POLESTAR ELECTRONIC PRIVATE LIMITED UNION OF INDIA DELHI CLOTH AND GENERAL MILLS CO LIMITED BLUE STAR LIMITED DELHI CLOTH AND GENERAL MILLS CO LIMITED DEEPAK OIL MILLS DEEPAK OIL MILLS TRADING ENGINEERS DEEPAK OIL MILLS KRISHAN Vs. ADDITIONAL COMMISSIONER SALES TAX: J K SYNTHETICS LTD

JUDGEMENT

(1.) These appeals raise a short but interesting question of law relating to the interpretation of S. 5 (2) (a) (ii) of the Bengal Finance (Sales Tax) Act, 1941" as applied to the Union Territory of Delhi (hereinafter, for the sake of convenience referred to as Delhi). The Act was extended to Delhi subject to certain modifications by a Notification dated 28th April, 1951 issued by the Central Government in exercise of the powers conferred by S. 2 of the Part C States (Laws) Act, 1950 and it came into force in Delhi on 28th May, 1951 by virtue of a Notification issued under S. 1, sub-s. (3) of the Act. There have been several amendments made in the Act from time since the date of its application to Delhi but we are concerned in these appeals only with the assessment periods 1971-72 and 1972-73 and hence we shall confine ourselves to the relevant provisions of the Act as they stood during these assessment periods.

(2.) Section 2 enacted the definition provision and Clause (c) of that section defined a "dealer" to mean any person who carries on the business of selling goods in Delhi. Clause (g) of S. 2 contained the definition of "sale". It was a definition in general terms and it made no reference to the situs of the sale. If did not limit the definition to a sale inside Delhi. There was an explanation to this Clause which laid down as to when a sale or purchase shall be deemed to take place inside Delhi. S. 4. sub-section (1) provided that every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum at any time within such year shall be liable to pay tax under the Act on all sales effected after the date notified by the Chief Commissioner and sub-section (2) of that Section said that every dealer to whom sub-section (1) does not apply, shall, if his gross turnover calculated from the commencement of any year exceeds the taxable quantum at any time within such year, be liable to any tax under the Act, on the expiry of two months from the date on which such gross turnover first exceeds the taxable quantum, on all sales effected after such expiry, Sub-section (5) of S. 4 defined "taxable quantum" to mean in relation to any dealer who imports for sale any goods into Delhi or manufactures or produces any goods for sale, regardless of the value of the goods imported, manufactured or produced, ten thousand rupees, and in relation to any other dealer, thirty thousand rupees. Sub-section (1) of S. 5 provided different rates of tax, according as the goods fell within one category or another, at which the tax payable by a dealer shall be levied on his taxable turnover. What is "taxable turnover" was defined in sub-s. (2) of S. 5 to mean:

(3.) These are the relevant provisions of the Act in the light of which we have to decide the question of law arising in the appeals. The assessees in all the appeals are registered dealers and during the relevant assessment periods they held certificates of registration specifying the class or classes of goods intended for resale by them or for use by them as raw-materials in the manufacture of goods for sale. The certificates of registration were in the form as it stood prior to its amendment on 29th March, 1973 and they did not specify that the resale of the goods purchased or their use as raw-materials in the manufacture of goods or the sale of manufactured goods should be inside Delhi. There are broadly two groups in which the appeals can be divided for the sake of convenience. One group consists of appeals where the assessees purchased goods of the class specified in the certificate of registration as being intended for resale by them and furnished to the dealer selling the goods declarations in the prescribed form, as it stood prior to 29th MArch, 1973, stating that the goods were intended for resale and thereafter resold the goods, though not within the territory of Delhi, while the other consists of appeals where the assessee purchased goods of the class specified in the certificate of registration as being intended for use by them as raw-materials in the manufacture of goods for sale and furnished to the dealers selling the goods declarations in the prescribed form, as it stood prior to 29th March, 1973, stating that the goods were purchased by them for use as raw-materials in the manufacture of goods for sale and thereafter used the goods purchased as raw-materials in the manufacture of goods, in some cases outside Delhi and in some others inside, but in the latter, sold the goods so manufactured outside Delhi. Civil Appeals Nos. 1526 of 1972, 1085 of 1977 and 1290 of 1977 are representative appeals belonging to the first group while Civil Appeals Nos. 1526 of 1972, 1035 of 1977 and 1352 of 1977 are illustrative of the appeals belonging to the second group. Some of the appeals are brought by special leave directly from the orders of the assessing authority and some others from the appellate or revisional orders. Special leave was granted in these cases without requiring the assessees to exhaust their remedies under the Act and to approach the High Court of Delhi in the first instance, because a decision was already given by the High Court of Delhi on 26th April, 1974 in Fitwell Engineers v. Financial Commissioner of Delhi, (1975 Tax LR 1866) (Delhi) negativing the contentions of the assessees. The view taken in the orders impugned in the appeals and accepted by the High Court of Delhi in Fitwell Engineer"s case was that for the purpose of S. 5 (2) (a) (ii) and the Second Proviso, resale of the goods purchased was confined to resale inside Delhi and so also, use of the goods purchased as raw-materials in the manufacture of goods and sale of manufactured goods were requited to be inside Delhi, and, therefore, if the assessees resold the goods outside Delhi or used them as raw-materials in manufacture outside Delhi, or even if the manufacture was inside Delhi, sold the goods manufactured, outside Delhi, there was utilisation of the goods by the assessees for a purpose other than that for which they were purchased and hence the Second Proviso to S. 5 (2) (a) (ii) was attracted and the price of the goods purchased was liable to be included in the taxable turnover of the assessees. The question which arises for determination in the appeals is that or this view taken by the taxing authorities and approved by the High Court of Delhi in Fitwell Engineers" case is correct and can be sustained.