TMI Blog1973 (4) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... tries, Chulkana Road, Samalkha Mandi, District Karnal (L.P.A. No. 313 of 1970), decided on 5th October, 1971*. This decision undoubtedly supports him. We are doubtful if a certificate issued contrary to the provisions of the statute would lead to the result which necessarily flows from the Letters Patent decision. In our opinion, it will be proper that this reference is heard by a larger Bench. We, therefore, direct that the papers of this case be laid before my Lord the Chief Justice for constituting a larger Bench to hear and dispose of this reference. In pursuance of the abovesaid order of reference, the reference came on for hearing before the Full Bench: Printed at page 423 infra. The judgment of the court was delivered by BAL RAJ TULI, J.-This reference came up for hearing before my learned brethren, Mahajan and Jain, JJ., on 9th February, 1972, when the learned counsel for the petitioner relied on a Division Bench judgment of this court in The State of Haryana and Another v. M/s. Karnal Gur and Khandsari Industries, Chulkana Road, Samalkha Mandi, District Karnal, (L. P. A. No. 313 of 1970) decided on 5th October, 1971*. Since the correctness of that decision was doubte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase value of the gur to the extent of the manufacture of khandsari out of it, which was 38 per cent. only, the molasses accounting for the remaining 62 per cent. The petitioner was thus held liable to pay sales tax on Rs. 1,71,296.00, which represented 38 per cent. of the purchase value of the gur determined as Rs. 4,50,780.53 instead of Rs. 50,074.00. On this amount sales tax at 6 per cent. amounting to Rs. 10,277.76 was levied. The order of assessment was accordingly modified and the appeal was accepted in part on 19th July, 1968. The Excise and Taxation Commissioner, Haryana, suo motu took action under section 21(1) of the Act and issued notice to the petitioner to show cause why the order of the appellate authority should not be revised. After hearing the petitioner, the Excise and Taxation Commissioner decided that the tax should be levied not on 38 per cent. of the purchase value of the gur, but on the market value of 38 quintals of khandsari out of every 100 quintals of gur purchased and, setting aside the order of the appellate authority, remanded the case to the assessing authority for fresh assessment on the basis indicated by him. This order was passed on 9th May, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force in 1965-66, read as under: "5. (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) the sale of goods declared tax-free under section 6; (ii) sales to a registered dealer of goods other than sales of goods liable to tax at the first stage under sub-section (1-A) declared by him in a prescribed form as being intended for resale in the State of Punjab or sale in the course of inter-State trade or commerce or sale in the course of export of goods out of the territory of India or of goods specified in his certificate of registration for use by him in the manufacture in Punjab of any goods, other than goods declared tax-free under section 6, for sale in Punjab and on sales to a registered dealer of containers or other materials for the packing of such goods: Provided that in case of such sales, a declaration duly filled up and signed by the registered dealer to whom the goods are sold and containing prescribed particulars on a prescribed form, obtained from the prescribed authority, is furnished by the dealer who sells the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------------------------------------------------------------------------ Description Quantity Price Number and date Full signature of goods of cash memo or of the selling bill issued by the dealer. selling registered dealer. ----------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------- Full signature and complete address of the dealer or his authorised agent. Place........................ Date.........................." Section 5(2)(a)(ii) of the Act was amended by the Punjab General Sales Tax (Amendment) Act, 1963 (Punjab Act No. 2 of 1963), so as to insert the words "other than goods declared tax-free under section 6", which were previously not there. That Act came into force with effect from 23rd March, 1963, but it appears that the Assessing Authority, Rohtak, who issued the certificate of registration to the petitioner on 21st April, 1965, was not aware of the amendment made by Punjab Act 2 of 1963, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of tax-free goods like khandsari, but it did not use that gur for any other purpose. To repeat, the gur was purchased for the manufacture of khandsari and was used for that very purpose. The second proviso to section 5(2)(a)(ii) has, therefore, no application and no other provision of the Act has been brought to our notice under which the State can assess the petitioner to tax on the purchase price of gur which was purchased by it for the manufacture of khandsari on the basis of its certificate of registration and declarations in Form S.T. XXII. It is quite manifest that under section 5(2)(a)(ii), as amended and in force in 1965-66, the selling dealer was not entitled to claim deduction for the sale turnover of gur sold to the petitioner tax-free for the manufacture of khandsari from his gross turnover and, if claimed, the assessing authority should have disallowed it. If the selling dealer has been allowed that deduction, it can be only on the basis that khandsari is not tax-free goods. If that be so, then a different interpretation cannot be placed on khandsari in the hands of the petitioner. On that basis, the petitioner is not liable to pay any tax on the purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner-firm purchased gur for some other purpose and used it for the manufacture of khandsari. The registration certificate entitled the petitioner-firm to purchase gur for the manufacture of khandsari and gursheera free of tax. It cannot, therefore, be said that the petitioner-firm used gur purchased for the manufacture of khandsari and gur-sheera for any purpose other than that for which it was sold to it. There was thus no misuse of the registration certificate by the petitioner-firm when it purchased gur free of tax for the manufacture of khandsari and gur-sheera on the strength of the registration certificate. The proviso to section 5(2)(a)(ii) of the Act has thus no applicability to this case. The dealer or dealers, who sold gur to the petitioner-firm on the basis of this registration certificate for the manufacture of khandsari and gur-sheera, may not be entitled to deduct from its/their gross turnover the value of such sales as khandsari is a tax-free goods but the petitioner cannot be held liable to the sales tax department for the payment of sales tax on the purchase of that gur. It was open to the seller to realise it from the purchaser, that is, the petitioner, but it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether. The assessee had to comply with the Act and the Rules and could not take shelter behind the unamended certificate. In that case, the assessee-company claimed deductions out of its gross turnover under section 5(2)(a)(ii) of the Act which were disallowed with the following observations: "There are three conditions involved: the first is that they must be for the use of the dealer; the second is they must be for manufacture in the State of Punjab; and the third is that the manufacture must result in goods for sale. It is not necessary to decide whether the sale should also be in the Punjab for the reason that no sale as required took place. The exemption could only be claimed if the company satisfied all the three conditions. The last condition does not appear to be fulfilled in this case. The words 'for sale' show the quality of goods and it is clear the goods that are manufactured in the Punjab must be for sale. According to the section the goods which are the result of manufacture must be for sale and not for use by the manufacturer in some manufacture outside the State resulting in different goods. The goods which the company manufactured in the State of Punjab were b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arnal, dated 10th April, 1968, in so far as it levied tax of Rs. 7,891.32 on the purchase value of gur amounting to Rs. 1,31,522.31 under section 5(2)(a)(ii) of the Punjab General Sales Tax Act (hereinafter referred to as the Act). Admittedly, the gur of the value, as stated above, was used by the respondent-firm for the manufacture of khandsari. There is also no dispute that a certificate of registration, copy annexure A, was issued by the authorities under the Act in the name of the respondent-firm. The copy of the certificate of registration, annexure A, is slightly confusing. The original certificate has been shown to us and column No. 2 of this certificate, while giving the business of the respondent-firm, states as follows: "mainly gur, khandsari, bardana, etc., dealer and manufacturer of khandsari, gur-sheera." Column No. 3 starts by saying, "the sales of the following goods to this dealer will be free of tax". Then there are two sub-columns, (a) "for purposes of manufacture"; (b) "for resale". Under sub-column (a) are mentioned "gur, firewood, sajji, lime" and under sub-column (b) "gur, etc." From the above it is clear that according to the certificate of registration, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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