TaxTMI 
TaxTMI 
TaxTMI 
1981 (7) TMI 205
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....ents much difficulty of solution. The facts giving rise to the appeal are few and may be briefly stated as follows. The assessee is a limited company registered under the Companies Act, 1956, and having its registered office at Calcutta. The assessee owns a factory in Faridabad where it carries on business of manufacturing and processing textiles. The assessee is registered under the Punjab General Sales Tax Act, 1948, as in force in the State of Haryana, and at all material times it also held a certificate of registration under section 7 of the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act). The business mentioned in the certificate of registration was "textile manufacturing, sale, purchase, wholesale distribution; sale and purchase of yarn and waste and textile machinery" and the certificate of registration also specified inter alia the following classes of goods for the purpose of sub-section (1) of section 8, namely, "dyeing colours, and other chemicals for use in manufacture". The assessee purchased these goods in the course of inter-State trade and commerce on the basis of its certificate of registration and furnished to the selling dealers declarat....
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....stration even if the goods purchased were used by the assessee in manufacture or processing of goods for a third party under a job-contract, so long as the manufactured or processed goods were intended for sale by such third party. This contention was however not accepted by the Excise and Taxation Officer and he consequently issued notices to the assessee for the assessment years 1962-63 to 1966-67 proposing to impose penalty under section 10A of the Central Act on the ground that the assessee had "contravened the provisions of section 10 of the Act ibid by purchasing goods for the purposes specified in clause (b) of sub-section (3) of section 8" but had failed "without reasonable excuse to make use of the goods for any such purpose". The assessee thereupon filed a writ petition in the High Court of Punjab and Haryana for quashing and setting aside the various notices issued by the Excise and Taxation Officer seeking to proceed against the assessee under sections 10 and 10A of the Central Act. The writ petition came up for hearing before a single Judge of the High Court who rejected it on the ground that on a true interpretation of section 8(3)(b), the goods purchased by the asse....
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....ven though the manufactured goods were intended for sale by such third party. The Division Bench did not accept this contention of the revenue and overturning the view taken by the learned single Judge, the Division Bench held that all that section 8(3)(b) provided was that the goods purchased must be used by the assessee in manufacture of goods for sale and did not require that the sale must be by the assessee himself. The prescription of section 8(3)(b) was that the goods manufactured must be for sale, without any qualifying expression that the sale must be by the assessee manufacturing the goods and therefore even if the goods were manufactured for a third party, so long as they were intended for sale by such third party, the case would be covered by the terms of the section. The Division Bench accordingly allowed the writ petition and quashed and set aside the notices issued against the assessee. The revenue thereupon preferred the present appeal after obtaining certificate of fitness from the High Court. It will be seen from the above statement of facts that the real controversy between the parties in the present appeal centres round the true interpretation of section 8(3)(b)....
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....n or distribution of electricity or any other form of power; (c)....................................... (d)....................................... (4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner- (a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government. (5)......................................." This section provides for three different rates of tax, one in sub-section (1), clauses (a) and (b), another in sub-section (2), clause (a), and the third in sub- section (2), clause (b). The rate of tax provided in sub-section (1), clauses (a) and (b), is lower than that provided in clause (a) or clause (b) of sub-section (2). We are concerned here with clause (b) of sub-section (1) since it is under that ....
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....facture......of goods for sale". The assessee was therefore clearly bound to use the dyeing colours and other chemicals purchased by it against its certificate of registration and the declarations in form C in manufacture of textiles for sale. If the assessee failed without reasonable cause to do so and used the dyeing colours and other chemicals purchased by it for a different purpose, then under section 10, clause (d), the assessee would be liable to punishment with imprisonment or fine or both and under section 10A, sub-section (1), the assessee would also incur liability to penalty in a sum not exceeding one-and-a-half times the tax which would have been levied under sub-section (2) in respect of the sale to him of the goods, if the sale had been a sale falling within that sub-section. The question which therefore arises for consideration is as to what is the scope and meaning of the expression "for use.........in the manufacture.........of goods for sale" occurring in section 8(3)(b) and in the declaration in form C and rule 13. Does it mean that the goods manufactured by a registered dealer by using the goods purchased against his certificate of registration and the d....
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....im" should have been omitted after the words "for sale" when the legislature considered it necessary to introduce those words after the words "for resale" in the first sub-clause of section 8(3)(b). The omission. of the words "by him" is clearly deliberate and intentional and it cannot be explained away on any reasonable hypothesis except that the legislature did not intend that the sale should be limited to that by the registered dealer manufacturing the goods. The court must construe the language of section 8(3)(b) according to its plain words and it cannot write in the section words which are not there. To read the words "by him" after the words "for sale" in section 8(3)(b) would not be construction but judicial paraphrase which is impermissible to the court. It is also important to note that the word "use" is followed by the words "by him" clearly indicating that the use of the goods purchased in the manufacture of goods for sale must be by the registered dealer himself but these words are significantly absent after the words "for sale". On a plain grammatical construction these words govern and qualify only "use" and cannot be projected into the words "for sale". The goods p....
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....ther words, they must be goods intended for sale, and it is immaterial whether they are intended for sale by the registered dealer himself or by anyone else. This sub-clause of section 8(3)(b) would therefore clearly cover a case where a registered dealer manufactures or processes goods for a third party on a job-contract and uses in the manufacture or processing of such goods, materials purchased by him against his certificate of registration and the declarations in form C, so long as the manufactured or processed goods are intended for sale by such third party. It is, of course, true that if the proceedings are taken against the registered dealer under section 10, clause (d), or section 10A, the question would arise whether the goods manufactured or processed by the registered dealer for a third party were intended for sale by such third party and that would have to be decided by the court or the competent authority according to the appropriate and relevant rules of evidence, but merely because some difficulty may arise in the determination of this question by reason of the third party coming into the picture that would be no ground for refusing to place on the language of secti....