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TMI Blog1991 (2) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd., is a company engaged in the manufacture of paper at Mukerian in the State of Punjab and is a registered dealer under the Punjab General Sales Tax Act, 1948 ("the Act" hereinafter). The assessee despatched some part of the manufactured goods outside the State of Punjab for sale on consignment basis. However, the assessee had not paid the taxes on the taxable raw material consumed in the manufacture of such goods. A show cause notice was, therefore, issued by the Assessing Authority under section 10(6) of the Act for the assessee's failure to pay the taxes along with the return as required by section 4-B of the Act. Interest on the tax amount which the assessee had failed to pay was also claimed under section 11-D of the Act. The assessee disputed its liability to pay penalty and interest on the amount of tax withheld on the plea that there was no wilful or intentional default on the part of the assessee to pay the taxes due under section 4-B of the Act as the assessee was under a bona fide belief that no tax was to be paid on the raw material purchased for the manufacture of paper which was ultimately sent outside the State on consignment basis. This impression, based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the Haryana General Sales Tax Act, 1973, which, says counsel, is in pari materia with section 4-B of our Act, this Court affirmed the High Court's view expressed in Goodyear India Ltd. [1983] 53 STC 163 (P H) and Bata India Ltd. [1983] 54 STC 226 (P H) and disapproved the Full Bench view in Des Rajs case [1985] 58 STC 393 (P H). Counsel for the Revenue, however, placed strong reliance on this Court's decision in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191; [1976] 1 SCR 38 and submitted that the assessee's case falls within the ratio of the said decision. But counsel for the assessee pointed out that this Court had considered the ratio of Kandaswami's case [19751 36 STC 191 (SC); [1976] 1 SCR 38 in the subsequent decision and had pointed out that in that case this Court was not concerned with the actual argument with which it was concerned in the subsequent case and, therefore, the decision in the former case is not an authority for the question of law involved in the subsequent case. In order to appreciate the rival submissions it would, we think, be appropriate to examine the language of section 4-B of the Act, which reads as under: "4-B. Levy of purchase tax on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer "sends" the goods so manufactured outside the State in any manner (other than by way of sale in the course of inter-State trade or commerce or in the course of export out of India) he becomes liable to pay purchase tax at the rate specified. To attract this provision the Revenue must show that (i) the manufacturer is a dealer liable to pay tax under the Act, (ii) he has purchased goods other than those specified in Schedule B from any source, (iii) he has used the said goods within the State in the manufacture of any goods other than those specified in Schedule B, and (iv) he has sent the goods so manufactured outside the State in any manner other than the one excepted. Before this provision can be invoked the above requirements must be strictly proved. The first requirement identifies the tax payer, the second and the third requirements identify the goods liable to tax in the event the fourth requirement of the goods so manufactured being sent outside the State takes place. Thus the liability to pay purchase tax does not accrue on the purchase of the raw material within the State or its use in the manufacture of goods other than those specified in Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after despatch of the manufactured goods outside the State and that event may have no relation to the actual purchase or manufacture. That being so, the conclusion is inescapable that the tax though described as a purchase tax is actually a tax on the consignment of the manufactured goods. Therefore, even though the language of section 4-B of the Act is not identical with the relevant part of section 9(1) of the Haryana Act, it is in substance similar in certain respects, particularly in respect of the point of time when the liability to pay tax arises. Under that provision, as here, the liability to pay purchase tax on the raw material purchased in the State which was consumed in the manufacture of any other taxable goods arose only on the despatch of the goods outside the State. We are, therefore, of the opinion that the ratio of the said decision of this Court in Goodyear India Ltd. [1990] 76 STC 71; AIR 1990 SC 781, applies on all fours to the main question at issue in this case. In the case of Goodyear India Ltd. [1990] 76 STC 71; AIR 1990 SC 781, this Court was concerned with the interpretation of section 9(1) and section 24(3) of the Haryana Act. The facts revealed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which dealt with section 7-A of the Tamil Nadu Act which though not identical was similar to section 9(l) of the Haryana Act. The decision in Kandaswami's case [1975] 36 STC 191 (SC); [1976] 1 SCR 38, though rendered in the context of an analogous provision was distinguished by this Court in Goodyear India Ltd. [1990] 76 STC 71; AIR 1990 SC 781, on the ground that it did not touch the core of the question at issue in the latter case. This aspect of the matter is elaborately dealt with in pages 96-97 of STC (paragraphs 31 to 34 at page 796 of AIR). We need not dilate on this any more since the correctness of the judgment in Goodyear India Ltd. [1990] 76 STC 71 (SC); AIR 1990 SC 781, is not canvassed before us. This Court, therefore, affirmed the High Court's view in Goodyear India Ltd. [1983] 53 STC 163 (P H) and Bata India Ltd. [1983] 54 STC 226 (P H) and disapproved of the Full Bench decision in the case of Des Raj [1985] 58 STC 393 (P H). Once it is found that the Revenue was not entitled to levy the tax which it purported to levy as purchase tax on the raw material, there can be no question of imposition of penalty or interest on the unpaid amount of tax. Therefore, the actio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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