1976 (3) TMI 203 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether paddy is exempt from purchase tax under Schedule B of the Punjab General Sales Tax Act, 1948.
2. Validity of the notification dated 15th January, 1968, including paddy in Schedule C.
3. Constitutionality of Section 31 of the Punjab General Sales Tax Act, 1948.
4. Whether the petitioners are dealers as defined under the Act.
5. Constitutionality of Section 4-B of the Punjab General Sales Tax Act, 1948.

Detailed Analysis:

1. Whether paddy is exempt from purchase tax under Schedule B of the Punjab General Sales Tax Act, 1948:

The petitioners argued that paddy, being agricultural produce, should be exempt from purchase tax under Schedule B of the Act. However, the court held that Section 6 of the Act, which lists Schedule B, provides exemptions only for the sale of goods specified therein and not for purchases. Therefore, paddy is not exempt from purchase tax under Schedule B.

2. Validity of the notification dated 15th January, 1968, including paddy in Schedule C:

The petitioners challenged the notification on the grounds that it was not in accordance with Section 31 of the Act. The court examined the legislative history and amendments to the Act, concluding that the State Government had the authority to amend Schedule C to include paddy. The notification was found valid and did not suffer from any illegality.

3. Constitutionality of Section 31 of the Punjab General Sales Tax Act, 1948:

The petitioners argued that Section 31, which allows the State Government to amend Schedule C, was an excessive delegation of legislative power. The court reviewed various Supreme Court judgments on delegated legislation and concluded that the power conferred on the State Government under Section 31 was within permissible limits. The court held that Section 31 did not suffer from the vice of excessive delegation and was constitutional.

4. Whether the petitioners are dealers as defined under the Act:

The petitioners contended that they were not dealers as defined under Section 2(d) of the Act because they did not sell paddy but used it to manufacture rice, which was acquired by the government. The court examined the definition of "dealer" and the nature of the petitioners' business activities. It was held that the petitioners, who purchase paddy and manufacture rice, fall within the definition of "dealer" under the Act. Therefore, they are liable to pay purchase tax.

5. Constitutionality of Section 4-B of the Punjab General Sales Tax Act, 1948:

The petitioners challenged the constitutionality of Section 4-B, arguing that it was ultra vires Article 246 read with Entry 54, List II, Schedule VII of the Constitution. However, the respondents agreed that Section 4-B was not applicable to the petitioners' case. Therefore, the court did not find it necessary to decide on the scope and ambit of Section 4-B.

Conclusion:

The court dismissed the writ petitions, holding that the notification dated 15th January, 1968, including paddy in Schedule C, was valid. Section 31 of the Act was found to be constitutional, and the petitioners were deemed to be dealers under the Act, liable to pay purchase tax. The court did not address the constitutionality of Section 4-B as it was not applicable to the petitioners' case. The petitions were dismissed with no order as to costs.