Modern Food Industries vs Stof Haryana
2024 Latest Caselaw 15894 P&H

Punjab-Haryana High Court

Modern Food Industries vs Stof Haryana on 2 September, 2024

Author: Sanjeev Prakash Sharma

Bench: Sanjeev Prakash Sharma

                                  Neutral Citation No:=2024:PHHC:113298-DB


     CWP No. 11972 of 2000                                            -1-

       IN THE HIGH COURT OF PUNJAB AND HARYANA
                    AT CHANDIGARH

                                                Reserved on :      07.08.2024
                                                Date of Decision : 02.09.2024
1.      CWP No. 11972 of 2000 (O&M)

        M/s Modern Food Industries (India) Limited            ...Petitioner
                                      Versus
        State of Haryana and others                           ...Respondents

2.      CWP No. 11988 of 2000 (O&M)

        M/s Modern Food Industries (India) Limited            ...Petitioner
                                    Versus
        State of Haryana and others                           ...Respondents

3.      CWP No. 12048 of 2000 (O&M)

        M/s Modern Food Industries (India) Limited            ...Petitioner
                                    Versus
        State of Haryana and others                           ...Respondents

4.      CWP No. 16829 of 2004
                         200 (O&M)

        M/s Bhalla Techtan Industries Limited                 ...Petitioner
                                    Versus
        State of Haryana and others                           ...Respondents

CORAM: HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA
       HON'BLE MR. JUSTICE SANJAY VASHISTH

Present:      Mr. Sandeep Goyal, Advocate, for the petitioner
              in CWP Nos. 11972, 11988 and 12048 of 2000.

              Ms. Shifali Bahia, Advocate for
              Mr. Arjun Pratap Atma Ram, Advocate, for the petitioner
              in CWP No. 16829 of 2004.

              Ms. Tanisha Peshawaria, Deputy Advocate General, Haryana.

              Mr. Virish Dahiya, Advocate for
              Mr. R. D. Gupta, Advocate, for the States of UP and Bihar.
                                    ***
SANJEEV PRAKASH SHARMA, J.

J

These are four writ petitions which have been heard jointly as

the petitioners therein assail essentially the same aspects relating to

assessments of different years.

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2. The challenge in CWP Nos. 11972 11972,, 11988 and 12048 of 2000 is

to the orders passed by the Sales Sale Tax Tribunal, Haryana whereby it decided

commonly STAs No. 13 and 594 of 1998-99

1999-2000

and dismissed the same by a short order dated 12.05.2000 upholding the

orders passed by the Joint Excise and Taxation Commissioner.

3. So far ass CWP No. 16829 of 2004 is concerned, prayer made

therein is for formation of Central Sales Tax Appellate Authority apart from

challenging the assessment order dated 29.09.2004 and requesting for refund

of the amount deposited as per assessment order dated 20.02.2004.

4. We find that the Central Sales Tax Appellate Tribunal has

already been formed.

5. Since all these writ petitions were tagged and are pending since

long, we propose to decide the legal issues issues raised therein herein without remanding

the same on the ground of alternative remedy.

6. Brief facts which need to be noticed are being examined on the

first original order passed by the Joint Excise and Taxation Commissioner

(Appeal), Faridabad dated 27.02.1998 and is made the basis to decide the

appeal by y the Sales Tax Tribunal, Haryana. The petitioner- M/s Modern

Food Industries (India) Limited (hereinafter to be referred as 'MFIL') is a

public sector undertaking of the Government of India engaged in the

business of manufacturing and sale of food products. It had set up

manufacturing plants at several places in the country. One among amongst these is

located at Faridabad in Haryana. One MOU was signed between MFIL and

Government of Bihar for supply of Poshahar to the Government for

distribution amongst amo the vulnerable sections of the society under the Social

Welfare Programmes of the Government. As per the terms of the agreement,

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they were required to supply products with the concerned specification as

laid down in the MOU. They were supposed to esta establish blish production facilities

for catering requirement of energy food supplies in various places in Bihar Bihar..

It was also agreed that till such time the facilities are established, the

company would provide energy food from its various existing production

facilities ities which included Faridabad apart from other places. The price of the

energy food supplies was fixed as per the MOU. The manner of supply fixed

as per the MOU is as under:-

under:

"The The Government of Bihar placed firm orders on MFIL for the supply of Poshahar to it and also placed some advance money at the disposal of MFIL for the purpose, vide para II a) of the MOU. The Patna Office of MFIL placed orders on Faridabad plant of MFIL on monthly/ fortnightly basis for the supply of Poshahar. The Faridabad plant manufactured nufactured and dispatched Poshahar to Patna office. The Poshahar was inspected for quality at Patna and thereafter dispatched to various block offices of the Welfare Department of the Government of Bihar according to the instructions of the government. If delivery of Poshahar from MFIL was taken FOR at the block office level by the officers of the Welfare Department of the Government of Bihar. The bills for the supply of Poshahar to the Government of Bihar were raised by the Patna office of MFIL."

7. The said supply was treated as a sale of Poshahar from MFIL

to the Government of Bihar in the course of inter inter-State State trade originating

from Haryana by the Excise & Taxation Officer Officer-cum-Assessing Assessing Authority,

Faridabad assessed as inter-State inter State sales, calculated tax on the sale and

imposed tax for the years in question (supra).

(supra). On the said basis, it also issued

demand for payment of outstanding tax along with penalty.

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8. In appeal, the Joint Commissioner & Taxation Commissioner

(Appeal), Faridabad upheld the order order while examining the same consider considering ing

the law as laid down in Sahney Steel and Press Works Limited vs

Commercial Tax Officer (1985) 60 STC 301 (SC) and held that where the

goods move from one State to other as a result of covenant in the contract

of sale,, or an incident of the contract, the same shall be treated as inter inter-State State

sales and was, thus, liable to tax under the Central Sales Tax Act. The

appellate authority, namely, the Sales Tax Tribunal has upheld the order.

9. Learned counsel for the petiti petitioners has submitted that the

petitioners paid sales tax at the level of the State of Bihar itself and,

therefore, it cannot be said inter-State inter State sales as the sale has to be treated at the

level of the concerned State alone. Once the petitioners have already paid

sales tax @ 4.43% to the Bihar Government, they cannot be taxed twice and

no ulterior motive could have been attributed to them as sales tax in Haryana

is only 4%.

10. During the course of arguments, learned counsel for the

petitioner has submitted that the petitioner has already paid sales tax to the

Bihar Government, which issued Form 'F' for stock transfer of goods from

Faridabad and payment of sales tax to them but the attempt of the State of

Haryana is to treat the said movement of goods as inte interstate sales and would

be taxed which would ultimately go back to the Haryana State by virtue of

the provisions contained in Articles 269 and 286 of the Constitution of India

and the Central Sales Tax Act. This would tantamount to the petitioner being

taxed d twice, once as an intra-state intra sales by the Government of Bihar and UP

and subsequently by the State of Haryana as inter inter-State tate sales. This would be

most unjust and would cause serious harassment to the petitioner making it

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impossible for it to carry on its its business as already the petitioner is suffering

recurring losses.

11. Learned counsel for the petitioner has further submitted that the

Tribunal has misconstrued the law in holding the disputed transactions as

inter-State tate sales.

sale It is submitted that a transaction ransaction is termed as stock transfer

and Intra-State State sales where the transfer of goods is claimed otherwise than

by way of sale and the burden of proof would be discharged by the dealer if

he has furnished to the assessing authority "F "Form-F". As stated in n the above

mentioned paras, the methods for discharging the onus that these

transactions were branch transfers and not Inter Inter-State sales as has been

envisaged under Section 6A of the CST Act, 1956 is by production of "F"

Form. This is the conclusive proof of discharge as per Section 6A of the

CST Act, 1956. Further, Section 3(a) of the Act (supra) lays down the

principles of tests to be applied for determining whether a particular

transaction is an Inter-State Inter sales of goods or not and whether the movement

of goods from one State to another were occasioned by contract of sale. As

per the definition under Section 5 of the Sale Sales of Goods Act, a contract of

sale is made by an offer to buy or sell goods for a price and the acceptance

of such offer. In a contract contract of sale, the title in goods passes immediately on

payment of price but in an agreement to sell, the title in goods passes at the

future time subject to conditions to be fulfilled thereafter. In the present

case, the goods have been shown as stock transfe transferr and the MOU signed with

the Bihar Government by the Delhi Head Office clearly indicates that the

goods are to be supplied by the Patna Plants/ Office in Bihar and Tax has

been paid in the Bihar State and similar is the case with regard to supplies

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made to o the State of U. P. Thus, the learned Tribunal has erred in holding

that there was a prior contract of sale of these goods.

12. Learned counsel for the petitioner submitted that once the

petitioner has already been assessed by the State of Uttar Pardesh and State

of Bihar, State of Haryana cannot claim the sales tax. In the alternative, he

submitted that the petitioner has to pay the amount to meet out the demand

raised by the State of Haryana. The petitioner ought to be allowed to refund

the local sales tax to the sales tax authorities of the States of U. P. and Bihar.

The issue raised by the petitioner is no more res integra in view of judgment

of the Supreme Court in Tata Motors Limited vs Central Sales Tax

Appellate Authority and others 2022 (9) TMI 11000, which is as under:-

"4. At this stage, it is required to be noted that prior to insertion of Section 22(1B) to the Central Sales Tax Act, 1956 (hereinafter referred to as the 'Act 1956'), there was no provision by which the Appellate Authority could have ave issued directions for refund of the tax collected by the State which has been held by the Appellate Authority to be not due to that State, or alternatively, direct that State to transfer the refundable amount to the State to which central sales tax is due on the same transaction. However, by the Finance Act, 2010, Section 22(18) has been inserted to Act 1956, which reads as under:

"Section 22(18) - The Authority may issue direction for refund of tax collected by a State which has been held by the Authority to be not due to that State, or alternatively, direct that State to transfer the refundable amount to the State to which central sales tax is due on the same transaction.

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Provided that the amount of tax directed to be refunded by a State shall not ot exceed the amount of central sales tax payable by the appellant on the same transaction."

4.1 It is required to be noted that in the present case the transaction is for the period prior to insertion of Section 22(18) to the Act 1956 and the impugned ord order er has been passed by the Appellate Authority pre pre- Insertion of Section 22(18) to the Act 1956. Therefore, as such, it cannot be said that the Appellate Authority has committed any error in not issuing any direction which now is permissible under Section 222(18) of the Act 1956.

5. However, at the same time, the State of Andhra Pradesh cannot retain the amount of central sales tax paid by the appellant on the transaction of sale effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC. Therefore, in line with Section 22(1B) of the Act 1956, the State of Andhra Pradesh is directed to transfer to the State of Jharkhand the amount of central sales tax deposited by the appellant with the State of Andhra Pradesh with respect to transaction in question, however, subject to the appellant submitting the proof of the amount of central sales tax already paid on the transaction in question, namely, sales effected through RSO, Vijayawada with respect to vehicles/ buses sold to APSRTC treating the sam samee as stock transfer sale.

After due verification, the amount of central sales tax so paid by the appellant with respect to the aforesaid transaction be transferred to the State of Jharkhand immediately on such verification and the State of Jharkhand is directed ected to adjust the same towards the central sales tax liability of the appellant on such transaction, namely, sales effected through RSO, Vijayawada with respect to vehicles/buses sold to APSRTC which are found to be in the nature of inter

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state sale. The aforesaid exercise shall be completed within a period of three months from today."

13. In the present case, the petitioner entered into an agreement

with the Bihar Government to supply energy food. However, learned

counsel for the respondents submitted submitted that the petitioner firm manufactures

energy food at Faridabad factory and also at branches in a case of necessity,

transfers energy Food at places of its requirement, if the same is not met by

the local branch. The petitioner firm has transferred energy Food of specific

formulation of its branches at Patna, Madras and Kanpur in pursuance of a

prior contract and orders for supply from branch were already contract contracted and

orders for supply from branch were already in hand and goods were supplied

as per agreement.

agreement. It has been held by the Supreme Court in M/s Bharat

Electric Limited vs Union of India (1996) 8 PRT 424 (SC) that interstate

sales Tax is leviable in the state where goods are manufactured for specific

purpose and also from where movement of goods ta takes kes place. As movement

of goods took place from Faridabad to Patna, Madras and Kanpur branches

for specific purpose in pursuance of a prior contract and specific formulation

hence it being an inter-State inter sales, inter--State tate sales tax is leviable at

Faridabad.

d. In view of the facts noted above, the branch transfer as claimed

by the petitioner firm from Faridabad were rejected and the same are treated

as inter-State tate sales.

sale

14. The Sales Tax Tribunal vide its order dated 12.05.2000 found

that the Poshahar supplied from Faridabad to Patna was in pursuance of a

contract of sale already in existence. Only the goods rejected, being of

inferior quality, could be returned or not paid for. There is no stock kept at

Patna which could be said to be over and above the req requirements uirements of

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Government of Bihar. So far as the sales sale tax is concerned, the same was

appropriately imposed by creating a demand of Rs. 1,93,73,877/ 1,93,73,877/-.. We find

that merely because the petitioner has been assessed by the concerned

respective States for the local local sales, it cannot absolve itself from the claim

raised by the State of Bihar and the petitioner was required to pay the same.

15. In this case on 17.05.2005, this Court passed the following

order:-

"Mr. S. Ganesh, for the petitioner, learned senior counsel appearing submits that a fresh application, Including the corporate guarantee by Hindustan Lever Ltd.. which is 100% parent company of the petitioner, is being filed. Let him do so. A copy of the said application has already been supplied to the le learned arned counsel for the respondents, who pray for some time to have instructions thereon. Mr.Ganesh has also brought to our notice that a notification [No.S0327(E)] has also been issued 17.3.2005 by the Ministry of Finance, whereby on the Authority for Advance ce Rulings constituted under Section 245-0 of the Income-tax tax Act, 1961 has been declared as the Central Sales Tax Appellate Authority to settle inter inter--

State disputes falling under Section 6A read with Section 9 of the Central Sales Tax Act, 1956 on and from the date on which the Central Sales Tax (Amendment) Act. 2001 had come into force.

Let learned counsel for the State have instructions if the issue raised in the present writ petition could be considered by the said Appellate Authority, despite the fact that hat the Sales Tax Tribunal has already taken a decision in the appeal preferred by the petitioner for the relevant period."

16. In the ordinary course, the present case ought to have been

transferred to the Central Sales Tax Appellate Authority, however, this

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Court finds that a corporate guarantee has been furnished by M/s Hindustan

Level Limited for and on behalf of the petitioner in terms of the directions

issued on 30.05.2005, wherein this Court directed that the guarantor shall be

bound by the terms of both the affidavits which have been filed by and on

behalf of the petitioner. The interim orders dated 20.11.2000 were directed

to be continued till the final disposal of the writ petition. The interim order

dated 20.11.2000 reads as under:-

under:

"However, it is made clear that if the writ petition is dismissed, the petitioner shall have to pay the arrears of tax etc. with interest at the rate of 18% per annum from the date the amount became due."

Keeping in view that we have not accepted the contention of the petitioner

and in terms of the judgment Tata Motors Limited (supra), we leave it open

to the petitioner to claim refund of the amount already paid to the concerned

States in terms of the observations made in Tata Motors Limited (supra).

The respondents would also be entitled to the interest in terms of interim

order passed by the Court.

17. The writ petitions are dismissed.

18. All pending applications shall stand disposed of.

19. No costs.

                                            (SANJEEV PRAKASH SHARMA)
                                                     JUDGE



02.09.2024                                       (SANJAY VASHISHT)
vs                                                    JUDGE



Whether speaking/reasoned                   Yes/No

Whether reportable                          Yes/No

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