TaxTMI 
TaxTMI 
1994 (10) TMI 259
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....annexure C notice whereunder the second respondent has called upon the petitioner to show cause why penalty should not be levied upon it under section 10(6) of the Punjab General Sales Tax Act, 1948, on account of its failure to pay the tax due under section 10(4) of the Act. The petitioner's case is: for the purpose of manufacturing sugar, it purchases sugarcane from the cane growers and co-operative societies comprised of cane growers. Sugarcane is an agricultural produce within the meaning of item 39 of Schedule B to the Act and, therefore, exempt from tax. Inasmuch as the said sugarcane is sold to the petitioner's mills by growers of sugarcane themselves, no sales tax or purchase tax is leviable on the sale or purchase of sugarcane. This position has been affirmed by a learned single Judge of the Punjab and Haryana High Court in Malwa Sugar Mills Co. Ltd. v. Assessing Authority [1976] 38 STC 39. The decision was affirmed in letters patent appeal. A special leave petition preferred by the State was also dismissed. Though the subsequent decision of the Division Bench in Babu Ram Jagdish Kumar & Co. v. State of Punjab [1976] 38 STC 259 (P&H), was not concerned with sugarcane....
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....ssions, means the acquisition of goods specified in Schedule C or of goods on the purchase whereof tax is payable under any provision of this Act for cash or deferred payment or other valuable consideration or otherwise.............". The expression "sale" is defined in clause (h). In so far as it is relevant, it reads: "sale means any transfer of property in goods other than goods specified in Schedule C for cash, deferred payment or other valuable considerations and includes.............". "Turnover" is defined in clause (i). It is an inclusive definition. In so far as it is relevant, the definition reads: "turnover includes the aggregate of the amounts of sales and purchases and parts of sales and purchases actually made by any dealer during the given period less any sum allowed as cash discount or trade discount according to ordinary trade practice, but including any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof". Section 4 is the first and the main charging section. Sub-section (1) reads thus: "(1) Subject to the provisions of sections 5 and 6, every dealer, except one dealing exclusively in goods declar....
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....ary to set out the section in full: "4-B. 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 tax is payable on the purchase of such goods under any other provision of this Act, there shall be levied a tax on the purchase of such goods at such rate not exceeding the rate specified under sub-sectio....
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....r himself. This means that sugarcane is exempt from tax on its sale. The question is whether its purchase is also exempt from tax. The contention of the learned counsel for the petitioner is this: Section 4-B, which levies purchase tax, expressly excludes the goods mentioned in Schedule B from its purview. In other words, Schedule B goods are exempt from tax on their sale by virtue of section 6 and exempt from tax on their purchase by virtue of section 4-B. The emphasis is upon the opening words of section 4-B which read: "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......... We find it difficult to agree. The said argument, in our opinion, is based upon an incorrect premise that purchase tax is levied by section 4-B in the Act and not by any other provision. The said argument also ignores the fact that section 4 levies tax not only upon "all sales effected" but also on "purchases made". If the assumption underlying the argument of the learned counsel for the petitioner were to be accepted then no purchase tax was leviable on Schedule C goods prior to introduction of section 4-B. Similarly, no....
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....f raw material. The object is again the same. If the manufactured goods, which are taxable on sale point are sent out of the State, the State does not get any income. If, on the other hand, they are taken out of the State as a result of inter-State sale, the State gets the tax by virtue of article 269 of the Constitution. In the case of export sale, the State forgoes the tax but it does so because it serves the national interest of promoting exports. (See Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 in this regard). In other words, according to this clause, if the manufactured goods are taken out of the State in such a manner that State does not derive any tax (nor the national interest aforesaid is served), the purchase of raw material is taxed. 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, 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 suc....
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....t too the State gets the revenue by virtue of article 269) or where they are sold in export trade (in which event though no tax is realised by State, yet the national interest aforesaid is served). It would be thus clear that section 4-B is, broadly speaking, actuated by the same idea as is underlying section 6-A of the Andhra Pradesh General Sales Tax Act, section 7-A of the Tamil Nadu General Sales Tax Act, section 5-A of the Kerala General Sales Tax Act and section 7 of the Madhya Pradesh General Sales Tax Act among others, all of which are dealt with and explained in Hotel Balaji [1993] 88 STC 98 (SC) and Devi Dass Gopal Krishan Pvt. Ltd. v. State of Punjab [1994] 95 STC 170 (SC); 1994 2 JT 239. Indeed, section 4-B was so understood in the latter decision. It is, therefore, idle to contend that section 4-B imposes purchase tax or is the only provision imposing purchase tax. As analysed hereinbefore, it is mainly designed to affirm or exempt, as the case may be, the purchase of certain goods from purchase tax in certain specified situations. It, of course, does not deal with the goods specified in Schedule B. Its object is to ensure, inter alia, that purchase of raw materi....
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....ition of goods specified in Schedule C or of goods on the purchase whereof tax is payable under any provisions of this Act". Firstly, clause (ff) in section 2 is not a charging section. It only defines "purchase". Secondly, the definition not only includes the purchase of Schedule C goods but purchase of other goods which are subject to purchase tax under any other provisions of the Act. The fact that the words "or of goods on the purchase whereof tax is payable under any provisions of this Act" were inserted in this definition by the same Amendment which introduced section 4-B into the Act does not mean that the said words are confined to section 4-B. If that were the intention, the Legislature would have used appropriate words to that effect. Moreover, as explained by us hereinbefore, section 4-B is designed for a different purpose. The said definition cannot, therefore, be read in derogation of section 4(1) nor can the levy created by section 4(1) be curtailed or cut down in any manner by the said definition. A subsidiary question arises: why does section 4(1) exempt a dealer "dealing exclusively in goods declared tax-free under section 6" from its operation. On the bas....