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TMI Blog2012 (5) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... that purchase tax was leviable on sugarcane under section 4(1) of the Punjab General Sales Tax Act, 1948 ?" 2. Briefly, the facts as narrated in the reference application may be noticed. The petitioner is a registered dealer under sales tax laws and is engaged in manufacturing and sale of sugar. It filed all the quarterly returns in time. Not satisfied with the returns, notice in form ST-XIV was issued to the petitioner by the Assessing Officer. After hearing the petitioner, the Assessing Officer framed assessment creating additional demands of Rs. 43,09,611, Rs. 1,06,89,637 and Rs. 1,23,51,885 for the years 1989-90, 1990-91 and 1991-92 vide orders dated December 27, 1995, July 9, 1996 and January 22, 1997, respectively. The Assessing Officer, inter alia, held that purchase tax was leviable on the sugarcane under section 4(1) of the Punjab General Sales Tax Act, 1948 (in short, "the Act"). Besides, it was also held that purchase tax under section 4B of the Act was imposable on the purchase of consumables used in the manufacture of the taxable and tax-free goods. Aggrieved by these orders, the petitioner filed three appeals before the DETC (A), Patiala Division, Patiala who after h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State. 6. Adverting to question No. 1, it would be expedient to reproduce section 4B of the Act, which reads thus: "4B. 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 course of inter-State trade or commerce or in the course of export out of the territory of India, or (iii) uses such goods for a purpose other than that of resale within the State or sale in the course of inter-State trade or commerce or in the course of export out of the territory of India, or (iv) sends them outside the State other than by way of sale in the course of inter-State trade or commerce or in the course of export out of the territory of India and no ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conversely, if the manufactured goods are sold within the State or sold in the course of inter-State trade or commerce or sold in the course of export sale, the raw material is exempted from purchase tax. In case, however, the manufactured goods are those mentioned in Schedule B-not taxable on sale point-clause (i) does not concern itself with their manner of disposal. From the point of Revenue, it makes no difference whether such goods are sold within the State or sold in the course of inter-State trade or commerce or sold in the course of export; in any of the situations, the State does not derive any revenue. 18. Clause (iii) says that where the goods purchased are used for a purpose other than resale within the State or in the course of interState sale or export sale, tax shall be levied on the purchase of such goods. This means that if the very goods purchased are resold within the State, no purchase tax shall be leviable on their purchase. Similarly, if the goods purchased are sold in the course of inter-State trade/commerce or in the course of export sale, again no tax will be levied on the purchase of such goods by the purchasing dealer. The idea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... get transformed into the end-product, whether the provisions of purchase tax under section 5A(1)(a) of the Kerala General Sales Tax Act were applicable. 10. It was concluded that where the dealer on the strength of his registration certificate purchases consumables which are ultimately used in the manufacture of taxable and tax-free goods, he is liable to pay purchase tax thereon. However, in case the consumables so purchased are used as fuel for consumption for providing taxable or tax-free goods, the same are not exigible to purchase tax. The relevant observations of the apex court in Thomas Stephen & Co. Ltd.'s case [1988] 69 STC 320 (SC) are as under (pages 323 and 324 in 69 STC): "The cashew shells in the instant case, had been used as fuel in the kiln. The cashew shells did not get transformed into the end-product. These have not been used as raw materials in the manufacture of the goods. These have been used only as an aid in the manufacture of the goods by the assessee. Consumption must be in the manufacture as raw material or of other components which go into the making of the end-product to come within the mischief of the section. Cashew she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case [2011] 37 VST 85 (P&H) held as under (pages 92 and 93 in 37 VST): "10. The first question which would arise for determination is whether three-Judge Bench judgment of the honourable Supreme Court rendered in the case of Jagatjit Sugar Mills [1995] 96 STC 344 (SC); [1995] 1 SCC 67 is binding on the parties. In the aforesaid case the question of law was posed in para 4 of the judgment, namely, whether the sugar mill was liable to pay purchase tax on the sugarcane purchased by it from the growers of the sugarcane. In a categorical answer to the aforesaid question it has been held that section 4(1) of the PGST Act, 1948 contemplates levy of purchase tax on all sales and purchases. Once the aforesaid judgment in the categorical terms lays down that purchase tax is leviable under section 4(1) then it is well nigh impossible for us to say that such a tax cannot be levied on the ground that the PGST Act, 1948 is a statute of general character which deals with sale or purchase tax in respect of all go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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