared in Goodyear. Later, However'. a Bench of three· Judges comprising S. Ranganathan, V. Ramaswami,JJ. andoneofus(B.P. Jeevan.Rec)dy, H J.) held that Goodyear does not lay down the correct Jaw-vide Hotel Balaji and

458 SUPREME COURT REPORTS (199313 S.C.R.

A Ors. etc. ttc. v. State ofAndlfra Pradesh & Ors. etc. etc. JT (1992) 6 S.C. I8i It was tieTd.in Hotel Balaji that having regard to the scheme of and the objective .·underlying section 9 ii was C;ompetent for the State Legislature to levy purchase . :tax ori raw rpaterial purchased Within the State. where the goods manufaciured out of such raw material .are t~en out of the State (without effecting a sale within the State. or otherwise than by way of an Inter-state sale or by way of an export-sale B . within' the "meaning of Section S(l)ofthe Central Sales Tax Act). It was held that SIJCh a tax does not amount to consignment tax. It is this decision in Balajithat calls for a:~ertai,n clanftcation of the principles enunciated in M1irli Manohar. . . ~ .

The fads·in MurliManohar were substantially similar to the facts herein. c . Thti·dealers within the State. of Haryana purchased raw material with.out paying . . ·tax. manufactured .goods out O.f the same and sold the manufactured goods to dealers woo.in tumexporte4 those goods out oflndia. On these facts it was held · by the Punjab and I-faryana High Court that inas~u~h as the sale to exporters was . a penultimate sale falliHg under section 5(3) of the Central Sales Tax Act and further !nasmuch as SecliQ-n 9 of the State Act. exempted only export sales within · D ·. the ·meaning of section.5(l)·of the Central Saies Tax Act but not the penultimate saJ.e. fal.ling under Section 5(3), tax under Section 9 was Ieviable. On appeal, this 'Court affirmed that Sec.tion 9·of the· Haryaria Act (before it was amended by Haryana Act I of 1988) dtd not exempt as sale failing under Section 5(3) but exempted .. : . only a sale . falling .under section ~ . . 5( I). Even so, the. appeal was allowed E on. t~e (ollowing reasoning: "the sales made by the assesses can only fall within .. one of the three categ0ries: They are either local sales or inter-state sales or export sales ........ :.... We are unable to conceive of a fourth category of sale which could. be neilher a local sale nor a~ inte~-Staie sale nor an export sale." In other words, . the _d~cisi~n .says that there can be only thre~ types of sales, namely, intra-state sales,. inter~state sal~s.and export sales and no other. A sale to an exporter would . F · be either an iptfa-stat~ ~aie or an ii;iter-state sale; in either case.it does not attract the purchase tax. (on raw material) under Section 9 of the Haryana Act, says the ·decision,_ It is:on th\s.reaso.ning that the appeals were. allowed inspite of the clear eiluncfation ~hat lhe sales falling under Section 5(3) of the Central Sales Tax Act .. were:not exempt u.nder Section 9 of.the Haryana Act, as it then stood .

.G The _aboYe7holdi:ng is e~idently influenced by the decision in .Goodyear, w)lich was good law ac the tiin.eMurliManoharwas decided. However, in the light Of the decision of Hotez Balaji, it must be held that there is one more category in addition· to. the three categories mentioned above. The fourth category is where a · dealer in· Haryana takes:his goods out of the Haryana without effecting a sale. An . H .illustratio~ woufo serve to highlight what we say: a Haryana manufacturer takes his goods to Delhi withput effecting a sale. In Delhi, if he finds it more profitable,

HAND.ICRAFTS EMPORIUM''· STAlEOFJiARYANA [B.P.}EEWAN REDO)']. 459

he w\ll sell it to a dealer in Delhi. Or if he finds it more profitable to' sell it. to an .A. exporter in Delhi he will sell the same to such exporter. These two sales'are neither intra-state sales nor inter-state sales, nor export sal~s w.ithin the meaning of. Section 5( I) of the Central Sales Tax Act. In one case, it is a sale in Delhi and. in~ . the other, it is a punultimate sale within the meaning of Sect.km 5(3) ofth"e Ce.ntrli! Sales Tax Ad. According to Section 9 of ·theHaryai;ia Act, as explained in Hoiei . Balaji and Murli Manohqr, purchase tax can be levied and ~ollected on tbe r&:w B material purchased by the manufacturer within HaryaI).a, which was uti~ised for. manufacturing the goods so sold in these two situations ..

We inust make it clear that in a petition u11der Article 32 of the ConsVtutlon~ ·

- it is notou.r province to go into facts. As repeatedlly emiJhasised,8.Y this Cour~. ~he : c a question whether particular sale is an intra~stateSale, an ipter-state sale, ari e?'pOrt · sale within the meaning o(section 5(1) or a penultimate.s·itle within the ipe~nin_g of section. 5(3), or otherwise, is always a question of fact to be decided b"y the· apporiate authority in.the light of.the principles enun~iatei;t by Cll!urts.·In these. circumstances, we content ourselves by declaring the \aw and leave it to be applied by the appropriate authorities. Counsel for thepetitioners says that all the sales D effected by all the petitioners are inter-State sales. May be, or may not be. We leave the matters.to b·~ disposed of by the authorities under the Act in the light o(.thi,! law - '

declared by tt.is Court iii Murli Manohi:ir, Hotel Balaji and in this judgment

· llte writ petitions are disposed of with theaforemeritioned clarification and. . E observations. No costs.

V.P.R. J>etitio,os disposed oL .