TMI Blog2012 (5) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar Mills' case [1994 (10) TMI 259 - SUPREME COURT OF INDIA] stating that 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. - G.S.T.R. No. 18 of 2006 - - - Dated:- 9-5-2012 - AJAY KUMAR MITTAL AND GURMEET SINGH SANDHAWALIA, JJ. For the Appellant : M.R. Sharma For the Respondent : Gaurav Garg Dhuriwala, Deputy Advocate-General, Punjab, The judgment of the court was delivered by GURMEET SINGH SANDHAWALIA J.- In compliance with the order dated August 17, 2005 passed by this court in STC Nos. 9, 10 and 11 of 2003, relating to assessment years 1989-90, 1990-91 and 1991-92, the Tribunal has referred the following questions of law for the opinion of this court: (1) Whether, in the facts and circumstances of the case, the Tribunal was correct in law in holding that purchase tax was leviable under section 4B of the Punjab General Sales Tax Act, 1948 on the consumables purchased on the strength of registration certificate and used in manufacturing of taxable and tax-free goods? (2) Whether the Tribunal was correct i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumables which had been purchased by the dealer on the strength of registration certificate and were used in the manufacture of taxable and tax-free goods. Reliance was placed upon judgment of the apex court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Thomas Stephen Co. Ltd. [1988] 69 STC 320 (SC). Referring to the second question, it was submitted that under section 4(1) of the Act, no purchase tax was leviable on the sugarcane. The decision of the Tribunal to the contrary was legally unsustainable. 4. The learned counsel for the State, on the other hand, while supporting the order passed by the Tribunal, canvassed that the purchase tax under section 4B of the Act was rightly imposed on the consumables which were transformed into end-product by using them in the manufacture of other goods. On the strength of the Division Bench judgment of this court in Indian Sucrose Ltd. v. State of Punjab [2011] 37 VST 85 (P H), it was urged that on the purchase of sugarcane, the same was chargeable to purchase tax under section 4(1) of the Act. 5. After giving thoughtful consideration to the respective submissions, we find that the Tribunal had ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 interState 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 (SC); [1993] Supp (4) SCC 536, in this regard.). In other words, according to this clause, if the manufactured goods are taken out of the State in such a manner that State does not derive any tax (nor the national interest aforesaid is served), the purchase of raw material is taxed. Conversely, if the manufactured goods are sold within the State or sold in the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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). 8. It was further noticed that section 4B of the Act was actuated by the same idea as is underlying section 6A of the Andhra Pradesh General Sales Tax Act, section 7A of the Tamil Nadu General Sales Tax Act, section 5A of the Kerala General Sales Tax Act and section 7 of the Madhya Pradesh General Sales Tax Act. 9. The apex court in Thomas Stephen Co. Ltd.'s case [1988] 69 STC 320 (SC) was examining the issue where the cashew shells which had been used as fuel in the kiln but did not get transformed into the end-product, whether the provisions of purchase tax under section 5A(1)(a) of the Kerala General Sales Tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint and purchase point of the same transaction be taxed, which feature is indicated in sub-section (2A) of section 4 also. It is, therefore, obvious that where the sale of certain goods is exempt from tax by virtue of section 6, their purchase will be taxed and conversely where the Act expressly taxes the purchase of certain goods their sale simultaneously will not be taxed-subject, of course, to any express provisions providing exemptions. In the case of sugarcane, it being an agricultural produce-and in cases where it is sold by the grower himself-such sale is exempt from tax by virtue of section 6 read with Schedule B. If so, the purchaser thereof is liable to pay tax on its purchase by virtue of section 4(1). That is the position in the cases before us. Since section 4B 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. 13. Following the aforesaid judgment of the honourable Supreme Court, a Division Bench of this court in Indian Sucrose Ltd.'s c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sugar Mills' case [1999] 115 STC 358 (SC); [1999] 7 SCC 76 has emerged out of different statute. It is needless to emphasise that the judgment by the honourable Supreme Court is a law declared in respect of the field occupied by it which is binding on all courts within the territory of India including the High Courts. In that regard reliance may be placed on the observations made by a Constitution Bench of the honourable Supreme Court in the case of Behram Khurshid Pesikack v. State of Bombay AIR 1955 SC 123. Even otherwise the decision of three-Judge Bench in Jagatjit Sugar Mills' case [1995] 96 STC 344 (SC); [1995] 1 SCC 67 has to be followed because that decision is by a larger Bench than the one deciding the Gobind Sugar Mills' case [1999] 115 STC 358 (SC); [1999] 7 SCC 76. The three-Judge Bench judgment decision is also under the PGST Act 1948 which is applicable to the petitioner. Therefore, in our view there is no possibility whatsoever to reopen the question by opining that the provisions of section 4(1) of the PGST Act,1948 would not apply and those of the 1953 Act alone would apply. On the basis of the aforesaid premise, the writ petitions are liable to be dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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