1973 (11) TMI 71 - HC - VAT and Sales Tax

Summary

Issues:
Whether a dealer exporting purchased cotton within 6 months from the date of purchase is entitled to deduction under section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948.

Analysis:
The judgment addresses the issue of whether a dealer, who buys cotton in Punjab and exports it within 6 months, can claim a deduction under section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948. The petitioners, various companies, purchased cotton and exported a portion of it. The Assessing Authority disallowed the deduction of the purchase price of the exported cotton, relying on a Supreme Court judgment. However, the High Court found that the Supreme Court did not rule out the deduction under section 5(2)(a)(vi) for cotton while assessing purchase tax. The High Court analyzed the provisions of the Act and concluded that the deduction must be allowed for goods sold in certain ways within 6 months of purchase to determine the taxable turnover. The court held that the Assessing Authority's decision to disallow the deduction for exported cotton was legally incorrect. Therefore, the court allowed the writ petitions, quashed the assessment orders, and directed fresh assessments in line with the judgment.

The judgment delves into the interpretation of sections 5(2)(a)(vi) and 5(3) of the Act to determine the liability for purchase tax and the calculation of taxable turnover. It emphasizes that the deduction under section 5(2)(a)(vi) must be allowed for goods sold to a registered dealer, in inter-State trade, or for export within 6 months of purchase. The court clarifies that the Assessing Authority should ascertain the dealer liable to pay purchase tax under section 5(3) while determining the taxable turnover based on allowed deductions from the gross turnover as per section 5(2). The judgment highlights the importance of correctly applying these provisions to ensure a fair assessment of purchase tax and deduction eligibility for exported goods.

The court distinguishes the present case from a previous Supreme Court judgment involving cotton sales, emphasizing that the earlier ruling did not preclude the deduction under section 5(2)(a)(vi) for exported cotton. By carefully analyzing the legal provisions and previous case law, the court concludes that the Assessing Authority erred in disallowing the deduction for exported cotton purchases. The judgment provides a detailed explanation of how the provisions of the Act should be applied to determine purchase tax liability and allowable deductions, ensuring a fair and lawful assessment process.