REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL  APPEAL NO. 3463 OF 2003

M/S UNITED RICELAND LTD. — APPELLANT

VERSUS

STATE OF HARYANA & ANR. — RESPONDENTS

J U D G M E N T

D.K. JAIN, J.:

1. This appeal, by special leave, is directed against the judgment dated 3rd  

August,  2000  delivered  by  the  High  Court  of  Punjab  and  Haryana,  

whereby the writ petition filed by the appellant herein, questioning the  

Constitutional validity of Haryana General Sales Tax (Amendment) Act  

9 of 1993 (for short “Act 9 of 1993”), substituting Section 15-A in the  

Haryana  General  Sales  Tax  Act,  1973  (for  short  “the  Act”)  

retrospectively w.e.f. 27th May, 1971, has been dismissed.  

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2. The appellant (hereinafter referred to as “the dealer”), a registered dealer  

under the Act, was engaged in the business of purchase and dehusking of  

paddy to produce rice, in the State of Haryana. Rice so produced was  

exported  outside  the  country  within  the  meaning  of  Section  5  of  the  

Central  Sales  Tax  Act,  1956  (for  short  “the  CST Act”).  The  present  

appeal relates to the assessment year 1990-91.  The turnover of the paddy  

purchased  by  the  dealer  during  the  relevant  year  was  subjected  to  

purchase  tax  under  Sections  6  and  15-A  of  the  Act  vide  assessment  

orders dated 14th January, 1997 and 9th July, 1999.

3. Aggrieved by the said levy, the dealer preferred a writ petition before the  

High Court, challenging,  inter alia,  the substitution of Section 15-A in  

the Act vide Act 9 of 1993, with retrospective effect.  

4. Before the High Court, it was conceded by the counsel for the dealer that  

the question of the constitutional validity of substituted Section 15-A was  

concluded against the dealer by virtue of the decision of a Full Bench of  

the  High  Court  in  United  Riceland  Limited  &  Anr.   Vs.  State  of   

Haryana  &  Ors.1,  and  therefore,  the  said  issue  did  not  survive  for  

consideration.  In so far as the merits of the assessments were concerned,  

1 104 STC 362 (Full Bench)

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the  High Court  was  of  the  opinion that  since an efficacious  statutory  

remedy by way of  appeal was available to the dealer and that the writ  

petition also suffered from delay and laches, it could not be entertained.  

Accordingly,  as  noted  above,  by  the  impugned  judgment,  the  writ  

petition has been dismissed  primarily on the ground of laches.

5. Hence, the present appeal.

6. Mr. Ramesh Singh,  learned counsel  appearing on behalf  of the  dealer  

contended  that  in  Satnam  Overseas  (Export)  &  Ors.  Vs.  State  of   

Haryana & Anr.2,  this Court did not consider the effect of the Haryana  

General Sales Tax (Second Amendment) Ordinance No. 2 of 1990 (for  

short “Ordinance No. 2 of 1990”) which had deleted Section 9 of the Act  

with effect from 15th October, 1990. Learned counsel argued that in light  

of the decisions of this  Court in  Bishambhar Nath Kohli & Ors.  Vs.   

State of Uttar Pradesh & Ors.3; R.K. Garg Vs. Union of India & Ors.4;  

A.K. Roy Vs. Union of India & Ors.5 and Fuerst Day Lawson Ltd. Vs.   

Jindal Exports Ltd.6¸  it is settled that the date of commencement of an  

Act which is preceded by an ordinance, is the date of promulgation of  

2 (2003) 1 SCC 561 3 AIR 1966 SC 573 4 (1981) 4 SCC 675 5 (1982) 1 SCC 271 6 (2001) 6 SCC 356

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the ordinance.  Learned counsel  argued that  in any case the benefit  of  

exemption contained in Section 9(1)(b) of the Act would be available to  

the dealer till 15th October, 1990 i.e. the date when Ordinance No. 2 of  

1990, deleting Section 9 of the Act, was promulgated.

7. Per contra,  learned counsel for the respondents submitted that since the  

provisions of Ordinance No. 2 of 1990 were incorporated in the Haryana  

General Sales Tax (Amendment) Act No.4 of 1991 (for short “Act No. 4  

of 1991”), in light of the judgment of this Court in Fuerst Day Lawson  

Ltd. (supra), the amendment was effective from the date of the ordinance  

i.e 15th October, 1990. It was urged that if at all the dealer was eligible for  

the benefit of the exemptions  under Section 9(1)(b) of the Act, it would  

only be for a part of the year and not for  the whole of the assessment  

year,  as  initially  claimed.  While  supporting  the  impugned  judgment,  

learned counsel contended that the High Court had rightly dismissed the  

dealer’s  writ  petition  as  barred  by  laches,  and had correctly  relegated  

them to the statutory remedy under the Act in light of the decision of this  

Court  in  M/s.  Titagarh Paper  Mills  Ltd.  Vs.  Orissa  State  Electricity   

Board & Anr.7. It  was  asserted that dealer’s challenge to the levy of  

7 (1975) 2 SCC 436

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purchase tax cannot survive after this Court had upheld the validity of  

Section 15-A of the Act in Satnam Overseas (Export) (supra).

8. In order  to  appreciate  the  rival  submissions,  it  would be expedient  to  

examine relevant provisions of the Act. Section 9, as it stood prior to its  

deletion by Ordinance No.2 of 1990, provided that:

“9. (1) Where a dealer liable to pay tax under this Act, (a) * * * (b) purchases goods, other than those specified in Schedule B,  from any source in the State and uses them in the State in the  manufacture  of  any  other  goods  and  either  disposes  of  the  manufactured goods in any manner otherwise than by way of  sale in the State or dispatches the manufactured goods to the  place outside the State in any manner otherwise than by way of  sale  in the course of  inter-State  trade or commerce or  in the  course  of  export  outside  the  territory  of  India  within  the  meaning of Section 5 of the Central Sales Tax Act, 1956; or (c) * * * in the circumstances in which no tax is payable under any other  provision  of  this  Act,  there  shall  be  levied,  subject  to  the  provisions of Section 17, a tax on the purchase of such goods at  such rate as may be notified under Section 15.”

9. The  scope  and  ambit  of  Section  9(1)(b)  of  the  Act,  was  succinctly  

explained by this Court in  Satnam Overseas (Export)  (supra).  It was  

observed that  the Section postulates  the  existence of  circumstances  in  

which no tax is payable, under any provisions of the Act by a dealer who:  

(i) is liable to pay tax under the Act; (ii) purchases goods (referred to as  

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“raw  material”)  (other  than  those  specified  in  Schedule  B)  from any  

source in the State; (iii) uses them in the State in the manufacture of any  

other goods (referred to as “manufactured goods”); (iv) disposes of the  

manufactured goods in any manner otherwise, than by way of sale or (v)  

dispatches the manufactured goods to a place outside the State in any  

manner  and provides  that  in  such  a  case  there  shall  be levied,  a  tax,  

subject to the provisions of Section 17, on the purchase of raw material at  

such  rate  as  may  be  notified  under  Section  15  of  the  Act.   It  was  

explained that the levy of purchase tax on the raw material would have  

no application when the manufactured goods are: (a) disposed of by way  

of sale in the State; (b) dispatched to a place outside the State: (i) in the  

course of inter-State trade or commerce, or (ii) in the course of export  

outside the territory of India, within the meaning of Section 5 of the CST  

Act.  It was emphasised that the exemptions contained in Section 9(1)(b)  

of the Act were confined to cases of impost levied thereunder and not  

otherwise.  Endorsing  the view expressed by this Court in the cases of  

Murli Manohar and Co. & Anr.  Vs. State of Haryana & Anr.8, Hotel   

8 (1991) 1 SCC 377

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Balaji & Ors. Vs. State of A.P. & Ors.9 and K.B. Handicrafts Emporium  

& Ors. Vs. State of Haryana & Ors.10, it was held as under:

“…we  conclude  that  specific  charging  provision  of  Section  9(1)(b) will be attracted as the assessee purchased paddy (which  is not one of the goods specified in Schedule B), procured rice  (manufactured  goods) from the said paddy and exported rice  outside the territory of  India,  on which no purchase tax was  payable  under  the  general  charging  provision  of  Section  6  which is, inter alia, subject to the provisions of Section 9.  We  have already held above that the assessees will not be liable to  pay tax on the purchase of such paddy in view of the provisions  of clause (b) of sub-section (1) of Section 9 in the assessment  years  in  question,  or,  for  that  matter,  any  assessment  year  ending before 1-4-1991.”

10. Ordinance No.2 of 1990 was succeeded by Act No.4 of 1991 which came  

into  effect  from  15th April,  1991.   Section  15  of  Act  No.4  of  1991  

provided that:

“The  Haryana  General  Sales  Tax  (Second  Amendment)  Ordinance, 1990 (Haryana Ordinance No.2 of 1990), is hereby  repealed.”

11. Section 15-A was initially inserted in the Act on 25th January, 1990 and  

was given retrospective effect from 27th May, 1971. Presently,  we are  

concerned  with  Section  15-A  as  substituted  by  Act  No.  9  of  1993  

retrospectively from 27th May, 1971. It provides:

9 1993 Supp (4) SCC 536  10 1993 Supp (4) SCC 589

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“15-A. Adjustment or refund of tax in certain cases.—Subject to  the  provisions  of  clause  (iii)  of  proviso  to  sub-section  (1)  of  Section 15 and subject to the conditions and restrictions, as may  be prescribed— (i) the tax leviable under this Act or the Central Sales Tax Act,  1956, on the sale of goods by a dealer,  manufactured by him,  shall be reduced by the amount of tax paid in the State on the sale  or purchase of goods, other than the tax paid on the last purchase  of paddy, cotton and oilseeds, used in their manufacture; and (ii) when no tax is leviable on the sale of manufactured goods  except those specified in Schedule B, subject to the conditions  and exceptions specified therein, or when the tax leviable on the  sale of manufactured goods is less than the tax paid in the State  on the sale or purchase of goods, other than the tax paid on the  1st  purchase  of  paddy,  cotton  and  oilseeds,  used  in  their  manufacture, the full amount of tax paid or the excess amount of  tax paid over the tax leviable on sale, as the case may be, shall be  refundable if the manufactured goods are sold in the State or in  the course of inter-State trade or commerce or in the course of  export out of the territory of India. Provided  that  in  case  the  manufactured  goods  have  been  sold  before  the  1st  day  of  January,  1988  the  tax  paid  on  goods,  leviable to tax at the first stage of sale under Section 18, used in  their manufacture, shall not be refunded.”

12. The question relating to the constitutional validity of the retrospective  

substitution of Section 15-A in the Act w.e.f. 27th May, 1971 is no more  

res integra,  in light of the decision of this Court in  Satnam Overseas  

(Export)  (supra),  wherein  this  Court,  while  upholding  the  

constitutionality of Act 9 of 1993, observed thus:

“It is true that Section 15-A does not permit refund of purchase  tax paid on paddy, cotton and oilseeds by an assessee though  such a relief is available in regard to other goods. In the light of  

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the  above  discussion,  the  challenge  to  Section  15-A  on  the  ground of violation of Section 15(c) of the CST Act or Article  286(1)(b) of the Constitution cannot be sustained because the  only relief that is granted by Section 15(c) is reduction of tax  leviable on the sale of rice procured from out of paddy, where  tax has been levied on sale or purchase of such paddy inside the  State. This relief is incorporated by the Haryana Act in clause  (iii) of the proviso to sub-section (1) of Section 15. Even clause  (b)  of  sub-article  (1)  of  Article  286  does  not  provide  for  exemption of tax on the purchase of paddy. There is no other  provision either in Article 286 or in the CST Act which bars a  State from levying tax on the sale or purchase of paddy which  is  not  exported  out  of  the  territory  of  India.  Section  15-A  proceeds on the premise that purchase tax is payable, inter alia,  on paddy. From the above discussion, it is clear that before the  omission of Section 9 from the Haryana Act, no purchase tax  was payable on paddy under Section 6 of the Act,  therefore,  during the aforesaid period, the assessee cannot complain of the  denial of the benefit of adjustment and refund of purchase tax  on the basis of Section 15-A of the Haryana Act. The position  would, however, be different after     1-4-1991, when Section 9  was omitted from the Act.”

The Court finally summed up its conclusions as follows:

“(1) In the specified circumstances in which charge of purchase  tax on the raw material is imposed, clause (b) of sub-section (1)  of Section 9 of the Haryana Act and the exemptions provided  therein would apply; the law declared by this Court in  Murli   Manohar & Co.,  Hotel Balaji and  K.B. Handicrafts holds the  field; (2) while Section 9 remained on the statute-book till     1-4- 1991, retrospective amendments of Sections 2(p), 6, 15 and 15- A of the Haryana Act would make no difference in regard to  levy of purchase tax on paddy;

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(3) adjustment of purchase tax paid on paddy (raw material) is  permissible under Section 15-A of the Haryana Act during the  relevant period; (4)  by virtue of  Section 15-A of the  Haryana  Act,  denial  of  refund of purchase tax, if any, paid by a dealer is not illegal  much less unconstitutional.”

13. The Court held that the exemptions mentioned in Section 9(1)(b) of the  

Act would be available to the dealer for assessment years ending before  

1st April, 1991, and the substituted Section    15-A, which provides that  

purchase  tax  payable  on  paddy  used  as  raw  material  can  neither  be  

refunded nor adjusted, will not have any effect between 27th May, 1971  

and 1st April,  1991 as Section 9(1)(b)  still  existed in the statute  book  

during  that  period.   It  is  evident  that  in  Satnam  Overseas  (Export)   

(supra), this Court did not examine the effect of Ordinance No.2 of 1990,  

as Section 9 was first deleted vide the said Ordinance w.e.f. 15th October,  

1990.  

14. It is trite that an ordinance promulgated by the President or the Governor  

has the same force and effect as an Act of Parliament or Act of State  

Legislature,  as  the  case  may  be.  Articles  367(2)  and  213(2)  of  the  

Constitution make it abundantly clear that an ordinance operates in the  

field it occupies with the same rigour as an Act.  In A.K. Roy (supra); a  

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Constitution Bench of this Court had observed that “an ordinance issued  

by the President or the Governor is as much a law as an Act passed by the  

Parliament and is,  fortunately and unquestionably,  subject  to the same  

inhibitions.  In those inhibitions lie the safety of the people.”  This view  

has been approved and reiterated in other Constitution Bench decisions.  

(See: R.K. Garg (supra); T. Venkata Reddy & Ors. Vs. State of Andhra  

Pradesh11 and Fuerst Day Lawson Ltd. (supra).)

15. Examined on the  touch-stone  of  the  afore-noted  legal  principles,  it  is  

manifest that Section 9 ceased to exist in the statute book from the date of  

promulgation of the ordinance i.e. 15th October, 1990; particularly, when  

there was nothing in the Act No. 4 of 1991 rendering the provisions of  

the ordinance otiose during the period from 15th October, 1990 to 15th  

April,  1991.  Therefore,  it  follows  that  the  benefit  of  the  exemption  

contained in Section 9(1)(b) of the Act was available to the dealer only  

upto  15th October,  1990;  and not  till  1st April,  1991,  as  elucidated  in  

Satnam Overseas (Exports) (supra).

16. In light of the foregoing discussion, the appeal is partly allowed to the  

extent  that  the  dealer  will  not  be  liable  to  pay  purchase  tax  on  the  

11 (1985) 3 SCC 198

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purchase of paddy made by them upto 15th October, 1990, i.e. till the date  

of promulgation of Ordinance No.2 of 1990.

17.In the facts and circumstances of the case, we make no order as to costs.

……………………………………                   (D.K. JAIN, J.)  

                             ...………………………………….                 (ANIL R. DAVE, J.)

NEW DELHI; JANUARY 7, 2011.

(RS)

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