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2009 (1) TMI 807 - PUNJAB AND HARYANA HIGH COURTWhether, in the facts and circumstances of the case, provisions of section 4B are attracted when a part of by-product, i.e., oil-cakes valuing ₹ 48,30,399 was sent outside the State of Punjab for sale on consignment basis and the entire oil and rest of the oil-cakes (produced from cotton seeds purchased within the State of Punjab) were sold within the State of Punjab? Whether tax under section 4B not leviable in respect of oil-cakes valuing ₹ 48,30,399 sent for sale outside the State on the proportion between ₹ 48,30,399 and rest of the sales or on the proportionate price of cotton seeds based on yield percentage of oil and oil-cakes produced from cotton seeds instead of ₹ 48,88,879? Held that:- The argument that the levy created by the purchase tax levied by section 4B (or any other similar section in respect of other States) has really been on manufacture of goods and therefore not a tax referable to entry 54 of List II of the Seventh Schedule to the Constitution was rejected and the contrary argument that such provision merely levies pure and simple purchase tax on the raw material, like cotton seed in the present case, was accepted.Therefore, the legislative competence of the State Legislature to levy purchase tax under section 4B of the Act has been upheld. Once the aforesaid position is clear from the various judgments of the honourable Supreme Court then the first question of law deserves to be answered against the dealer-assessee and in favour of the Revenue especially when taxable event is the purchase of cotton seed which in the hands of oil-mill is the last stage of purchase.Question No. 1 is decided against dealer-assessee. If section 4B of the Act is to operate within the parameters of legislative competence postulated by article 246 and various Lists then it has to conform to the State taxes alone which could be achieved by assessing the tax on the purchases. Therefore, it has been rightly submitted by Mr. Sethi that the consignment sale in respect of oil-cake (khal) is only 9.66 per cent. of the total sale and, therefore, 9.66 per cent. of the total purchase of cotton seed should have been taken for tax purpose under section 4B of the Act. Accordingly, the answer of the question No. 2 would go in favour of the dealer-assessee and against the Revenue
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