Atlas Cycle Industries Ltd. vs The Assessing Authority and Others

S.C. Mital, J.—The question for determination in this writ petition and C. W. No. 2927 of 1974 is, whether the order (annexure P2) of the Assessing Authority refusing to refund the sales tax paid by the petitioner, is unsustainable ?

The undisputed facts are that the petitioner supplied certain goods to its employees on "no-profit-no-loss" basis. The petitioner''s pleas that the transaction was not "sale", as defined in the Punjab General Sales Tax Act of 1948, as applicable to Haryana, was rejected by the taxation authorities. However, the petitioner succeeded in getting the following question referred u/s 22(2) of the Act to this Court :

Whether the supply of goods to its employees by the assessee-company on hire and purchase basis without profit-motive is liable to sales tax ?

A Division Bench of this Court answered the question in favour of the petitioner, vide The Atlas Cycle Industries Ltd. Vs. The State of Haryana, . Thereafter, the petitioner moved the taxation authorities for the refund of the sales tax deposited by it. During the pendency of the refund proceedings, the Punjab Act abovesaid was repealed by the Haryana General Sales Tax Act of 1973 (hereinafter referred to as the Haryana Act). The Haryana Act amended the definition of "dealer" retrospectively with effect from 7th September, 1955, and enacted Section 2(c) in the following terms :

''Dealer'' means any person including a department of Government who in the normal course of trade, whether with or without a profit-motive, directly or otherwise, whether for cash, deferred payment, commission, remuneration or other valuable consideration, purchases, sells, supplies or distributes any goods in the State, or imports into or exports out of the State, any goods, irrespective of the fact that the main place of business of such person is outside the State and where the main place of business of such person is not in the State, includes the local manager or agent of such person in the State in respect of such business.

Challenge to the validity of the amendment abovesaid was overruled by a Division Bench of this Court in Birla Cotton Spinning and Weaving Mills Ltd. and Another Vs. The State of Haryana and Another, .

Learned counsel for the petitioner relied on the following provisions of Section 65(1) of the Haryana Act :

(1) The Punjab General Sales Tax Act, 1948 (hereniafter referred to as the repealed Act), is hereby repealed :

Provided that such repeal shall not affect the previous operation of the repealed Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder, and subject thereto, anything done or any action taken, shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken, and all arrears of tax and other amounts due under the repealed Act, at the commencement of this Act, may be recovered as if they had accrued under this Act.

Accordingly, it was urged that the Division Bench decision of this Court, now reported as The Atlas Cycle Industries Ltd. Vs. The State of Haryana, , being final, the retrospective amendment of the term "dealer" did not in any way affect the right of the petitioner to get the sales tax refunded. On the other hand, the learned Advocate-General contended that the finality of an order passed before the coming into force of the Haryana Act, as envisaged by Section 65(1), was subject to the retrospective operation of the Haryana Act which also validated the order set aside by The Atlas Cycle Industries Ltd. Vs. The State of Haryana, . Strong reliance was placed on the following provisions of Section 68(a) of the Haryana Act:

Notwithstanding any judgment, decree or order of any court or tribunal or other authority to the contrary-

(a) any levy, assessment, reassessment or collection of any amount by way of tax or penalty made or purported to have been made and any action or thing taken or done or purported to have been taken or done before the commencement of this Act in relation to such levy, assessment, reassessment or collection under the provisions of the repealed Act, shall be deemed to be as valid and effective as if such levy, assessment, reassessment, collection or action or thing is made, taken or done under this Act.

With a view to further justify the impugned order refusing refund of the sales tax, the learned Advocate-General cited Hiralal Rattanlal Vs. State of U.P. and Another etc. etc., , wherein their Lordships of the Supreme Court dealt with the retrospective legislation, viz., the U. P. Sales Tax (Amendment and Validation) Act, 1970 (hereinafter referred to as the U. P. Act), validating certain transactions. At page 183 of the Reports, their Lordships dealt with the objects and reasons of the said U. P. Act, which, inter alia, stated :

These judgments have created legal difficulties in the assessment and collection of tax on the aforesaid commodities. Besides, the dealers have started applying for the refund of tax already collected on these commodities. This will have serious repercussions on the State''s revenue. Accordingly, it is proposed to amend Sections 3-A and 3-D to provide for the levy of tax on the aforesaid commodities as seperate items. It is also proposed to validate the past levy, assessment and collection of tax on the above commodities....

Challenge to Section 7 of the U. P. Act validating earlier levies, notwithstanding the previous judgments to the contrary, was rejected by their Lordships. Respectfully following Hiralal Rattanlal Vs. State of U.P. and Another etc. etc., , the present petition fails and the same is hereby dismissed. No order as to costs.

S.S. Sandhawalia, C.J.

I agree.