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TMI Blog2003 (9) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... t is engaged in procurement, storage and release of essential foodgrains under public distribution system without making any profit. It is also claimed by the assessee that it is carrying out its activities, keeping in mind the national importance in maintaining price level of essential food commodities and also to meet the exigencies and requirement of famine affected areas and tribal areas. 3.. The assessment years in these petitions pertain to the years 1982-83, 1984-85, 1985-86; and 1987-88 to 1989-90. Though the assessing officer initially accepted the returns filed by the assessee, subsequently in exercise of the power conferred on him under section 12-A of the Act, by means of its orders dated June 19, 1993, assessed the assessee under section 6 of the Act in respect of the parboiled stock of rice transferred from the assessee to its various branches in the neighbouring States of Karnataka. The said orders were called in question by the assessee before the Joint Commissioner of Commercial Taxes (Appeals) (hereinafter referred to as first Appellate Authority). The first appellate authority, by means of his common order dated April 26, 1996 dismissed the appeals filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the learned counsel pointed out that so far as the transaction of levy-paddy sold to the assessee, which is treated as an agent of the State is concerned, the tax is not made leviable and the miller is not liable to tax in respect of foodgrains sold to the assessee. Therefore, he submits that since the miller is not liable to tax in respect of foodgrains sold to the assessee, the provision of section 6 is not attracted and as such the assessee is not liable to pay the tax in respect of the foodgrains sent outside the State. Finally, he contended that if the third proviso given to section 5(4) read with explanation (1) given to Fourth Schedule of the Act is considered, the assessee is entitled for the deduction of tax paid in respect of levy-paddy which are subsequently converted as rice while making an order of assessment against the assessee. In support of his submission, he also referred to us the full bench decision of this Court in the case of B.V. Patil v. Commissioner of Commercial Taxes, Bangalore reported in [1979] 43 STC 419 and drew our attention to page 424 of the judgment and also the judgment of the honourable Supreme Court in the case of Food Corporation of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him, the second contention of the learned counsel for the petitioner also is liable to be rejected as one devoid of any merit. Lastly, he submitted that while the Corporation is entitled for deduction of tax paid in respect of levy-paddy, in terms of third proviso given to section 5(4) of the Act, the claim is required to be made by the assessee only after the assessee complies with the orders of assessment and makes the payment by producing necessary proof before the assessing officer that the articles in respect of which the assessment has been made, had already suffered tax. It is his further submission that since the assessee has not made any claim on this regard before the assessing officer, it should not now be permitted to urge the same. 6.. In the light of the rival contentions advanced by the learned counsel appearing for the parties, the only question that would arise for our consideration in this petition is as to whether the orders impugned in these petitions are liable to be interfered with in exercise of the power conferred on us under section 23(1) of the Act? 7.. We will now proceed to consider each of the contentions advanced by the learned counsel appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the sale of cereals mentioned in serial No. 9 of the Fourth Schedule, made by any person to a procurement agent appointed by the Government of Karnataka or to any sub-agent of such procurement agent in pursuance of the Karnataka Rice procurement (Levy) Order, 1981, or any other Foodgrains procurement (Levy) order of the Government of Karnataka for the time being in force, such sale shall not be deemed to be, but the subsequent sale by the said procurement agent or subagent shall be and shall be deemed to be the point at which the tax under this Act shall be levied." It is also useful to extract section 6 of the Act which reads as hereunder: "6. Levy of purchase tax under certain circumstances.-Subject to the provisions of sub-section (5) of section 5, every dealer who in the course of his business purchases any taxable goods in circumstances in which no tax under section 5 is leviable on the sale price of such goods, and (i) either consumes such goods in the manufacture of other goods for sale or otherwise or consumes otherwise, or disposes of such goods in any manner other than by way of sale in the State, or (ii) despatches them to a place outside the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the weavers as stated in the proviso above. If the object was to grant exemption only to the weavers, these silk fabrics manufactured by the weavers could have been shifted to the Third Schedule read with section 5(3)(b) of the State Act or a statutory exemption from liability to pay the sales tax could have been granted by saying so by a suitable wording of the proviso. The proviso could have said that sale by a handloom or a power-loom weaver, etc., of silk fabrics manufactured by him shall not be taxable under clause (c) of section 5(3). The proviso has clearly declared that such a sale is not a 'sale' at all for the purposes of the State Act. It will be straining the language of the proviso and the legal effect to be given to the deeming provision to say that there can be a purchase without a sale." 9.. Therefore, we are of the view that the principle enunciated by this Court in the case of Madhur Trading Co. [1993] 90 STC 537, has no application to the facts of the present case, as the decision in the said case, as noticed by us earlier, was rendered with reference to the proviso given to section 5(3)(c) of the Act. Therefore, since the second proviso given to sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give some benefit to such persons who sell or surrender the foodgrains to the procurement agent at the rate notified by the State which is generally lower than the market price. Therefore, it is not possible to take the view that the procurement agent is also exempted from payment of tax in terms of section 6 of the Act. Section 6 of the Act provides for levy of purchase tax under certain circumstances. It is useful to refer to the observation made by this Court in the case of Shabib Jan v. Commissioner of Commercial Taxes in Karnataka, Bangalore reported in (1993) 37 Kar LJ 274 which supports the view we have taken above. In the said judgment, at page 276 it is observed as follows: "The Supreme Court pointed out that the concept of taxable event referred in the earlier decision in Goodyear's [1990] 76 STC 71 case was not correctly applied to the fact situation involved. The Supreme Court also pointed out that purpose of a provision like section 6 is to enable the State to levy at least one tax on the sale or purchase transaction involving the goods. The charge under the charging section is attracted because of the purchase made by the dealer though the sale under which the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned counsel for the petitioner. We are unable to accept the submission that tax is not levied under section 5 of the Act as contented by Sri Indra Kumar. The reading of sub-section (4) of section 5 of the Act extracted above makes it clear that notwithstanding anything contained in sub-section (1) or section 5-B or section 5-C a tax under the Act shall be levied in respect of the sale or purchase of any of the declared goods mentioned in column (2) of the Fourth Schedule at the rate and only at the point specified in the corresponding entries of columns (4) and (3) of the said Schedule on the dealer liable to tax under the Act on his taxable turnover of sales or purchases in each year relating to such goods. However, the first part of the second proviso only makes an exception in the case of the sale of foodgrains made by any person to a procurement agent appointed by the Government of Karnataka like the assessee from payment of tax under the Act. As noticed by us earlier, the foodgrains purchased by the procurement agent are liable for payment of tax. Therefore, we are also unable to accept the second submission of Sri Indra Kumar. 13.. The only other contention remains to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving regard to the facts and circumstances of the case and keeping in mind that the assessee is a Government of India undertaking, we are of the view that the ends of justice would be met, if an opportunity is given to the assessee to make a claim for refund of the tax, if any paid, on the paddy sold by the persons to the assessee, in terms of the third proviso given to section 5(4) of the Act. However, reserving of such liberty to the assessee to make a claim for refund, it is made clear, would not absolve the assessee of its lability to pay tax under section 6 of the Act; and on that ground the assessee cannot delay making the payment in terms of the order of assessment made under section 6 of the Act. 15.. In the light of the discussion made above and subject to the liberty reserved to the assessee to seek refund of the tax as stated above, these appeals are rejected. If the assessee intends to make a claim for refund, it should make such a claim within five months from the date of receipt of a copy of this order. If such a claim is made within five months as stated above, the assessing officer shall consider the same on merits and in accordance with law without raising any o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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