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TMI Blog1982 (4) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... s has however argued that in a case inter Partes a Full Bench of this Court in Punjab Khandsari Udyog v. State [1972] 30 STC 414 (FB), after considering the observations made by the Supreme Court in Modi Spinning and Weaving Mills' case [1965] 16 STC 310 (SC) laid down that the dealer was not liable to pay tax on the gur purchased. The view taken in Punjab Khandsari Udyog's case [1972] 30 STC 414 (FB), was considered by a later Full Bench of this Court of which I was a member. That case is reported as Sterling Steels Wires Ltd. v. State of Punjab [1980] 45 STC 438 (FB); ILR [1980] 1 P H 306 (FB). Therein the view taken in Punjab Khandsari Udyog's case [1972] 30 STC 414 (FB) was impliedly doubted and the same was not overruled because the Bench considering the matter was a co-equal one. This matter has directly arisen in this case and I am of the view that this case should be decided by a still larger Bench so that the controversy may be set at rest. Let the papers be placed before my Lord the Chief justice for obtaining suitable orders in that behalf. In pursuance of the abovesaid order, the Full Bench delivered the following judgment: JUDGMENT SANDHAWALIA, C.J.-Rumblings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection to the assessee acting thereon and he can avoid liability for the payment of tax? The case was consequently referred for decision by a Full Bench. B.R. Tuli, J., speaking for the Full Bench and after referring to the earlier precedents on the point, including the Supreme Court judgment in Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax, Punjab [1965] 16 STC 310 (SC), categorically observed as under: "..............The petitioner did not use gur purchased for the manufacture of khandsari on the basis of its certificate of registration and the declarations furnished to the selling dealer(s), for any purpose other than the manufacture of khandsari. It cannot, therefore, be said that under the second proviso to section 5(2)(a)(ii), set out above, the petitioner could be made liable for the payment of tax on the purchase of gur because he did not use that gur for any purpose other than that for which it was sold to it. It is quite a different matter that the petitioner was not entitled to purchase, free of tax, gur for the manufacture of tax-free goods like khandsari, but it did not use that gur for any other purpose. To repeat, the gur was purchased for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps in Modi Spinning and Weaving Mills Co. Ltd. [1965] 16 STC 310 (SC) and that is why the matter is before us. However, as noticed earlier, the issue is concluded by the ratio of the decision of their Lordships in Polestar Electronic (Pvt.) Ltd. [1978] 41 STC 409 (SC), which is on all fours. Therein what fell for consideration were the virtually identical provisions of section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941, as applied to the Union Territory of Delhi. Particularly, it calls for notice that the second proviso to the aforesaid provisions was in pari materia with the earlier second proviso to section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948 (hereinafter called "the Act"). However, on 28th May, 1972, by the Finance Act, 1972 the main enactment in section 5(2)(a)(ii) was substituted. However, the relevant rule 26 and the form of the declaration were not amended till later on 29th March, 1973. The identical question of the liability to sales tax of the purchasing dealers when their registration certificates and declaration forms were at variance with the amended statute, therefore, fell for consideration before their Lordships. In construing the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective whether the manufacture or sale takes place inside Delhi or outside Delhi. If the purchasing dealer does not use the goods purchased as raw materials in the manufacture of goods or having manufactured the goods does not sell them, he would commit a breach of the intention expressed by him in the declaration furnished to the selling dealer and the second proviso would immediately be attracted and the price of the goods purchased by him would be liable to be included in his taxable turnover. But so long as he carries out the intention expressed in the declaration and uses the goods Purchased as raw materials in the manufacture of goods, whether inside or outside Delhi, and sells the goods so manufactured in Delhi or outside, he would not fall within the second proviso and the sale to him would not be taxable in his hands." It is manifest that the aforesaid observations conclude the matter and affirm in categoric terms the earlier view of the Full Bench in Punjab Khandsari Udyog's case [1972] 30 STC 414 (FB). 5.. With illimitable fairness, Mr. Harbhagwan Singh, the learned Advocate-General, Haryana, stated that the Polestar Co. Ltd.'s case [1978] 41 STC 409 (SC) now cov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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