1993 (10) TMI 331 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Vires of Section 2(ff) and Section 5(3)(a)(ii) of the Punjab General Sales Tax Act, 1948.
2. Levy of purchase tax on goods consigned outside the State.
3. Legislative competence of the State of Punjab to impose such tax.
4. Refund of purchase tax paid by the petitioner-corporation.

Issue-wise Detailed Analysis:

1. Vires of Section 2(ff) and Section 5(3)(a)(ii) of the Punjab General Sales Tax Act, 1948:
The petitioner challenged the vires of Section 2(ff) and Section 5(3)(a)(ii) of the Punjab General Sales Tax Act, arguing that the levy of purchase tax on goods consigned outside the state was ultra vires the legislative competence of the State of Punjab. The court examined the definitions and provisions under the State Act, including "Dealer" (Section 2(d)), "Purchase" (Section 2(ff)), and "Turnover" (Section 2(i)). The court also reviewed amendments to Section 5(3) and the relevant entries in the Seventh Schedule of the Constitution, specifically Entry 54 of the State List and Entries 92A and 92B of the Union List. The court ultimately held that the provisions were within the legislative competence of the State Legislature and intra vires.

2. Levy of Purchase Tax on Goods Consigned Outside the State:
The petitioner argued that the levy of purchase tax on goods consigned outside the state was illegal and ultra vires, citing the Supreme Court's decision in Goodyear India Ltd. v. State of Haryana, which held similar provisions in the Haryana General Sales Tax Act to be ultra vires. The court distinguished the present case from Goodyear's case, noting that the tax in question was on the purchase of goods, not on their consignment. The court emphasized that the taxable event was the purchase of goods, not their subsequent despatch or transfer to other states. The court referred to the Supreme Court's decision in Hotel Balaji v. State of Andhra Pradesh, which overruled Goodyear's case and upheld the validity of similar provisions in other state legislations.

3. Legislative Competence of the State of Punjab to Impose Such Tax:
The court analyzed the legislative competence of the State of Punjab to impose purchase tax on goods consigned outside the state. The court referred to the relevant constitutional provisions and judicial precedents, including the Supreme Court's decision in Hotel Balaji's case. The court concluded that the State Legislature was competent to enact the impugned provisions, as the tax was levied on the purchase of goods, not on their consignment. The court held that the provisions were within the legislative competence of the State Legislature and intra vires.

4. Refund of Purchase Tax Paid by the Petitioner-Corporation:
The petitioner sought a writ of mandamus directing the respondents to refund all the purchase tax paid to the State of Punjab. The court, having upheld the validity of the impugned provisions, dismissed the petition and did not grant the refund sought by the petitioner-corporation. The court held that the tax imposed was on the purchase of goods and not on their consignment, and therefore, the petitioner-corporation was liable to pay the purchase tax as per the provisions of the State Act.

Conclusion:
The court dismissed the writ petition, holding that the provisions of the Punjab General Sales Tax Act, 1948, were within the legislative competence of the State Legislature and intra vires. The court distinguished the present case from Goodyear's case and relied on the Supreme Court's decision in Hotel Balaji's case to uphold the validity of the impugned provisions. The court concluded that the tax imposed was on the purchase of goods and not on their consignment, and therefore, the petitioner-corporation was liable to pay the purchase tax. The writ petition was dismissed with no costs.