PAMILA AGRO PROCESSING Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE Gujarat Sales Tax Tribunal, Ahmedabad, has referred to this Court for its decision the following questions under section 69 of the Gujarat Sales Tax Act, 1969, hereinafter, referred to as the "act" : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was wrong in holding that the sale of manufactured goods by the applicant outside the State of Gujarat results in a breach of condition No. (2) of sub-item No. 2 of entry of the Government Notification issued under section 49 (2) of the Act and the wording of form "nn" specified thereunder ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was wrong in holding that the levy of purchase tax under section 50 of the Gujarat Sales Tax Act, 1969, without instituting any independent proceedings under that section was valid and proper as it was levied in the course of assessment proceedings under section 41 of the Act, 1969 ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was wrong in holding that penalty under under section 45 (6) of the Gujarat Sales Tax Act, 1969, should be imposed at half the amount determined by the sales tax authorities ?"

(2.) THESE questions have been referred in the background of the following facts : The applicant, M/s. Pamila Agro Processing, is a new small-scale industrial unit commissioned after November 1, 1977, at Vapi in south Gujarat, which is a registered dealer the Act, manufacturing dyes and at the relevant time sending manufactured goods to its branch office at Bombay for being sold at Bombay. In order to earn exemption from sales tax under suitable package of incentives for encouragement of industries in the State as per the relevant Government Resolution, the applicant had applied for and was holding exemption certificate under entry 94 of the Government Notification dated June 22, 1978, issued under section 49 of the Gujarat Sales Tax Act, 1969, pursuant to which he was required to furnish a certificate in form "nn" appended to the notification which contained a certain undertaking on its part in order to earn exemption. The applicant made purchases of raw materials against such certificate in form "nn" from other registered dealers, free of tax, and these raw materials were used at the applicant's unit at Vapi for the purpose of manufacturing dyes, but the manufactured goods were then sent to its branch office at Bombay, as stated earlier. The Sales Tax Officer was of the view that the applicant had committed branch of condition and undertaking mentioned in form "nn" and, therefore, it was liable to pay purchase tax under section 50 of the Act, in respect of the goods purchased against the certificates issued in form "nn". He, therefore, levied purchase tax at the rate of 4 per cent on such goods under section 50, and also levied penalties under section 45 (6) and 45 (1) (b) of the Act. The applicant challenged this assessment order by filing first appeals which came to be dismissed by the Assistant Commissioner of Sales Tax. The applicant's two second appeals before the Tribunal were dismissed in substance, but the order regarding the penalties came to be modified.

(3.) THE form in which the specified manufacturer purchasing goods for use in manufacture of goods has to furnish a certificate, is couched in the following words : " FORM Nn Certificate by a specified manufacturer purchasing goods for use in manufacture of goods. [see entry at serial No. 94 inserted by Government Notification, Finance Department No. (GHN-39)-GST-1078/ (S. 49)- (67)-TH dated the June 26, 1978 issued under section 49 (2) of the Gujarat Sales Tax Act, 1969. ] I,. . . . . . . . . . . . . . . of M/s. . . . . . . . . . . . . address. . . . . . . . . . . . . . . . . do certify that I/the said. . . . . . . . . . . . . am/is a registered dealer holding a certificate of registration No. . . . . . . . dated. . . . . . . . and also holding a certificate No. . . . . dated. . . . . granted by the Commissioner under Government Notification No. (GHN-39)-GST-1078- (S. 49)- (67)-TH dated the June 26, 1978 and that the goods being machinery, raw materials, processing materials or consumable stores mentioned in bill/cash memo/invoice No. . . . . . . . . dated. . . . . . . of M/s. . . . . . . . . . will be used by me/the said. . . . . . . . . . . . . . . within the State in the manufacture of goods (for sale by me/the said firm/the said company) which shall not take place outside the State of Gujarat or being the packing materials mentioned in bill/cash memo/invoice No. . . . . . . . . . . . . . dated. . . . . . . . . . of M/s. . . . . . . . . . . . will be used in the packing of the goods so manufactured namely. . . . . . . . . . . . . . I further certify that the aforesaid certificate was in force on the date of the aforesaid purchase of goods. Place : Signature : Date : Status : By order and in the name of the Governor of Gujarat. . . . . . . . . . . . " As per this certificate the specified manufacturer has to undertake that he will use the machinery, raw materials, processing materials or consumable stores, within the State in the manufacture of goods for sale, which shall not take place outside the State of Gujarat. THE question is whether the words "which shall not take place outside the State of Gujarat" qualify the term "manufacture" or the term "sale" appearing in entry 94 (2) or in form NN.