STATE OF PUNJAB Vs. PERFECT SYNTHETICS

JUDGEMENT

(1.) This civil appeal filed by the State of Punjab is directed against judgment and order dated 4-7-06 passed by Punjab and Haryana High Court in CWP No. 2271 of 2006 by which it has been held that the assessee was entitled to deduction under Rule 29(xii) of the Punjab General Sales Tax Rules, 1949 (for short, "1949 Rules").

(2.) Respondent-assessee M/s. Perfect Synthetics is a partnership firm engaged in the business of purchase, sale and manufacturing of yarn. In this civil appeal we are concerned with assessment year 2001-02. Assessee is registered under Punjab General Sales Tax Act, 1948 (for short, "1948 Act"). Assessee claims that after purchasing raw-material from exempted units within the State it has used the same in the manufacture of yarn, majority of yarn being sold in the course of intra-State sales and tax on finished goods being paid. Some of the units from whom the assessee purchased raw-material stood exempted from payment of tax under Punjab General Sales Tax (Deferment and Exemption) Rules, 1991 (for short, "1991 Rules").

(3.) It is the grievance of the assessee that in calculating its taxable turnover, in terms of Rule 29(xii) of the 1949 Rules, deduction is not being allowed by the Department on the ground that the goods purchased by the assessee are liable to tax at the first stage of sale and since no tax on purchase of raw-material from exempted units has been paid the assessee is not entitled to deduction under Rule 29(xii) of the 1949 Rules.