- (1.) The instant petition filed under Article 226 of the Constitution prays for quashing the assessment order dated 20.3.1990, passed by the District Excise and Taxation Officer-cum-Assessing Authority, Patiala (P-1), qua levy of tax on packing material, ice and Light Diesel Oil (LDO) and to refund the amount of tax paid. A further prayer has been made for striking down clause (ii) and (iv) of Section 4-B of the Punjab General Sales Tax Act, 1948 (for brevity, 'the Act') being ultra vires of the State Legislature as also striking down Rule 29(xii) of the Punjab General Sales Tax Rules, 1949 (for brevity, 'the Rules') repugnant to the provisions of Section 7(3) and 5(2)((a)(ii) of the Act. Still further a prayer has been made for declaring the Skimmed Milk Powder as Milk and not liable to tax on sale if on the purchase of Milk tax has been paid. The petitioner is a Public Limited Company engaged in the manufacture and sale of Desi Ghee, Skimmed Milk Powder, Whole Milk Powder, Infant Milk Powder and Ice Cream etc. It is a registered dealer under the Act as well as the Central sales Tax Act, 1956. The petitioner purchases milk from within and outside the State of Punjab and use it for manufacturing of Desi Ghee, Skimmed Milk Powder etc. . Milk is a highly perishable commodity and in order to preserve the same the petitioner used to purchase ice. A notification under Section 5(1-A) of the Act was issued and ice was made liable to tax on first stage w. e. f. 30.5.1984. At the relevant time, the petitioner also used Light Diesel Oil to run its plant, which was also liable to tax at first stage w. e. f. 11.1.1985.
(2.) It is claimed that during the year 1985-86, the petitioner purchased bulk tins and poly liners for packing of Ghee and Milk Powder from within the State, for a sum of Rs. 75,23,579/-. It transferred the manufactured goods for sale out of Punjab, valued at Rs. 32,62,05,676.56, to its branches and agents. For the assessment year 1985-86, an assessment Order, dated 20.3.1990, has been passed by the Assessing Authority levying the additional tax of Rs. 55,683/-, which was paid on 6.4.1990. According to the petitioner, the said additional tax has been levied despite the fact that it was specifically brought to the notice of the Assessing Authority that Skimmed Milk Powder is nothing but Milk in powder form and as the tax on Milk has been paid, therefore, the sale of Skimmed Milk Powder is not liable to tax in terms of Section 4(2-A) of the Act, which forbids the tax on sale of goods if the tax on their purchases is payable under the Act. However, the said contention has been rejected by the Assessing Authority (P-1). A similar contention was also dismissed by the Sales Tax Tribunal, Punjab, in the case of the petitioner in respect of proceedings for the Assessment Year 1981-82, vide order dated 25.3.1990 (P-2).
(3.) We have heard learned counsel for the parties at length and perused the paper book with their able assistance. The issues raised in the instant petition are no longer res integra. Similar issues concerning taxable event in such circumstances have been subject matter of consideration of Hon'ble the Supreme Court in the case of Goodyear India Ltd v. State of Haryana, 1990 2 SCC 71, which took the view that taxable event would not be the stage when the goods have been purchased by a taxable person being the last purchaser. However, the view taken in the case of Goodyear India Ltd. did not find approval of the 3-Judge Bench of Hon'ble the Supreme Court in the case of Hotel Balaji v. State of A. P., 1993 Supp4 SCC 536. The rationale for doing so is discernible from para 91 and the relevant extracts reads as under:- 91. Goodyear India Ltd v. State of Haryana, 1990 2 SCC 71 takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers' own depots/agents outside the State, it is consignment, which cannot be taxed by the State legislature. With the greatest respect at our command, we beg to disagree. The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State. If, however, the manufactured goods are sold within the State, no purchase tax is collected on the raw material, evidently because the State gets larger revenue by taxing the sale of such goods. (The value of manufactured goods is bound to be higher than the value of the raw material). The State legislature does not wish to - in the interest of trade and general public - tax both the raw material and the finished (manufactured) product.;