Purchase tax on raw material used for export manufacture remains payable absent express exemption under state sales tax law.

Purchase tax under section 4B of the Punjab General Sales Tax Act, 1948 was held leviable on raw material purchased in India and used to manufacture goods later exported, because export of the finished product does not by itself extinguish liability on the taxable purchase. The Court followed prior rulings applying the same principle to export-oriented manufacturing transactions and read section 4B with section 4(1) as not creating an exemption. A separate exemption claim based on the Additional Duties of Excise (Goods of Special Importance) Act, 1957 failed because it was not properly pleaded and the relevant schedule entry did not cover the raw material taxed under the State Act.

---

---

Issues: (i) whether purchase tax under section 4B of the Punjab General Sales Tax Act, 1948 was leviable on raw material purchased in India and used in the manufacture of goods ultimately exported outside India; (ii) whether the petitioner could claim exemption from purchase tax on the basis of the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

Issue (i): whether purchase tax under section 4B of the Punjab General Sales Tax Act, 1948 was leviable on raw material purchased in India and used in the manufacture of goods ultimately exported outside India.

Analysis: The provision was construed in the light of the statutory scheme and prior decisions holding that purchase tax is attracted on the taxable purchase of raw material and that export of the finished product does not, by itself, eliminate the liability. The Court followed the earlier rulings applying the same reasoning to analogous export-oriented transactions and held that section 4B, read with section 4(1), did not exempt the petitioner from purchase tax on the goods purchased for manufacture.

Conclusion: The liability to purchase tax on the raw material was upheld and the contention that export of the finished goods barred the levy was rejected.

Issue (ii): whether the petitioner could claim exemption from purchase tax on the basis of the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

Analysis: The Court held that the plea failed both because it had not been properly founded in the pleadings and because the relevant schedule entry dealt with shoddy woollen blankets, whereas the levy in question was on the raw material used to manufacture those blankets. The enactment therefore did not provide a basis to avoid purchase tax under the Punjab General Sales Tax Act, 1948.

Conclusion: The exemption claim based on the 1957 Act was rejected.

Final Conclusion: The writ petitions failed, the reference was answered against the assessee, and the purchase tax levy on the raw material used for export production was sustained.

Ratio Decidendi: Under the Punjab General Sales Tax Act, 1948, purchase tax remains payable on taxable raw material used in manufacturing exported goods unless the statute expressly grants an exemption; export of the finished product does not by itself negate the levy.

---