M.M. Kumar, J. - (1.) The short question raised in this petition filed under Article 226 of the Constitution is whether the Sales Tax Tribunal, Punjab, Chandigarh (for brevity, 'the Tribunal') could have validly exercise its jurisdiction while deciding the rectification application, filed under Sec. 21A(2) of the Punjab General Sales Tax Act, 1948 (for brevity, 'the 1948 Act'). The petitioner, which is a partnership firm and is engaged in the business of purchase and sale of sugar in packed jute gunny bags (Bardana), has raised the aforementioned issue by challenging orders dated 25.2.2003 (P -8) and 22.12.2003 (P -9), passed by the Tribunal. The Tribunal initially vide its order dated 30.8.2000 (P -7) had granted relief to the petitioner. However, on rectification application filed by the respondent State, the order dated 30.8.2000 (P -7) was rectified on 25.2.2003 (P -8). The rectification application later on filed by the petitioner was dismissed on 22.12.2003 (P -9).
(2.) Facts in brief are that the petitioner was registered as a dealer under the provisions of the 1948 Act and has later on been registered under the Punjab Value Added Tax Act, 2005 (for brevity, 'the 2005 Act') after the repeal of 1948 Act. For the year 1989 -90, the assessment was framed by the Assistant Excise and Taxation Commissioner -cum -Assessing Authority, Ludhiana -III and a finding was recorded that the gunny bags (bardana) sold with sugar were liable to tax by virtue of amendment in Item No. 65 of Schedule -B of the 1948 Act. The Assessing Authority had placed reliance on a judgment of Hon'ble the Supreme Court rendered in the case of Jamna Flour Mills (P) Ltd. v/s. : [1987]2SCR1047 , wherein it was held that it is a question of fact as to whether an implied agreement to sell the packing material along with product existed in the facts and circumstances of the case. Accordingly, the Assessing Authority ordered addition on the value of gunny bags assessing the same at Rs. 1,51,410/ - by clarifying that the aforementioned amount is disallowed from the tax free claim of the dealer. The Assessing Authority also imposed penalty under Sec. 10(6) of the 1948 Act after recording the finding that the dealer had failed to furnish any plausible explanation for his failure to deposit the tax on the sale of gunny bags with sugar. Accordingly, a penalty of Rs. 1,000/ - under Sec. 10(6) of the 1948 Act was imposed and interest of Rs. 4,656.50 paise was also calculated.
(3.) Feeling aggrieved, the petitioner went in appeal before the Deputy Excise and Taxation Commissioner (Appeals), Patiala Division, Patiala, by raising the plea that neither there is any contract for sale of gunny bags (Bardana) nor any consideration has passed on between the parties. The petitioner submitted that no implied sale could be inferred in the absence of any attending circumstances, especially when the petitioner had purchased sugar packed in jute gunny bags (Bardana) from sugar mills in the State of Punjab. It was argued that gunny bags were liable to be taxed at the first stage arid tax, if any, was leviable on the first seller i.e. sugar mills and the petitioner being the second seller of sugar was not liable to pay any tax. The petitioner had placed reliance on the sample bills dated 20.10.1993, (P -2), 15.9.1993 (P -3) and 28.3.1990 (P -4), to show that no payment in lieu of the sale of gunny bags was made. However, the Deputy Excise and Taxation Commissioner (Appeals), Patiala Division, Patiala, vide his order dated 18.2.1994 (P -5) upheld the order passed by the Assessing Authority by holding that any dealer dealing exclusively in tax free goods can always claim that he does not fall within the ambit of Sales Tax Act. He further held that Bardana sold with tax free goods like sugar, is re -useable and the same cannot be called a mode of conveyance. As such, the contract for its sale with tax free goods was taken to be implied.;