2010 (1) TMI 1139 - HC - VAT and Sales Tax

Court upholds purchase tax on sugarcane under Punjab tax laws. No bar to multiple taxes on same goods.

The court upheld the validity of the notification imposing a tax on the purchase of sugarcane, ruling that the Punjab General Sales Tax Act, 1948 governs ... Declaring section 19, item 4 of Schedule H of the Punjab Value Added Tax Act, 2005 as unconstitutional as the same would not be applicable in respect of sugarcane and purchase tax thus not leviable under the said Act. Held that:- 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 account of the binding precedent available in the form of judgment of Jagatjit Sugar Mills' case [1994 (10) TMI 259 - SUPREME COURT OF INDIA] we are not dealing with any of the contentions raised by the petitioners which could have been otherwise examined in the light of the observations made in Gobind Sugar Mills' case [1999 (8) TMI 761 - SUPREME COURT OF INDIA]. W.P. dismissed. Issues Involved:1. Validity of the notification dated May 27, 1988, imposing a tax on the purchase of sugarcane.2. Constitutionality of Section 19, Item 4 of Schedule H of the Punjab Value Added Tax Act, 2005.3. Applicability of the Punjab General Sales Tax Act, 1948, versus the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953.4. Allegation of double taxation.5. Binding precedent between conflicting Supreme Court judgments.Detailed Analysis:1. Validity of the Notification Imposing Tax on Sugarcane:The petitioners challenged the notification dated May 27, 1988, which imposed a tax of 50 paisa per 100 kgs on the purchase of sugarcane. They argued that the Punjab Sugarcane (Regulation of Purchase and Supply) Act, 1953 (the 1953 Act), being a special Act, should govern the levy of purchase tax on sugarcane, and not the Punjab General Sales Tax Act, 1948 (PGST Act, 1948). The court held that the PGST Act, 1948, which imposes tax on the sale or purchase of all goods, including sugarcane, is valid and applicable. The judgment of the Supreme Court in Jagatjit Sugar Mills v. State of Punjab [1995] 96 STC 344; [1995] 1 SCC 67 was cited, where it was held that section 4(1) of the PGST Act, 1948 contemplates levy of purchase tax on all sales and purchases, including sugarcane.2. Constitutionality of Section 19, Item 4 of Schedule H of the Punjab Value Added Tax Act, 2005:The petitioners contended that Section 19, Item 4 of Schedule H of the Punjab Value Added Tax Act, 2005 (the 2005 Act) is unconstitutional as it imposes a purchase tax on sugarcane, which should be governed exclusively by the 1953 Act. The court dismissed this contention, stating that the 2005 Act is a general Act that provides for the collection of commercial taxes on the sale and purchase of all goods, including sugarcane. The court reiterated that there is no constitutional bar to imposing two taxes under different enactments on the same goods.3. Applicability of PGST Act, 1948, versus the 1953 Act:The petitioners argued that the 1953 Act, being a special Act, should override the PGST Act, 1948, and the 2005 Act. They relied on the Supreme Court judgment in Gobind Sugar Mills Ltd. v. State of Bihar [1999] 115 STC 358; [1999] 7 SCC 76, where it was held that the special Act would govern the levy of purchase tax. However, the court preferred the judgment in Jagatjit Sugar Mills' case, which was rendered by a three-Judge Bench and specifically interpreted the PGST Act, 1948. The court held that the PGST Act, 1948, is applicable and enforceable.4. Allegation of Double Taxation:The petitioners claimed that levying tax under both the PGST Act, 1948, and the 1953 Act amounts to double taxation. The court rejected this argument, stating that there is no constitutional prohibition against double taxation. The court referred to the Supreme Court judgments in Arvinder Singh v. State of Punjab AIR 1979 SC 321 and Radhakisan Rathi v. Additional Collector, Durg AIR 1995 SC 1540, which upheld the validity of double taxation under different enactments.5. Binding Precedent Between Conflicting Supreme Court Judgments:The court addressed the issue of conflicting judgments between the three-Judge Bench in Jagatjit Sugar Mills' case and the two-Judge Bench in Gobind Sugar Mills' case. The court held that the judgment of the larger Bench (Jagatjit Sugar Mills' case) is binding and must be followed. The court emphasized that the judgment in Jagatjit Sugar Mills' case specifically interpreted the PGST Act, 1948, which is applicable to the petitioners.Conclusion:The court dismissed all the writ petitions, holding that the PGST Act, 1948, and the 2005 Act are applicable and enforceable. The notification dated May 27, 1988, imposing a tax on the purchase of sugarcane, is valid. The court upheld the constitutionality of Section 19, Item 4 of Schedule H of the 2005 Act. The court rejected the allegation of double taxation and followed the binding precedent set by the three-Judge Bench in Jagatjit Sugar Mills' case.