New Delhi, December 9
In a major relief to the Haryana Government, the Supreme Court has vacated its stay on the recovery of levy from rice millers on the export-quality rice that could bring an additional revenue of nearly Rs 70 crore to the state annually.
The stay, granted by the court in August last year following writ petitions by nearly 92 rice mills, was vacated by a Bench comprising Mr Justice N. Santosh Hegde and Mr Justice B.P. Singh allowing the plea of the state to lift the ban on the recovery of the tax.
“In all these matters there will be no stay... and the earlier interim order stands modified,” the Bench said while allowing the Haryana Government’s plea for modification of the court’s interim order of August 14, 2002.
The court agreed to vacate the stay after Haryana’s counsel Mahendra Anand said the state government was ready to give undertaking to “repay the amount due to the mill owners at such period of time to be fixed at the time of final hearing” of their petitions.
Millers’ counsel M.N. Krishnamani had opposed the Haryana Government’s plea, stating that pending final decision on the writ petitions such a relief was not warranted.
The millers had challenged the constitutional validity of the Haryana General Sales Tax Act (HGSTA), 1973 provisions identifying paddy and rice as two different commodities for levying tax on the rice for export.
The mill owners had challenged the vires of the Section 5 read with Section 17 and Schedule ‘D’ of the Act, passed in 1973, contending that the state Assembly had no power to pass such a legislation.
They were more aggrieved by government’s notification implementing the provisions of the Act from retrospective date of May 27, 1971.
They claimed that these provisions of the Act were contrary to the Article 286 of the Constitution, which restricts the imposition of tax on the sale or purchase of goods.
This action of the state government had put the millers who shelled rice from paddy in the category of the indirect exporters for the purpose of levying tax on paddy apart from the rice, they said.
The mill owners said the Article 286 provided sufficient safeguards to restrain the states from imposing tax on the sale or purchase of goods in the course of inter-state trade or export outside the country.
They had further contended that the action of the state government was also contrary to Parliament declaring rice as “goods of special importance” by virtue of which the Centre was given the power to regulate the tax by the states on it, including fixing of the rates for the same.
The government had ignored the fact that the exporters did not realise the “purchase tax” from their customers to whom the rice was sold outside the country, the millers said, adding that even in the 1996 Finance Act, the Union Government had clarified that both paddy and rice would be treated as “single commodity”.
