TMI Blog2012 (3) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... the event of tax would come into existence on such purchases of the cotton seed to the extent the by-product oil-cakes has been sold outside the State of Punjab. Do not find any reason to interfere with the order passed by the statutory authorities levying purchase tax on the purchase value of oil-seeds referable to the production of oil-cakes which is disposed of by way of stock transfer in a situation where on sales tax is attracted. W.P. dismissed. - W.P. (C) No. 5391,5451,5473 of 2010 - - - Dated:- 21-3-2012 - GOEAL A.K. C.J. AND SARMA C.R., J. For the Appellant : Dr. B.P. Todi, Senior Advocate, A. Todi and A. Nath For the Respondents : R. Dubey, Standing Counsel, Finance Department and D. Saikia ORDER :- The order of the court was made by A.K. GOEAL C.J.- This order will dispose of W.P.(C) No. 5391 of 2010, W.P. (C) No. 5451 of 2010 and W.P. (C) No. 5473 of 2010, as all the three petitions involve common question of validity of levy of purchase tax on the transaction of turnover of purchase of raw material, i.e., oil-seeds referable to oil-cake transferred outside the State on consignment basis in which event no sales tax is attracted. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product of manufacture. Further, the petitioner has got mustard oil-cake included as a commodity dealt by it. Hence, the petitioner cannot claim it to be wastage. The contention raised in the petition is the intention of the Legislature is to collect tax on purchase of goods where no tax is leviable on sale under section 10. In the present case, the petitioner is paying tax on the sale of oil which is manufactured from the mustard seeds and oil-cake was merely by-product. The proportionate value of purchase turnover of mustard seeds referable to value of oil-cakes, produced therefrom, could not be subjected to purchase tax as manufacture of oil-cakes is automatic. Reliance has been in a situation where sales tax is not attracted, the levy of purchase tax was certainly permissible on oil-seeds. Reliance has been placed on the judgment of the honourable Supreme Court in Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 (SC); [1993] Supp 4 SCC 536 and the judgment of the Punjab and Haryana High Court in Shri Krishna Oil and General Mills v. State of Punjab [2010] 35 VST 226 (P H) passed in GSTR No. 63 of 1997, decided on January 22, 2009. The question for consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ap which was by-product in the course of production of iron and steel. On facts noted in the said judgment, scrap was chargeable to nil rate of duty and the question was whether the inputs used for production of steel qualified for exemption when duty was paid on the production of steel and scrap was merely a by-product. The stand of the Revenue was that since scrap was exempted from tax, the exemption notification will not apply to the inputs in view of condition for exemption that the product should not be exempted from the tax. This plea of the Revenue was not accepted. The said judgment is distinguishable as the scheme of exemption of inputs of exempted excisable goods is different from the concept of purchase tax. The concept of purchase tax has been discussed in Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 (SC); [1993] Supp 4 SCC 536, as under (pages 142 and 143 in 88 STC): 91. . . . If, however, the manufactured goods are sold within the State, no purchase tax is collected on the raw material, evidently because the State gets larger revenue by taxing the sale of such goods. (The value of manufactured goods is bound to be higher than the value of the raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is thus evident that section 4B applies only on those cases where (i) the goods are purchased like raw material by a dealer liable to pay tax under the Act in the State, (ii) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (iii) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter-State sale or export sale. In other words, if such manufactured goods are not sold within the State of Punjab, but yet disposed of within the State then no tax is payable on such disposition. Likewise where manufactured goods are despatched out of State as a result of an inter-State sale or export sale, no tax is payable on such sale. Again where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents then no such tax is payable on such removals. The question which has arisen is whether purchase tax would be payable when the event of purchase takes place or at any later stage? In the present case, the cotton seed purchased by the dealerpetitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State. If, however, the manufactured goods are sold within the State, no purchase tax is collected on the raw material, evidently because the State gets larger revenue by taxing the sale of such goods. (The value of manufactured goods is bound to be higher than the value of the raw material). The State Legislature does not wish to-in the interest of trade and general public-tax both the raw material and the finished (manufactured) product. . .' The aforesaid reasoning has been found to be based on a sound policy in the filed of taxation. Explaining the policy, their Lordships have observed as under: '. . . This is a well-known policy in the field of taxation. But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter-State sale or export sale) the tax has to be paid on the purchase value of the raw material. The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps be said is that it is plausible (as pointed out by Ranganathan, J. in his separate opinion) to characterise the said tax both as purchase tax as well as consignment tax. But where two interpretations are possible, one which sustains the constitutionality and/ or effectuates its purpose and intendment and the other which effectively nullifies the provision, the former must be preferred, according to all known canons of interpretation . . .' The provisions of section 4B of the Act fell for consideration before a three-Judge Bench of the honourable Supreme Court in the case of Devi Dass Gopal Krishan Pvt. Ltd. v. State of Punjab [1994] 95 STC 170 (SC); [1994] Supp 2 SCC 59. After considering the provisions of various other Acts and noticing the judgment of the honourable Supreme Court rendered in the case of Mukerian Papers Ltd. v. State of Punjab [1991] 81 STC 152 (SC); [1991] 2 SCC 580, the honourable Supreme Court held that there was no conflict between Hotel Balaji case [1993] 88 STC 98 (SC); [1993] Supp 4 SCC 536 and Mukerian Papers Ltd. [1991] 81 STC 152 (SC); [1991] 2 SCC 580. The view has been expressed in para 6 of the judgment which reads thus (at page 176 of 95 ST ..... X X X X Extracts X X X X X X X X Extracts X X X X
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