TaxTMI 
TaxTMI 
1981 (4) TMI 246
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.... provisions of the Gujarat Sales Tax Act, 1969 (Gujarat Act No. 1 of 1970) (hereinafter referred to as "the Act"). For the purpose of manufacturing the goods, the appellant which was also a recognised dealer under the Act purchased raw materials during the period between May 6, 1970, and March 31, 1971, after furnishing a certificate in form No. 19 as provided under section 13(1)(B) of the Act read with rule 24(4) of the Gujarat Sales Tax Rules, 1970 (hereinafter referred to as "the Rules"), framed under the Act stating that the raw materials purchased by it would be used in manufacturing taxable goods which would be sold by it in the State of Gujarat. Some part of the goods manufactured by the appellant were sold to a certain electrical undertaking in the State of Gujarat against C forms in order to claim exemption from payment of tax on the said sales under the Act by virtue of a notification issued under section 49(2) of the Act exempting the goods sold to electrical undertakings for being used in generation and distribution of electrical energy. On coming to know of the said sales, the Sales Tax Officer, who was the assessing authority under the Act, levied purchase tax under s....
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....e goods so manufactured and sold did not amount to manufacture of taxable goods." It is seen from the two questions referred to above that they are substantially the same. The High Court answered the said questions in favour of the revenue and against the assessees by two separate orders following its earlier decision in Nowroji N. Vakil & Co. v. State of Gujarat Sales Tax Reference No. 1 of 1977 decided on November 24/27, 1978 (Gujarat High Court); reported in [1979] 43 S.T.C. 238. The appellants have filed these appeals against the decision of the High Court by special leave under article 136 of the Constitution. We shall now briefly refer to the relevant provisions of the Act. Section 2(10) of the Act defines a "dealer" as any person who buys or sells goods in connection with his business and when he obtains a certificate of registration he becomes a registered dealer. Section 32 of the Act provides for the recognition of a registered dealer. It says that where during the previous or current year, the value of all taxable goods manufactured for sale by a dealer registered under section 29 or by a dealer registered under section 30, whose turnover of sales or purchases has ....
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....ction 13, a certificate as provided therein." "8. Levy of general sales tax on goods in Schedule II, Part B.-There shall be levied a general sales tax on the turnover of sales of goods specified in Part B of Schedule II at the rate set out against each of them in column 3 thereof, but after deducting from such turnover,- (i) resales of goods on the purchase of which the dealer is liable to pay purchase tax under section 16; (ii) resales of goods purchased from a registered dealer by a dealer who is not a licensed dealer at the time of such purchase; and (iii) sales of goods or resales of goods to which clauses (i) and (ii) do not apply, to a licensed dealer, recognised dealer or to a commission agent holding a permit, who purchases on behalf of a principal who is a licensed dealer or a recognised dealer, upon such dealer or commission agent as the case may be furnishing, in the circumstances and subject to the conditions specified in section 13, a certificate as provided therein." "10. Levy of sales tax and general sales tax on goods specified in Schedule III.- (1) There shall be levied a sales tax on the turnover of sales of goods, specified in Schedule II....
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....in becomes deductible and no tax is payable on such sales in favour of the recognised dealer. The relevant part of section 13 of the Act reads thus: "13. No deduction from turnover except on a certificate.-(1) There shall not be deducted from the turnover of sales, sales of goods to a licensed dealer, recognised dealer or to a commission agent holding a permit purchasing on behalf of his principal, as provided in sections 7, 8 and 10 unless- (A).....................................................................................; (B) the recognised dealer certifies in the prescribed form, that the goods other than prohibited goods sold to him are goods purchased by him for use by him as raw or processing materials or as consumable stores in the manufacture of taxable goods for sale by him; or................................." Rule 24(4) of the Rules prescribes that the certificate issued by a recognised dealer shall be in form No. 19. The relevant part of form No. 19 reads: "...........................................and that the goods Purchased by me/the said.............................and specified in bill/cash memo/invoice No.......... dated...................
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....f the Act, the relevant part of which reads: "16. Liability to purchase tax for contravention of terms of certificates, etc.- (1) Where any dealer or commission agent has purchased any taxable goods under a certificate given by him under section 12 or 13, and (a) contrary to such certificate, the goods are used for another purpose, or are not resold or despatched in the manner and within the period certified, or (b) on the resales in the course of inter-State trade or commerce, of the goods so purchased, no tax under the Central Sales Tax Act, 1956 (74 of of 1956), is actually payable by him on account of any deduction admissible under any of the provisions of the said Act, then such dealer or commission agent shall be liable to pay tax on the purchase price of the goods purchased under such certificate; and accordingly, he shall include the purchase price thereof in his turnover of purchases in his declaration or return under section 40 which he is to furnish next thereafter. (2)....................................................................................... (3) The purchase tax leviable under this section in respect of any goods speci....
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....se to be taxable goods. The solution to the question, therefore, lies on the true meaning of the expression "taxable goods". Relying upon the decision of this Court in State of Tamil Nadu v. M.K. Kandaswami [1975] 36 S.T.C. 191 (S.C.)., it is urged on behalf of the appellants that the expressions "taxable person", "taxable goods" and "taxable events" are entirely different concepts in sales tax law; that the goods in question were taxable goods as any sale of those goods not covered by section 49(1) and (2) would make such sale taxable and that section 49(1) and (2) of the Act referred to only events which resulted in the exemption from payment of sales tax. It is further argued that all goods the sale or purchase of which is liable to tax under the Act are taxable goods and that goods would not be taxable goods only when their sales are exempted generally from payment of tax as provided in section 5 of the Act. It is, therefore, contended that the goods manufactured by the appellants not having been goods, the sale or purchase of which had been exempted from tax by inclusion in Schedule I to the Act, the appellants could not be treated as having infringed the terms of form No. ....
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....33) of the Act reads: "taxable goods" means goods other than those on the sale or purchase of which no tax is payable under section 5 (which corresponds to section 5 of the Bombay Act) and section 49 of the Act (which corresponds to section 41 of the Bombay Act) or a notification issued thereunder. By this definition, the dichotomy that is stated to exist between "taxable goods" and "taxable events" has been given a go-by. It may be that section 5 and Schedule I refer to goods only but section 49 deals with only taxable events which result in the exemption from payment of tax on the conditions mentioned therein or in the notification issued thereunder being satisfied even though the goods in question do not come under Schedule I. Secondly, one has to wait till the disposal of the goods by the dealer to find out whether the goods are taxable goods or not in view of the definition of the said expression which takes away goods sold under circumstances attracting section 49 from the scope of the meaning of that expression. Nor does the third ground survive for the very same reason. If the sale is exempt from tax under section 49 of the Act, the goods sold would not be taxable goods. We....