Hidayatullah, J. - (1.) This appeal by certificate against the judgment of the High Court of Punjab at Chandigarh, dated February 18, 1963 questions the inclusion of certain items in the turnover of Messrs Modi Spinning and Weaving Mills Co. Ltd., Modinagar in the assessment of sales-tax for the year 1959-60. In that year the Company filed a return of its sales showing a gross turnover of Rs. 40,89,954.24 nP and a taxable turnover of Rs. 1,30,296.81 np. In computing the taxable turnover the Company deducted Rs. 10,85,842. 74 nP on account of unginned cotton purchased by it on a certificate of registration granted to it on January 3, 1956. This deduction was not permitted by the assessing Authority, Patiala District, also described as the District Taxation Officer, Patiala District. Exemption from tax was also claimed in respect of purchases of oil seeds amounting to Rs. 4,47,437.33 nP which the Company claimed to exclude from the taxable turnover under S. 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948. This claim was also disallowed by the Taxing Authority. The Company then filed a petition under Arts. 226 and 227 of the Constitution in the High Court but by the order under appeal the petition was dismissed. During the course of the hearing Mr. G. S. Pathak abandoned the claim about oil seeds and no reference need, therefore, be made to that part of the case.
(2.) The tax is being levied under the Punjab General Sales Tax Act 1948, of 1948). This Act was amended from to time and the amendments with which we are concerned were last made by Punjab XIII of 1959. S. 2(i) defines the "turnover" as including the aggregate of the amounts of the sales and purchases and parts of sales and purchases actually made by any dealer' during a given period less any sums allowable as trade discount. S. 4 lays down the incidence of tax and makes every dealer whose turnover exceed the taxable quantum liable to tax. In view of the fact that the turnover of the Company exceeds the taxable quantum there is no need to discuss the section in detail. The section lays down the definition of taxable quantum and the Company is within that definition. S. 5 then provides as follows:- "5. Rate of tax. (1) Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates not exceeding four naye paise in a rupee, as the State Government may by notification direct: Provided ********** ********** Provided further that the rate of tax shall not exceed two naye paise in a rupee in respect of any declared goods as defined in cl. (c) of S. 2 of the Central Sales Tax Act, 1956, and such tax shall, not be levied on the purchase or sale of such goods at more than one stage:(This was inserted with effect from 1st April, 1960 by Act No. 18 of 1960). Provided.********** ********** (2) In this Act the expression taxable turnover" means that part of a dealer's gross turnover during any period which remains after deducting therefrom- (a) his turnover during that period on (i) ********** (ii) sales to a registered dealer of goods declared by him in a prescribed form as being intended for resale in the State of Punjab or sale in the course of inter-State trade or commerce 'or sale in the course of export of goods out of the territory of India or of goods specified in his certificate of registration for the use by him in the manufacture in the State of Punjab of any goods for sale and on sales to a registered dealer of containers or other materials for the packing of such goods. Provided that in case of such sales, a declaration duly filled up and signed by the registered dealer to whom the goods are sold and containing prescribed particulars on a prescribed. form is furnished by the dealer who sells the goods: Provided further that when such goods are used by the dealer to whom these are sold for purposes other than those for which these were sold to him, he shall be liable to pay tax on the purchase thereof at the rate of tax leviable on the sale of such goods, notwithstanding that such purchase is not covered by cl. (ff) of S. 2; ********** ********** .". The registration of dealers is provided by S. 7 which provides inter alia: "7. Registration of dealers. (1) No dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has been registered and possesses a registration certificate. (2) Every dealer required by sub-sec. (1) to be registered shall make application in this behalf in the prescribed manner to the prescribed authority. (3) If the said authority is satisfied that an application for registration is in order, he shall, in accordance with such rules and on payment of such fees as may be prescribed, register the applicant and grant him a certificate of registration in the prescribed form which may specify the class or classes of goods for the purposes of sub-cl. (ii) of cl. (a) of sub-sec. (2) of S. 5. ********** **********" Section 5(2)(a)(ii) was substituted by Act No. 13 of 1959). The words underlined (here into ' ') in it were inserted with effect from April 20, 1959 by Punjab Act No. 18 of 1960.
(3.) When S. 5(2)(a)(ii) was amended by the addition of the words "in the State of Punjab", which did not formerly exist, R. 26 of the Punjab General Sales Tax Rules, 1949 was also amended. R. 26, amended by virtue of various notifications (last being on 29th September, 1961), reads as follows:- "26. A dealer, who wishes to deduct from his turnover the amount in respect of a sale on the ground that he is entitled to make such deduction under the provisions of sub-cl. (ii) of clause (a) of sub-sec. (2) of S. 5 of the Act, shall on demand, produce in respect of such a sale the copy of the relevant cash memo or bill, according as the sale is a cash sale or a sale on credit, and a declaration in writing in Form S.T. XXII by the purchasing dealer or by his agent, that the goods in question are intended for resale in the State of Punjab or such goods are specified in his certificate of registration for use by him in the manufacture- in the State of Punjab of any goods for sale." Though the words "in Form' S.T. XXII" to the end were inserted as far back as June 28, 1955 the words "in the State of Punjab" were inserted. on February 1, 1960 after the passing of Act 13 of 1959. Form S.T. XXII was altered on February 1, 1960. That Form is for declaration to be furnished by registered dealers purchasing goods from another registered dealer for exemption of tax under R. 26 read with S. 5 of the Act quoted above. Form S. T. XXII required the dealer to declare in respect of the goods that they were for the purpose of "manufacture in the State of Punjab for sale". Unfortunately, though the section and the rule contemplated the certificate of registration also to be amended in the same manner, the certificate in Form S.T. III was not amended till a Government Notification issued on September 29, 1961 prescribed the new Form, that is tosay, after the period of assessment in the present case. The Company, therefore held a certificate of registration in which there was no condition that the goods were for use by the dealer "in the manufacture in the State of Punjab' of goods for sale". The italicised (here into ' ') words were not present in the old certificate which the Company held. ;