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TMI Blog1998 (8) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, 1948" on May 25, 1981. In the meantime, the respondent had applied for a power connection on December 22, 1979. It was sanctioned by the Punjab State Electricity Board on July 24, 1980. The tariff bill was raised on September 11, 1980. Permission for installation of a diesel generator was given vide letter dated March 17, 1981. However, the actual power connection was granted by the Board on July 18, 1981. 3.. The respondent bought the first lot of cotton as raw material in "March 1981". The trial run of the factory was conducted in April, 1981. The production commenced on May 12, 1981. The yarn manufactured at the factory had left the premises on June 8, 1981. 4.. The respondent was assessed for the payment of sales tax. The assessment for the year 1981-82 was made by the Assessing Authority vide order dated February 18, 1983. An additional demand of Rs. 99,089 was created. However, on March 11, 1983, the order was rectified. After appeal, etc., the assessment was finalised by the Assessing Authority vide order dated February 3, 1986. The "total tax assessed including interest and penalty" was Rs. 2,80,738.90. The respondent-company had deposited Rs. 2,91,281.37. An amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im in this behalf, the Governor of Punjab is pleased to make the following further amendment in the Punjab Government, Excise and Taxation Department Notification No. S.O. 26/P.A./46/48/S. 5/72 dated the 10th August, 1972, namely: AMENDMENT.-In the said notification, after the proviso to item 4, the following further proviso shall be added, namely: 'Provided further that the rate of purchase tax on cotton shall be two paise in a rupee on the purchases made by the textile mills established on or after the first December, 1979, for a period of five years to be reckoned from the aforesaid date subject to the following conditions: (i) that these mills shall start production by 31st December, 1981; and (ii) that these mills shall not despatch yarn in the course of inter-State transaction on consignment basis or through ex-State commission agents'." 7.. Mrs. Tuli, learned counsel for the appellants has contended that the respondent is not a textile mill. It has only a licence to manufacture cotton yarn. Being a spinning mill, the respondent is not entitled to the tax rebate as admissible under the notification dated November 23, 1979. Learned counsel has further contended that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncessional rate of tax. Thereafter, even when suo motu action under section 21(1) of the Act was initiated, it was not held that the respondent-assessee had not established a textile mill. When the respondent had filed a revision before the Sales Tax Tribunal, an argument was raised that the "assessee-firm is not a textile mill". However, no finding adverse to the assessee was recorded. The orders passed by the authorities under the Act have to be justified on the grounds stated therein. In the absence of a positive finding that the respondent has not established a textile mill, the claim made on behalf of the appellants cannot be sustained. 12.. It also deserves mention that on a perusal of the notification dated November 23, 1979, it appears that its basic objective was to ensure a proper return to the farmer. The purpose appears to be to encourage the establishment of units which may utilise the cotton grown in the State. This purpose is amply achieved by the production of yarn as well as fabric. It cannot be said that the yarn produced by the respondent does not serve the purpose for which the notification has been issued. 13.. Mr. Sibal also referred to the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give an unduly restricted meaning to the expression "textile" as used in the notification. It is, accordingly, held that "textile" includes "yarn/fibre ". Thus, the first question is answered against the appellants and in favour of the assessee. Reg: (ii) 17.. It was contended on behalf of the appellants that the respondent is not entitled to the concession admissible under the notification as it had not been established on or after December, 1979. It was further contended that the mill was not entitled to the concessional rate of purchase tax as it had despatched yarn in the course of interstate transaction on consignment basis. Is it so? 18.. The sequence of events has been noticed above. It is undoubtedly correct that the first respondent was registered as a company on February 16, 1979. It was registered as a dealer under the Punjab General Sales Tax Act on September 26, 1979. However, the incorporation of a company or the registration as a dealer do not mean that a textile mill has been established. A mill in the very nature of things denotes "a building containing machinery used in some kind of manufacture..........." Neither the incorporation of a company nor the regi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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