MOHAN LAL MOTI LAL Vs. ASSESSING AUTHORITY BHATINDA

JUDGEMENT

(1.) THIS judgment will dispose of two writ petitions (Civil Writs Nos. 620 and 621 of 1964 ). They have both been filed by Messrs. Mohan Lal Moti Lal and raise the same question of law, though they pertain to two different years.

(2.) IN Civil Writ no. 620 of 12964, it has been pleaded that the petitioner Messrs. Mohan Lal Moti Lal is a partnership firm with its head office at as Bombay and branch at Bhatinda which is registered as a dealer under the Punjab General Sale tax Act. The registered firm is really the main firm working at Bombay, although for registration purposes, it has given the location of its office in the State where it is registered under the local Sales Tax Act. This firm deals in cotton and as a part of its business exports, the firm makes purchases from various parts of the whole of India but as the proper quality of cotton to be exported is available only in punjab or in Rajasthan, the purchases are made from these two States for the purpose of exporting cotton out of the country, the modus operandi of the petitioner-firm being that it enters into contract with the foreign buyers to supply cotton on various future dates and in pursuance of those contracts, it purchases cotton from various places in India. This, according to the write petition, establishes direct integration of the two activities of purchase and export. Emphasis has been laid on the fact that the branch office at Bhatinda in reality represents the head office of Bombay, the former having no separate entity or existence. It is, therefore, the Bombay firm which makes purchases of cotton in the State of Punjab through its branch office at Bhatinda, with the result that the principal party making purchases is the Bombay firm. Assessment for the year 1962-63 which is impugned in this writ petition was made by the Assessing authority on 23-1-1964d vide Annexure 'a' to the writ petition. During this year, the petitioner-firm made purchases worth Rs. 11, 77, 676. 18 and claimed before the Assessing Authority that the cotton which had been purchased for about rupees 10, 78, 28c3. 40 had been purchased for the purpose of export from India to other countries. Evidence, it is averred in the petition, was led before the assessing Authority that all this cotton had been exported our of India from bombay which so the port for export. To repeat the actual words of the petition, " the petitioner submitted to the Assessing Authority that this purchase was actually made obey the head office of Bombay through its branch office at Bhatinda for the purpose of export out of the territory of India. It was also proved to the satisfaction of the Assessing Authority that the cotton so purchased had actually been exported''. The averment proceeds on to state that the Assessing Authority in spite of the submissions made in this behalf, which were not oral but also given in writing, did not agree with these submissions and assessed the petitioner to purchase tax to the tune of Rs. 21, 585. 68. It is complained in the present proceedings that the Assessing Authority had not actually applied its independent mind to the facts of the case because there was a letter of the Excise and Taxation Commissioner directing that in cases like the present the dealer is liable to pay tax. It is mentioned in the write petition that a copy of that letter was sent to a dealer known as Rallies India, Bhatinda, from where the petitioner has learnt of this letter. It has also been averred that the assessing Authority has wrongly stated that the petitioner had furnished no proof of export of its cotton by Bhatinda office. It is un contained in paragraph II of the writ petition because that has not been urged by the learned counsel before us. The only question argued before us is that the transaction in question is exempt from tax by virtue of Article 286 (1) of the Constitution and section 29 of the punjab General Sales Tax Act.

(3.) THE short question falling for determination relates to the scope of these two provisions of law. It is, therefore, helpful to reproduce these two provisions. Article 286 (1) of the Constitution, so far as relevant for our purpose, is in the following terms: