TMI Blog2008 (3) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... eitei, Seeraj Bagga, Mrs. S. Bagga and M.P. Devenath, Advocates with them) for the respondents. Mahabir Singh, Senior Advocate, (Ajay Pal, Nikhil Jain, S.P. Singh Chauhan and Sanjay Jain Advocates with him) for the appellants. -------------------------------------------------- The judgment of the court was delivered by S.H. KAPADIA J. This civil appeal filed by the State of Punjab is directed against judgment and order dated July 4, 2006 passed by the Punjab and Haryana High Court in C.W.P. No. 2272 of 2006 Reported as Perfect Synthetics v. State of Punjab [2007] 6 VST 280 (P H) Page No: 551 by which it has been held that the assessee was entitled to deduction under rule 29(xii) of the Punjab General Sales Tax Rules, 1949 (for short, "the 1949 Rules"). The respondent-assessee, Perfect Synthetics, is a partnership firm engaged in the business of purchase, sale and manufacturing of yarn. In this civil appeal we are concerned with assessment year 2001-02. The assessee is registered under the Punjab General Sales Tax Act, 1948 (for short, "the 1948 Act"). The assessee claims that after purchasing raw material from exempted units within the State it has used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... publication of this notification in the Official Gazette, the tax under sub-section (1) of the said section shall be levied at the first stage of the sale of goods other than declared goods manufactured and sold by a dealer who has been allowed the benefit of deferment of or exemption from the liability to pay tax under the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991 and which stage in his case shall be the stage of sale when such dealer sells the goods from the premises of his manufacturing industrial unit for the first time in the State of Punjab." Section 5(2) of the 1948 Act provides for definition of the word "taxable turnover" to mean part of the dealer's gross turnover which remains after deducting therefrom the dealer's turnover during the relevant period on such other sales or purchases as may be prescribed. We quote hereinbelow section 5(2)(a)(vii) which reads as follows: "5. Rate of tax. (1) . . . (2) In this Act, the expression, 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom, (a) his turnover during that period on (i) to (vi) . . . (vii) such other sales or pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules made thereunder as early as possible and shall be completed by the 31st day of December in respect of the assessment year immediately preceding thereto and the additional demand so determined, if any, shall be paid as per the provisions of the Act and the Rules made thereunder." Issue The question which arises for determination in this civil appeal is: "What is the meaning of the words 'the purchase value of the goods' which have been subjected to tax under section 5(1A) in rule 29(xii)." Findings According to the Department, the words "subjected to tax" in rule 29(xii), quoted above, would mean goods which had suffered the tax under that section. In that connection the Department has placed reliance on the judgment of the Constitution Bench of this court in the case of Gannon Dunkerley Co. v. State of Rajasthan [1993] 1 SCC 364 See [1993] 88 STC 204 (SC) .in which rule 29(2) of the Rajasthan Sales Tax Rules came to be interpreted. We find no merit in the said argument of the Department. In this connection, we have to construe the scheme of the 1948 Act. As stated above, section 4 is the charging section whereas section 5(1A) indicates the point at which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gives deduction to the goods. Since the said rule 29(xii) refers to the purchase value of the goods which stood subjected to tax it becomes clear that under the Scheme of the 1948 Act even the eligible unit has to be assessed to tax. Under that assessment, the Department had to compute the tax liability. The Department had to compute the amount of tax payable by the eligible unit as such tax has to be appropriated towards the exemption entitlement. Therefore, the words used in rule 29(xii) are "the purchase value of goods which had been subjected to tax under section 5(1A)". Hence, we cannot equate the Scheme of the 1948 Act and the Rules framed thereunder with the scheme of the Rajasthan Sales Tax Act, 1954. Before concluding we may refer to the judgment of the Constitution Bench of this court in the case of Gannon Dunkerley Co. v. State of Rajasthan [1993] 1 SCC 364 See [1993] 88 STC 204 (SC). In that case it was held that the goods, on which no tax was leviable under section 5(1) of the Rajasthan Sales Tax Act, 1954, were not subjected to any tax and, therefore, there was no question of such goods having suffered tax at the rates prescribed under section 5 of the said A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have already suffered at the rates prescribed under section 5' only refer to the goods which have already been subjected to tax under the Act at the rates specified under section 5, and their value is to be excluded from the turnover. The goods on which no tax is leviable under sub-section (1) of section 5 are not subject to any tax under the Act and there is no question of such goods having suffered tax at the rates prescribed under section 5. In this context we may again refer to the definition of 'taxable turnover' contained in section 2(s) of the Rajasthan Sales Tax Act wherein provision is made under clauses (i) to (iv) for deduction from the turnover for arriving at the taxable turnover. Clause (i) refers to sale of goods 'on which no tax is leviable under this Act' and clause (ii) refers to sale of goods 'which have already been subjected to tax under this Act'. These clauses show that the Legislature has made a distinction between a sale of goods on which no tax is leviable and a sale of goods which has already been subjected to tax under the Act. Clause (i) of sub-rule (2) of rule 29 is a provision similar to that contained in clause (ii) of section 2(s). It is, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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