Kirpsons Industrial Corporation vs State of Punjab

Sukhdev Singh Kang, J.—The Sales Tax Tribunal, Punjab, at the instance of Kirpsons Industrial Corporation, Goraya, District Jullundur (hereinafter referred to as "the petitioner"), has stated the case and referred the following question of law for our opinion :

"Whether, in the facts and circumstances of the case, the Tribunal was correct in law in holding that the rate of tax notified u/s 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948, previous to induction of Section 4B would be applicable during the year 1973-74 up to the date when notification of rate of tax u/s 4B was issued on 6th April 1973, by virtue of provisions of Section 21 of the Punjab General Clauses Act, 1898 ?"

The learned counsel for the parties had agreed that in the penultimate line of the question, Section 21 of the Punjab General Clauses Act should be read as Section 22.

A broad brush factual back-drop will help to delineate the forensic controversy.

The petitioner, a registered dealer, is engaged in the manufacture and sale of agricultural implements. The dealer filed quarterly return for the year 1973-74 indicating his gross turnover. The Assessing Authority after perusing the account books of the dealer admitted the gross turnover returned by the dealer to be correct. However, he held the dealer liable to pay purchase tax u/s 4B of the Punjab General Sales Tax Act, 1948 (hereinafter called "the Act"), on the value of the goods purchased by him which were consumed in the manufacture of agricultural implements, which are tax-free goods. He assessed the dealer to an additional tax on this score. The dealer filed an appeal before the Deputy Excise and Taxation Commissioner, Punjab, and pleaded that the Assessing Authority was in error in concluding that the dealer was liable to pay purchase tax on the raw materials purchased by him which went into the production of agricultural implements. The first appellate court accepted the appeal and remanded the case to the Assessing Authority for fresh determination of all other grounds except the ground of application of Section 4B and assessment thereunder. The dealer filed a second appeal against this part of the order of the Deputy Excise and Taxation Commissioner upholding the application of Section 4B of the Act. The appeal was partly allowed to the extent of non-taxing the unused raw materials in stocks at the close of the assessment year. The orders of remand were modified to that extent. However, the findings of the authorities that provisions of Section 4B were attracted and the assessee was liable to pay purchase tax were upheld. Aggrieved, the petitioner filed an application u/s 22(1) of the Act that was allowed and the statement of the case and the question reproduced above has been referred for our opinion.

The aforementioned question is applicable only to the assessment relating to the year 1973-74 and the orders passed in relation thereto. This question does not arise with regard to orders relating to the assessment years 1974-75 and 1975-76. General Sales Tax Reference Nos. 3 and 4 of 1984 relate to these two years. The question does not arise out of the orders of Tribunal in relation to these years. We, therefore, decline to answer the question in the context of these two years, namely 1974-75 and 1975-76.

It has been contended by Shri Ramesh Kumar, learned counsel for the petitioner, that Section 4B of the Act was inserted in the Act by Section 3 of the Punjab Act 3 of 1973 with effect from 15th November, 1972. However, no notification was issued, as contemplated by Section 4B specifying the rate of tax till 6th of April, 1973. In the interregnum from 1st April, 1973 to 6th April, 1973, when the notification was issued there was no notice operative prescribing the rate of tax payable on the purchase of goods u/s 4B of the Act. Therefore, the assessee was not liable to pay any tax during this period. This submission is devoid of all force. Indeed provisions of second proviso to Section 5(2)(a)(ii) were amended and new Section 4B was inserted in the Act in their place. It is also true that a notification for the purposes of Section 4B specifying the rate of tax was issued on 6th April, 1973. However, notification issued under the provisions of deleted second proviso remained operative till 6th of April, 1973, by virtue of the provisions of Section 22 of the Punjab General Clauses Act which reads as under :

"22. Continuation of orders, etc., issued under enactments repealed and reenacted.--Where any Punjab Act is repealed and reenacted with or without modification then unless it is otherwise expressly provided, any appointment, notification, order, scheme, rule, form or bye-law, made or issued under the repealed Act, shall, so far as it is not inconsistent with the provisions reenacted, continue in force, and be deemed to have been made or issued under the provisions so reenacted unless and until it is superseded by any appointment, notification, order, scheme, rule, form or bye-law made or issued under the provisions so reenacted."

So the petitioner was liable to pay purchase tax at the previous rates specified by the notification issued u/s 5(2)(a)(ii) till 6th of April, 1973, when the new notification specifying the rates had been issued.

In the result, we answer the question in the affirmative and in favour of the Revenue. No costs.