STATE OF PUNJAB Vs. SHAKTI COTTON COMPANY:OM PARKASH SOM CHAND:BABU RAM BRIJ LAL:DHANI RAM MILKHI RAM:SURYA RAM AND SONS:SHIVEJI RAM SITA RAM:THE BHUCHO AGGARWAL TRADING CO

JUDGEMENT

(1.) These seven appeals, on certificate, are by the State of Punjab, challenging the judgments and orders of the Letters Patent Bench of the Punjab High Court dismissing in limine the appeals filed by the State against the decisions of the learned Single Judge either quashing the orders of assessment of sales tax made by the concerned Sales Tax Officers or directing the said officers to reconsider the orders and pass fresh orders of assessment. The assessments that were challenged before the High Court were made under the Punjab General Sales Tax Act, 1948 (Punjab Act No. XLVI of 1948) (hereinafter to be referred to as the Act). Civil Appeals Nos. 2320 of 1968 and 1468 of 1969 relate to the assessment year 1960-61, Civil Appeals Nos. 2319 of 1968 and 1467, and 1470 of 1969 relate to the assessment year 1961-62 and Civil Appeal No. 1466 of 1969 relates to the assessment year 1962-63.

(2.) The controversy related to the assessment to sales tax under the Act in respect of cotton, which admittedly is an item of "declared goods" within the meaning of Section 2, Clause (c) read with Section 14 of the Central Sales-tax Act, 1956 (Act 74 of 1956) (hereinafter to be referred to as the Central Act).

(3.) As the nature of the dealings and the approach made by the assessing officers in respect of the respondents, who are different assessees, is the same, it is enough to refer to the facts in Civil Appeal No. 2319 of 1968. The respondent M/s. Shakti Cotton Company is partnership firm carrying on business as a registered dealer under the Act. Amongst its other business, the firm purchases kapas or unginned cotton and after ginning sells cotton and cotton seeds. For the assessment year 1961-62, the firm submitted a return under the Act showing its gross turn-over of purchase at Rupees 23,76,452.68 n. p. This amount included the purchase of unginned cotton i.e. kapas and the sales were shown as having been made to registered dealers and for inter-State trade and commerce. The firm claimed deduction from its gross turnover value of the entire quantity of cotton it had purchased. According to the firm, it was entitled to so deduct the purchase price under S. 5 (2) (a) (vi) of the Act. If appears that there was originally an order of assessment passed on June 30, 1962. On appeal by the firm the Appellate Authority by its order dated February 4, 1963 remanded the matter to the assessing authority for re-examination and reconsideration of the original order of assessment. The assessing authority, Patiala District, took up the assessment proceedings afresh and after an examination of the account books and other vouchers produced by the firm accepted as correct the gross turnover returned by the dealer. Regarding the various deductions claimed by the firm particularly in respect of the purchase price of unginned cotton which had been sold to registered dealers, it is not clear from the assessment orders as to how exactly the claims for deductions were either allowed or rejected. Ultimately, the assessing authority fixed the taxable turn-over for the purposes of purchase tax at Rupees 3,18,993.27 n. p. and levied purchase tax on this amount at the rate of 2 per cent. The assessment order was passed on September 26, 1963. The firm filed in the Punjab High Court Civil Writ No. 452 of 1964 challenging the order of assessment passed by the Sales-tax Officer. The grievance of the firm as is seen from the said writ, is, that the assessing authority disallowed the claim, made by it for deduction of purchase price of ginned cotton sold to the registered dealers and for inter-State trade and commerce. The firm's claim before the assessing authority, appears to have been that if three maunds of kapas is ginned, it gives roughtly one maund of ginned cotton which if disposed of in toto should be equivalent to the purchase price of three maunds of kapas originally purchased. The assessing authority appears to have proceeded on the basis that out of the total quantity of unginned cotton purchased by the firm, only 1/3rd quantity of the unginned cotton can be considered to have been sold as ginned cotton. Deductions, according to the assessing authority, under Section 5 (2) (a) (vi) of the Act from the purchase turn-over of unginned cotton should be fixed at 1/3d of the total price paid for the unginned cotton. The assessing authority has also proceeded on the basis that the amount realised by the firm by sale of cotton seeds as a result of ginning cannot be taken into account for calculating the turn-over under Section 5 (2) (a) (vi) of the act as the said material is something different from cotton. The firm had also challenged the order of assessment that the levy of sales tax on cotton, which is an item of "declared goods" under the Central Act is illegal and opposed to Section 15 of the Central Act as no stage for levy of tax had been fixed. As the Excise and Taxation Commissioner of Punjab had given instruction to the assessing authorities to assess cotton in the manner shown in the assessment order, the firm averred that no useful purpose will be served by carrying the assessment orders in appeals before the Departmental Authorities. It was pleaded that as the leery was unconstitutional, the relief can be obtained only from the High Court and hence its jurisdiction under Article 226 and 227 of the Constitution was invoked.