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TMI Blog1964 (10) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... facture in the sense in which this word has been used in the aforesaid clause. In the return filed by the Excise and Taxation Commissioner it is stated that oil is quite a different commodity from the oil seeds and can be said to have been "manufactured" from the seeds in the sense in which it has been used in the amended definition of "purchase" and "manufactured goods". Mr. Sharma appearing on behalf of the respondent has admitted that the term "manufacture" of goods is nowhere defined in the Act but it came to be considered in Srirangam Brothers and Others v. Sales Tax Officer, Ganjam Circle, Berhampur[1959] 10 S.T.C. 257. , and Hiralal Jitmal v. Commissioner of Sales Tax[1957] 8 S.T.C. 325. There the learned Judges interpreted it, as to bring into existence something in a form in which it is capable of being sold or supplied in the course of business. It is not necessary that to constitute "manufacture" there should be complete transformation in the materials and the transformation must result in the formation of a new article commercially known as different from the raw materials. The next argument of the petitioner's counsel is that under Entry 54, List II, Seventh Schedule, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench and the Court delivered the following judgment: R. Sachar with Kuldip Chand Sud, for the petitioner. Gokal Chand Mittal and D.S. Nehra, for the respondents. JUDGMENT HARBANS SINGH, J.-This writ filed by Messrs Janki Das Bhagat Ram challenges the order of assessment passed by the Assessing Authority under the Sales Tax Act and was referred to a Division Bench by me because of a number of law points that were raised in it. The relevant facts necessary for the disposal of this writ may briefly be stated as under: Under sub-section (1) of section 5 of the Punjab General Sales Tax Act, tax is levied on the "taxable turnover" at a particular rate mentioned therein. Under sub-section (2) of this section "taxable turnover" means "that part of a dealer's gross turnover during any period which remains after deducting therefrom" certain sales and purchases that are detailed under various clauses under that sub-section. "Gross turnover" means the "aggregate of the amounts of sales and purchases and parts of sales and purchases actually made by any dealer during the given period....." It may be mentioned here that according to clause (ff) of section 2, "purchase" for the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the course of export of goods out of the territory of India..... (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer or in the course of inter-State trade or commerce or in the course of export out of the territory of India." As would be clear from the items detailed in paragraph 21 of the petition as reproduced above, we are concerned only with the sale or purchase of cotton and cotton seeds. As already indicated above, no tax is leviable on the sale of these goods. Tax is levied only on purchase of these commodities and, consequently, sub-clause (ii) has no bearing on the matters before us because that sub-clause relates only to sales as defined in the Act and the word "sale" as already indicated, refers to transfer of goods (for cash or similar consideration) other than those mentioned in Schedule C. It will be noticed that even in the impugned assessment order, this distinction between clauses (ii) and (vi) has not been kept. The two clauses are materially the same except that sub-clause (ii) relates to sales of goods other than those mentioned in Schedule C and subclause (vi) gives a corresponding re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. I will deal with these in seriatim. So far as the first head is concerned, as was mentioned in the return in reply to paragraph 21 of the petition, the wording of subclause (vi) is absolutely clear and if the petitioner-company can prove that it purchased the binolas as such and sold them to registered dealers within the prescribed time, it would be entitled to deduct such purchase price from the gross turnover. The assessment order is not clear on this point but, in any case, the claim of the petitioner seems to be valid and this matter must be gone into by the Assessing Authority and if it is satisfied, in view of the material before it, that the allegations are correct, the petitioner-company would be entitled to the deduction claimed. So far as the second category is concerned, the matter is now concluded by a Division Bench judgment of this Court in Messrs Patel Cotton Company Private Ltd. v. The State of Punjab and Others C.W. No. 114 of 1964 decided on 14th May, 1964; since reported at [1964] 15 S.T.C. 865 and the claim in this respect, which had been disallowed by the Assessing Authority, vide paragraph 5 of the assessment order reproduced above, shall have to be disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as understood in the Sale of Goods Act, the goods were transferred by the petitioner to his commission agents at Bombay for sale on consignment basis. In determining his case, on the sales made by the petitioner in the State of Punjab are to be taken into account because he is a dealer under the Punjab General Sales Tax Act, 1948, in respect of the business done by him, and not of his commission agents outside the State of Punjab. In the circumstances of the case, the Assessing Authority is legally justified in rejecting the claim of the petitioner." From the above, it appears that there were two matters which were taken into consideration by the Assessing Authority in disallowing relief under this head; first, that the sale was not by the petitioner to the seller for the purpose of export but the "sale was by the petitioner on consignment basis" to the commission agent and it was the commission agent who had made a further sale and secondly, that the sale has not taken place in Punjab but in Bombay. The procedure detailed in paragraph 19 of the petition, which is not controverted, leaves no manner of doubt that the commission agents at Bombay act as mere agents of the petitioner- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. Assuming without deciding that the property in the goods in the present cases passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey as found by the Sales Tax Authorities, the sales must, nevertheless, be regarded as having taken place in the course of the export and are, therefore, exempt under Article 286 (1)(b). That clause, indeed, assumes that the sale has taken place within the limits of the State and exempts it if it takes place in the course of the export of the goods concerned." At page 1120 of the report it was further stated: "We accordingly hold that whatever else may or may not fall within Article 286 (1)(b), sales and purchases which themselves occasion the export or the import of the goods, as the case may be, out of or into the territory of India come within the exemption and that is enough to dispose of these appeals." The words underlined by me, in the observations above, fully apply to this case, even if the contract of sale is entered into between the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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