PURAN CHAND GOPAL CHAND Vs. STATE OF PUNJAB

JUDGEMENT

(1.) THIS petition under Article 226 of the Constitution has been referred to a Division Bench by D. K. Mahajan J. on the ground that the question raised is of importance and also arises in a number of other petitions.

(2.) THE petitioner is a Hindu Undivided Family firm carrying on sarafa business at ludhiana and is registered as a dealer under the East Punjab General Sales Tax act No. 46 of 1943. The business of this firm, according to the writ petition, consists of, inter alia, the sale and purchase of silver, gold, bullion, and gold and silver ornaments etc. The ornaments purchased by the firm are either resold in the same form or converted into pure gold after removing the alloy. On 19-4-1958 the punjab General Sales Tax (Amendment) Act No. 7 of 1958 was promulgated by means of which inter alia the terms "dealer" and "turnover" were amended and the definition of the word "purchase" was inserted for the first time. The Assessing authority (Excise and Taxation Officer) respondent No. 3 proceeded to impose purchase tax on the petitioner in respect of the year 1958-59 on the purchase price of gold bullion, sliver and ornaments converted into gold after separating alloy therefrom. This assessment was sought to be made under the Amendment act No. 7 of 1958. On 1-8-1959 the impugned assessment order was made and the petitioner assessed to a sum of Rs. 499. 08 as purchase tax. The petitioner through the president of Sarata Association, Ludhiana, moved the Excise and Taxation commissioner, Patiala (Respondent No. 2 in this Court) for clarification of the position as a result of which all the Assessment Authorities were directed to hold in abeyance till further orders the as ent cases of the sarafs who, as part of their business, purchased old ornaments and prepared bullion and new ornaments therefrom for sale. On 20-9-1960, respondent No. 2 informed the Saraba Association that on consideration of the matter it had been decided that conversion of old ornaments into bullion and/or preparation of new ornaments therefrom constituted a manufacturing process with the result that such purchase of old ornaments would be subject to levy of purchase tax. The petitioner has further stated that an appeal preferred against the assessment order would stand virtually decided against the petitioner because the Appellate Authority being subordinate to the Excise and taxation Commissioner, respondent No. 2, could not but decide the appeal in accordance with the decision of the said respondent.

(3.) IN the return, almost all the facts are admitted and it is pleaded that conversion of old ornaments into bullion and new ornaments constitutes a process of manufacture and the acquisition of old ornaments for this purpose is a "purchase" within the meaning of Section 2 (ff) of the Sales Tax Act. By the time the return was filed, the petitioner's appeal had already been dismissed and it is averred in the return that the same has been rightly dismissed.