1989 (9) TMI 379 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the applicability of tax rates under section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948, before the induction of section 4-B.
2. Determination of liability to pay purchase tax on goods consumed in the manufacture of tax-free goods.
3. Application of section 22 of the Punjab General Clauses Act regarding the continuation of previous rates of tax.

Detailed Analysis:
1. The case involved a question of law referred by the Sales Tax Tribunal regarding the correct application of tax rates under section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948, prior to the introduction of section 4-B. The petitioner contended that no notification specifying the rate of tax under section 4-B was issued until April 6, 1973, and therefore, argued that they were not liable to pay any tax during the interim period. However, the Court held that the notification issued under the previous provisions remained operative until the new notification was issued, based on the provisions of section 22 of the Punjab General Clauses Act. The Court ruled in favor of the Revenue, stating that the petitioner was liable to pay purchase tax at the previous rates until the new notification was issued.

2. The Assessing Authority had initially held the dealer liable to pay purchase tax under section 4-B of the Act on goods purchased and consumed in the manufacture of tax-free goods. The dealer appealed against this decision, arguing that they should not be liable to pay tax on raw materials used in producing tax-free goods. The first appellate court partially allowed the appeal, exempting unused raw materials from taxation but upheld the application of section 4-B on other goods consumed in production. The Court affirmed the findings that the provisions of section 4-B were applicable, leading to the dealer's liability to pay purchase tax.

3. The Court also discussed the application of section 22 of the Punjab General Clauses Act, which deals with the continuation of orders under repealed and reenacted enactments. The Court emphasized that the notification specifying the previous tax rates remained in force until the new notification was issued, as per the provisions of section 22. This legal provision ensured the continuity of the previous rates until superseded by a new notification. The Court's interpretation of section 22 supported the conclusion that the petitioner was obligated to pay purchase tax at the previous rates until the issuance of the new notification.