1975 (12) TMI 152 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of the petitioner-company to pay purchase tax under the Punjab General Sales Tax Act, 1948 for the assessment year 1973-74.

Comprehensive Analysis:
The petitioner-company, engaged in the manufacturing of sugar, purchased sugarcane directly from growers during the assessment year 1973-74. The Assessing Authority held the company liable for purchase tax amounting to Rs. 6,68,963.76. The petitioner contested this assessment through a writ petition, arguing that it was not liable to pay the purchase tax on goods specified in Schedule B to the Act. The State contended that the company is indeed liable for the tax under section 4B of the Act, with an exemption granted only to the growers under entry No. 39 of Schedule B.

The key contention revolved around the interpretation of section 4B of the Act, which specifies the levy of purchase tax on certain goods purchased by a dealer. The section outlines conditions under which the tax is applicable, emphasizing that goods specified in Schedule B are exempt from the tax. The definition of a "dealer" under section 2(d) of the Act was also crucial, encompassing any person involved in selling or purchasing goods in the state, irrespective of their main business location.

The court emphasized that the legislative intent behind exempting goods listed in Schedule B from purchase tax was clear. The entry No. 39 of Schedule B specifically mentions agricultural or horticultural produce, which includes sugarcane. As the petitioner purchased sugarcane directly from growers, falling under the exemption criteria of Schedule B, the court ruled that no purchase tax could be levied on this item. The court highlighted that section 4B is the sole provision dealing with purchase tax, and goods listed in Schedule B are explicitly exempted.

The State's argument that entry No. 39 only exempts growers from sales tax, not dealers from purchase tax, was dismissed by the court. It reiterated that as long as agricultural produce remains in Schedule B, and the corresponding exemption under section 4B applies, no purchase tax can be imposed on such goods. The court concluded by allowing the petition, quashing the assessment order, and directing the respondents not to enforce the purchase tax for the assessment year 1973-74. No costs were awarded in this matter.