1997 (2) TMI 514 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 15(d) of the Central Sales Tax Act, 1956 and its impact on the M.P. General Sales Tax Act, 1958.
2. Whether conversion of whole pulses into split pulses amounts to a process of manufacture.
3. Imposition of purchase tax under section 7(2) of the Act of 1958 on split pulses purchased from unregistered dealers.

Analysis:
1. The judgment of the High Court of Madhya Pradesh dealt with the interpretation of section 15(d) of the Central Sales Tax Act, 1956 and its effect on the M.P. General Sales Tax Act, 1958. The petitioner argued that section 15(d) restricts the State Legislature's power to levy sales or purchase tax on goods declared by Parliament under section 14(vi-a) of the Act of 1956. The Court analyzed the provisions of both Acts and concluded that pulses, whether whole or separated, are to be treated as a single commodity for tax purposes under section 15(d) of the Act of 1956, thereby impacting the taxation of pulses under the Act of 1958.

2. The issue of whether the conversion of whole pulses into split pulses constitutes a process of manufacture was raised in the case. The petitioner contended that no purchase tax should be levied on split pulses, arguing that they do not amount to a manufacturing process. The Court referred to previous judgments and legislative provisions to determine that despite the technical aspect of splitting pulses being a manufacturing process, section 15(d) of the Act of 1956 deems all pulses, whether whole or split, as a single commodity, thereby affecting the taxation treatment.

3. The imposition of purchase tax under section 7(2) of the Act of 1958 on split pulses purchased from unregistered dealers was a key issue. The petitioner challenged the assessment of purchase tax on split pulses, arguing that the tax rate should be 2.5% as per a notification. The Court examined the relevant sections of the Act of 1958 and the impact of section 15(d) of the Act of 1956 on the taxation of pulses. It was concluded that split pulses, despite being a result of a manufacturing process, are to be treated as a single commodity under section 15(d), thereby exempting them from purchase tax under section 7(1)(b) of the Act of 1958.

In conclusion, the High Court allowed the writ petitions, emphasizing that no purchase tax could be levied on split pulses under section 7(1)(b) of the Act of 1958 due to the special treatment accorded to pulses under section 15(d) of the Act of 1956. The Court directed the authorities to reexamine the tax liability in accordance with the law, with no costs awarded to either party.