TMI Blog1994 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... and Vineeth Kumar, Advocates, for the other petitioners. Harish N. Salve, Senior Advocate (Ms. Meenakshi Grover and Rajiv Gupta, Advocates with him, for the petitioner in W.P. No. 382 of 1979. Dr. V.C. Mahajan, Senior Advocate (G.K. Bansal, Advocate, with him), for the respondents. -------------------------------------------------- The judgment of the Court was delivered by B.P. JEEVAN REDDY, J.- Writ Petition (C) No. 382 of 1979 is instituted by Jagatjit Sugar Mills Co. Ltd. for the issuance of an appropriate writ, order or direction restraining the respondents (State of Punjab and the Assessing Authority, Sales Tax, Kapurthala) from giving effect to annexure C notice whereunder the second respondent has called upon the petitioner to show cause why penalty should not be levied upon it under section 10(6) of the Punjab General Sales Tax Act, 1948, on account of its failure to pay the tax due under section 10(4) of the Act. The petitioner's case is: for the purpose of manufacturing sugar, it purchases sugarcane from the cane growers and co-operative societies comprised of cane growers. Sugarcane is an agricultural produce within the meaning of item 39 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition need not be set out herein, not being relevant for the purpose of this case). The expression "goods" is defined by clause (e) to mean, "all kinds of movable property and goods consumed at business premises other than newspapers, actionable claims, stocks, shares or securities and includes all materials, commodities and articles including the goods (whether as goods or in some other form) involved in the execution of a works contract or those goods which are used in the fitting out, improvement or repair of movable property". The expression "purchase" is defined in clause (ff). In so far as it is relevant, it reads: "purchase with all its grammatical or cognate expressions, means the acquisition of goods specified in Schedule C or of goods on the purchase whereof tax is payable under any provision of this Act for cash or deferred payment or other valuable consideration or otherwise.............". The expression "sale" is defined in clause (h). In so far as it is relevant, it reads: "sale means any transfer of property in goods other than goods specified in Schedule C for cash, deferred payment or other valuable considerations and includes.............". "Turnover" is defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x-free from time to time under this section". Sub-section (2) empowers the State Government to make additions to or to effect deletions from Schedule B in the prescribed manner. Item 39 of Schedule B reads as follows: "SCHEDULE B (1) (2) 39. Agricultural or horticultural produce sold by a person or a member of his family grown by himself or grown on any land in which he has an interest whether as owner or usufructuary mortgagee, tenant or otherwise." Item 62 in Schedule B is "sugar". Column (2) against item 62 is blank just as in the case of item 39. Section 4-B was introduced by Amendment Act 3 of 1973 with effect from November 15, 1972. It is necessary to set out the section in full: "4-B. Levy of purchase tax on certain goods. -Where a dealer who is liable to pay tax under this Act purchases any goods other than those specified in Schedule B from any source and- (i) uses them within the State in the manufacture of goods specified in Schedule B, or (ii) uses them within the State in the manufacture of any goods, other than those specified in Schedule B, and sends the goods so manufactured outside the State in any manner other than by way of sale in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chedule B. Such agricultural produce is exempt from tax on its sale when it is sold by a person or a member of his family who had grown the said produce himself or has grown it on any land in which he has any interest whether as a owner or usufructuary mortgagee, tenant or otherwise. The writ petitioner no doubt says that the entire sugarcane purchased by him is sold by growers of sugarcane themselves but that is a matter upon which no opinion can be expressed in this writ petition since it is a question of fact. It is sufficient to clarify that item 39 of Schedule B operates to exempt the sale of agricultural produce from tax only where it is sold by the grower himself. This means that sugarcane is exempt from tax on its sale. The question is whether its purchase is also exempt from tax. The contention of the learned counsel for the petitioner is this: Section 4-B, which levies purchase tax, expressly excludes the goods mentioned in Schedule B from its purview. In other words, Schedule B goods are exempt from tax on their sale by virtue of section 6 and exempt from tax on their purchase by virtue of section 4-B. The emphasis is upon the opening words of section 4-B which read: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the liability to purchase tax. Accordingly, section 4-B retains and affirms the tax on the goods purchased by such manufacturer-dealer, i.e., it taxes the raw material in the hands of the purchaser- manufacturer-dealer. Clause (ii)-which continues the idea behind clause (i)-says that where the manufacturer-dealer uses the goods purchased by him (raw material) in manufacture of goods other than the goods in Schedule B (i.e., where the manufactured goods are taxable at the sale point) but sends the goods so manufactured outside the State in any manner other than by way of inter-State sale or export sale, he shall be liable to pay tax on the purchase of raw material. The object is again the same. If the manufactured goods, which are taxable on sale point are sent out of the State, the State does not get any income. If, on the other hand, they are taken out of the State as a result of inter-State sale, the State gets the tax by virtue of article 269 of the Constitution. In the case of export sale, the State forgoes the tax but it does so because it serves the national interest of promoting exports. (See Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 in this regard). In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured goods are taxable and are sold within the State or sold in the course of inter-State trade or commerce in both of which situations, they fetch revenue to the State or where they are sold in the course of export, which does not fetch any revenue to the State but promotes national interest in promoting exports; and (b) to avoid taxing the purchase of the goods where the very goods are resold within the State so as to fetch tax on their sale (it must be remembered that the goods dealt with by section 4 are goods other than the goods in Schedule B and hence taxable at sale point) or are sold in the course of inter- State sale (in which event too the State gets the revenue by virtue of article 269) or where they are sold in export trade (in which event though no tax is realised by State, yet the national interest aforesaid is served). It would be thus clear that section 4-B is, broadly speaking, actuated by the same idea as is underlying section 6-A of the Andhra Pradesh General Sales Tax Act, section 7-A of the Tamil Nadu General Sales Tax Act, section 5-A of the Kerala General Sales Tax Act and section 7 of the Madhya Pradesh General Sales Tax Act among others, all of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Since section 4-B does not apply to Schedule B goods, the said provision is not relevant to the petitioners. The purchase tax on sugarcane is levied by section 4(1), since it being an agricultural produce, and said to be sold by growers themselves, is exempt from tax on its sale under section 6. The learned counsel for the petitioner sought to argue that only the goods mentioned in Schedule C are subject to purchase tax and no other goods. This argument is sought to be sustained with reference to the definition of "purchase" in section 2(ff). The said definition, which we have set out hereinbefore, defines the "purchase" as meaning "acquisition of goods specified in Schedule C or of goods on the purchase whereof tax is payable under any provisions of this Act". Firstly, clause (ff) in section 2 is not a charging section. It only defines "purchase". Secondly, the definition not only includes the purchase of Schedule C goods but purchase of other goods which are subject to purchase tax under any other provisions of the Act. The fact that the words "or of goods on the purchase whereof tax is payable under any provisions of this Act" were inserted in this definition by the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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