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The State of Punjab and anr. Vs. Laxmi Ginning and Oil Mills and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtPunjab and Haryana High Court
Decided On
Case Number L.P.A. No. 61 of 1980 in C.W.P. No. 7522 of 1975
Judge
Reported in[1984]55STC389(P& H)
AppellantThe State of Punjab and anr.
RespondentLaxmi Ginning and Oil Mills and anr.
Appellant Advocate D.S. Brar, Assistant Adv.-General
Respondent Advocate Anand Swarup, Sr. Adv. and; Manoj Swarup, Adv.
Cases ReferredRattan Lal and Co. v. Assessing Authority
Excerpt:
- - state of 'punjab [1967] 20 stc 290 (sc). the learned judge who allowed the writ quashed the assessment orders but gave a direction that it would be open to the assessing authority to review its earlier order in view of the amendments made in the act to overcome the effect of the judgment given in bhawani cotton mills' case [1967] 20 stc 290 (sc). after the amendments, sections 5 and 11aa of the act read as under: it is argued that the amendments have been made retrospective but no machinery is provided to enable the dealer to discover that the goods had been taxed before and the single stage at which the tax is to be levied is still not clearly discernible......of declared goods, tax shall be levied at one stage and that stage shall be-(i) in the case of goods liable to sales tax, the stage of sale of such goods by the last dealer liable to pay tax under this act;(ii) in the case of goods liable to purchase tax, the stage of purchase of such goods by the last dealer liable to pay tax under this act;(b) the taxable turnover of any dealer for any period .shall not include his turnover during that period on any sale or purchase of declared goods at any stage other than the stage referred to in sub-clause (i), or as the case may be, sub-clause (ii) of clause (a).2. section 11aa. review of certain assessments, etc., of tax on declared goods.- (1) notwithstanding anything contained in this act, the assessing authority shall (whether or not an.....
Judgment:

M.R. Sharma, J.

1. This appeal under clause 10 of the Letters Patent is directed against the judgment dated 2nd November, 1979 [1980] 46 STC 123, rendered by a learned Judge of this Court whereby he allowed the petition and quashed the notice exhibit P-2 issued by appellant No. 2 for framing an assessment against the respondents under the provisions of the Punjab General Sales Tax Act, 1948 (hereinafter called the Act). Respondent No. 1 is a registered dealer under the Act and running an oil mill at Khanna, district Ludhiana. It carries on the business of purchase of groundnut for producing oil therefrom in its mill. Vide its order dated 15th November, 1961, the Assessing Authority imposed purchase tax on it to the tune of Rs. 54,675.50 for the period commencing from 1st April, 1959, and ending on 31st March, 1960. This assessment and levy was affirmed by the appellate authority. The respondents challenged the assessment by filing C. W. Petition No. 3072 of 1968 in this Court. This petition was allowed by following the judgment of the Supreme Court in Bhawani Cotton Mills Ltd. v. State of 'Punjab [1967] 20 STC 290 (SC). The learned Judge who allowed the writ quashed the assessment orders but gave a direction that it would be open to the Assessing Authority to review its earlier order in view of the amendments made in the Act to overcome the effect of the judgment given in Bhawani Cotton Mills' case [1967] 20 STC 290 (SC). After the amendments, Sections 5 and 11AA of the Act read as under:

Section 5.-(1) Subject to the provisions of this Act, there shall be levied on the taxable turnover of a dealer a tax at such rates not exceeding six naye paise in a rupee as the State Government may by notification direct.

(2) In this Act the expression 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom--

(a) his turnover during that period on....

(vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter-State trade or commerce, or in the course of export out of the territory of India :

Provided that in the case of such a sale to a registered dealer, a declaration, in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction.

(3) Notwithstanding anything contained in this Act,-

(a) in respect of declared goods, tax shall be levied at one stage and that stage shall be-

(i) in the case of goods liable to sales tax, the stage of sale of such goods by the last dealer liable to pay tax under this Act;

(ii) in the case of goods liable to purchase tax, the stage of purchase of such goods by the last dealer liable to pay tax under this Act;

(b) the taxable turnover of any dealer for any period .shall not include his turnover during that period on any sale or purchase of declared goods at any stage other than the stage referred to in Sub-clause (i), or as the case may be, Sub-clause (ii) of Clause (a).

2. Section 11AA. Review of certain assessments, etc., of tax on declared goods.- (1) Notwithstanding anything contained in this Act, the Assessing Authority shall (whether or not an application is made to him in this behalf), review all assessments and reassessments made before the commencement of the Punjab General Sales Tax (Amendment and Validation) Act, 1967, in respect of declared goods and make such order varying or revising the order previously made as may be necessary for bringing the order previously made into conformity with the provisions of this Act as amended by the Punjab General Sales Tax (Amendment and Validation) Act, 1967 :

Provided that no proceeding for review shall be initiated without giving the dealer concerned a notice in writing of not less than thirty days.

(2) Any dealer on whom a notice is served under Sub-section (1) may within thirty days from the date of receipt of such notice intimate in writing the Assessing Authority of his intention to abide by the assessment or reassessment sought to be reviewed and if he does so, the Assessing Authority shall not review such assessment or reassessment under this section.

(3) No order shall be made under this section against any dealer without giving such dealer a reasonable opportunity of being heard.

(4) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary but subject to the provisions of the foregoing sub-sections any assessment, reassessment, levy or collection of any tax in respect of declared goods made or purporting to have been made, and any action or thing taken or done or purporting to have been taken or done in relation to such assessment, reassessment, levy or collection, under the provisions of this Act before the commencement of the Punjab General Sales Tax (Amendment and Validation) Act, 1967, shall be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under this Act as amended by the Punjab General Sales Tax (Amendment and Validation) Act, 1967.

3. The Assessing Authority was of the view that respondent No. 2 was prima facie liable to pay tax under the above-mentioned provisions for which purpose it issued notice annexure P-2 dated 10th August, 1975. The respondents challenged this notice by filing C. W. Petition No. 7522 of 1975 which as already mentioned was allowed by a learned Judge of this Court. Before the learned Judge reliance was placed on Section 4(2-A) of the Act which reads as under :

Section 4(2-A).-Notwithstanding anything contained in Sub-sections (1) and (2), no tax on the sale of any goods shall be levied if a tax on their purchase is payable under this Act.

4. The argument raised was that declared goods were likely to pass hands through unregistered dealers who were bound to pay sales tax and since no provision was made under which the respondents could know whether sales tax had already been paid on the declared goods purchased by them they were under no liability to pay the purchase tax. This argument found favour with the learned single Judge.

5. After hearing the learned counsel for the parties, we are of the view that the matter stands concluded against the respondents by a later judgment of the Supreme Court reported as Rattan Lal and Co. v. Assessing Authority [1970] 25 STC 136 (SC). Therein the court observed as under:

The argument is that the position has not altered at all even after the amendments and the liability to taxation at different stages remains still and the Act continues to be in conflict with the Central Act on the same reasons on which Bhawani Cotton Mills' case [1967] 20 STC 290 (SC) proceeded. It is argued that the amendments have been made retrospective but no machinery is provided to enable the dealer to discover that the goods had been taxed before and the single stage at which the tax is to be levied is still not clearly discernible. This is the main argument but there are many supplementary arguments which we shall notice later. For the present we confine our attention to the main point.

6. The stage of tax is now stated in Section 5(3) (i) and (ii). In the case of sales tax, the stage of tax is the sale of such goods by the last dealer liable to pay the tax and in the case of purchase tax the stage is purchase by the last dealer liable to pay tax. It is also provided that the turnover of any dealer for any period shall not include his turnover during that period of any sale or purchase of declared goods at any other stage than the stage so mentioned.

7. It will be seen that the matter is now in the hands of the dealer. He has to find out for himself whether he is liable to pay the tax or not. A dealer knows what he has done with his goods or is going to do with them. If he knows that he is not the last dealer having parted with the goods to another dealer or he knows that he is going to use the goods or sell them to consumers, he knows when he is not liable to tax and when he is. Therefore, he will not include the transaction in his taxable turnover in the first case but include it in the second. Goods in the hands of a dealer are not taxed. They are only taxed on the last purchase or sale. This information is always possessed by a dealer and by providing that he need not include in his turnover any transaction except when he is the last dealer, the position is now clear.

8. It is contended that even so the dealer may not know that he is the last dealer and may make some mistake. The law does not take into account the actions of persons who are negligent or mistaken but only of persons who act correctly, according to law. If the dealer is clear about his own position he is now quite able to see whether he is the last purchaser liable to pay the tax or the last seller liable to pay the tax. The Act by specifying the stage as the last purchase or sale by a dealer liable to pay the tax makes the stage quite clear and by giving an option to him not to include such transactions in his return saves him from the liability to pay the tax till he is the dealer liable to pay the tax. In our opinion, therefore, the present provisions of the Act are quite clear and are quite sufficient to make the amended Act accord with the Central Act. The arguments noted in the earlier case of this Court do not. therefore arise.

9. It will thus be seen that the present Act does not suffer from any of the defects from which the unamended Act had suffered. It is, however, contended that the Act has been made retrospective but no machinery is provided to discover if the declared goods were assessed to tax more than once. As we have already pointed out, the matter is within the ken of the dealer himself and it is for him to decide whether he would not claim the benefit of Section 11AA and ask for a refund or in future transactions delete the sales from his taxable turnover when he is not the last dealer liable to pay the tax. Therefore the retrospectivity of the Act does not make any difference. It is not contended before us that it was not within the competence of the Punjab Legislature to pass such an Act retrospectively. The defect pointed out is the self-same defect which was noticed in Bhawani Mills' case [1967] 20 STC 290 (SC). But that defect no longer exists.

10. In fairness to the learned Judge, the aforementioned judgment of the Supreme Court was not cited before him. For reasons aforementioned, we allow this appeal, withdraw the writ issued by the learned single Judge and dismiss the petition with costs. Counsel fee Rs. 200.


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