1971 (11) TMI 144 - SC - VAT and Sales Tax

Whether the notification No. 3483-E & T.54/723(C11) dated August 5, 1954, issued by the State Government is valid? Whether the assessment orders are in conflict with the decision of this court in Bhawani Cotton Mills Ltd. ? Held that - Appeals allowed in part and the judgments and orders of the High Court are modified by declaring that the impugned notification is valid and it has effect from September 11, 1956, and sales tax on edible oils can be levied after that date. In other respects, the appeals are dismissed

Summary

Issues Involved:
1. Validity of Notification No. 3483-E & T.54/723(C11) dated August 5, 1954.
2. Conflict of assessment orders with the decision in Bhawani Cotton Mills Ltd.

Issue-wise Detailed Analysis:

1. Validity of Notification No. 3483-E & T.54/723(C11) dated August 5, 1954:
The original entry in Schedule B of the Punjab General Sales Tax Act exempted edible oils produced from sarson, toria, and til from sales tax. However, the notification dated August 5, 1954, substituted this entry to limit the exemption to oils produced by indigenous kohlus worked by animal or human agency. This change excluded oils produced by mechanical processes from the exemption.

The High Court in Ganga Ram Suraj Parkash [1963] 14 S.T.C. 476., held the notification invalid, relying on the provisions of the Act and the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952. The Supreme Court, in its decision in The Punjab State, Chandigarh v. Sansari Mal Puran Chand [1968] 21 S.T.C. 91 (S.C.), upheld the validity of the notification from September 11, 1956, due to the Sixth Amendment to the Constitution. This amendment allowed the state to impose tax on sales of edible oils from this date. Consequently, the Supreme Court in the current judgment held that the notification was valid from September 11, 1956, and the High Court's decision invalidating the notification was overruled. The assessees' claim for exemption based on the previous entry was dismissed as they produced oils by mechanical processes.

2. Conflict of Assessment Orders with the Decision in Bhawani Cotton Mills Ltd.:
The assessees amended their writ petitions to challenge the levy of purchase tax on oil-seeds, arguing it conflicted with the Central Sales Tax Act, 1956, as interpreted in Bhawani Cotton Mills Ltd. [1967] 20 S.T.C. 290 (S.C.). The Supreme Court in Bhawani Cotton Mills Ltd. held that the levy of sales tax on declared goods under the Punjab Act, as it stood on April 1, 1960, was invalid.

The High Court allowed the amendment but did not address this issue due to the agreement between parties based on the Ganga Ram Suraj Parkash decision. The Supreme Court acknowledged this oversight and directed the assessing authority to reconsider the orders under the newly amended section 11AA of the Punjab General Sales Tax Act, as introduced by the Punjab General Sales Tax (Amendment and Validation) Act, 1967. This amendment required the authority to reassess declared goods in conformity with the amended Act. The Supreme Court directed the assessing authority to revise or make fresh assessment orders in accordance with the amended provisions.

Conclusion:
The Supreme Court allowed the appeals in part, declaring the notification valid from September 11, 1956, and upheld the levy of sales tax on edible oils after this date. The court directed the assessing authority to reassess the orders in light of the amendments introduced by the Punjab General Sales Tax (Amendment and Validation) Act, 1967. The appeals were otherwise dismissed, and each party was directed to bear its own costs.