- (1.) THIS is a petition on behalf of the Punjab Woollen Textile Mills, Chheharta, district Amritsar, under Articles 226 and 227 of the Constitution of India for a writ in the nature of certiorari for quashing the order of the Assessing Authority, Sales Tax, Amritsar District, dated 8th of July, 1958, whereby the assessee-petitioner was held liable to pay sales tax on best judgment basis to the extent of Rs. 3,625-0-0; in fact, the liability was determined at Rs. 3,638-4-0, but, as Rs. 13-4-0 had already been paid by the dealer (assessee-petitioner) demand notice and challan for the balance of Rs. 3,625 alone were ordered to be issued. It is alleged in the petition that the petitioner is a partnership concern with Sarvshri Shiv Sahai Kapur, Ram Parkash Kapur, Sardari lal Kapur, Nand Kishore Kapur and Om Parkash Kapur as partners carrying on the manufacturing business of woollen textiles at Chheharta, district Amritsar. The concern is said to be a registered partnership under the Indian Partnership Act. Within the premises of the mills, the petitioner is said to be having a department of bleaching, dyeing and finishing of textiles which, for purposes of account, is being maintained as a separate department and is being run under the name and style of Oriental Textile Finishing Mills, the partners, both of the petitioner-mills as well as of this department, being the same individuals. The concern, according to the petition, not only dyes, finishes and packs the produce of the petitioner-mills so as to make it marketable for sale, but it also, in addition, manufactures the unbleached, undyed and unfinished textile goods of other textile mills, so that the same may be made marketable and sold by the textile mills on whose behalf the goods are handled and manufactured. At this stage I may observe that the word "concern" occurring in para 2 of the petition apparently refers to the department of bleaching, dyeing and finishing of textiles mentioned in the opening part of this para. The petition then proceeds that the petitioner-mills has got a certificate of registration as a dealer and in Clause 3 of the certificate it is, inter alia, provided that the sales of the following goods to the petitioner would be free of tax : (a) for purposes of manufacturing woollen, cotton and silken yarn, electric goods for the factory, packing paper and other material, machinery, its parts, dyes and its chemicals. For the assessment year 1956-57 the Assessing Authority, respondent, by means of an order dated 8th of July, 1958, took action under Section 11-A of the East Punjab General Sales Tax act, 1948 (XLVI of 1948) read with Rule 63 of the East Punjab General Sales Tax Rules, 1949 and reopening the petitioner's assessment already made on 16th January, 1958, assessed the petitioner on the raw material, which had been purchased by it under the certificate of registration and which raw material had been utilised in the manufacture (bleaching, dyeing, finishing and wrapping) of the textile goods (woollen, silken and cotton) belonging to textile mills other than that of the petitioner. This assessment, so continues the petition, has been made on the basis that the raw material, which has been used by the petitioner for the bleaching, dyeing and finishing work of the goods of third parties, would be deemed to be a sale by the petitioner to himself. It is pleaded that this basis of the Assessing Authority is wholly misconceived inasmuch as the certificate of registration had exempted the petitioner from the levy of sales tax for the raw material to be utilised by the petitioner for the manufacture of any goods for sale. It is further stated that all the goods, which were manufactured by the petitioner-mills, were for sale and that no distinction could be drawn between the goods fabricated by the petitioner and the goods fabricated by others, though bleached, dyed and finished by the petitioner-mills, which is a department of the petitioner-concern; there was no sale of the raw material by the petitioner to himself within the meaning of the word "sale" as given in Section 2 (h) of the Sales Tax Act and the taxable turnover could, under Section 5 (2) (a) (ii) of the Act, be determined only by excluding the sales made to the petitioner of goods, which were intended for re-sale, as given in the certificate of registration, or of goods specified in the said certificate for use by him in the manufacture of any goods for sale or in the execution of any contract. The goods (machinery parts and accessories, lubricants, dyes, chemicals, firewood and coal etc.) which had been consumed by the petitioner, were used in the manufacture of "any goods for sale ", or "in the execution of a contract" and the petitioner had only charged the labour charges pertaining to the sale, with the result that there was no sale of the raw material either to himself or to the customers for and on whose behalf the goods had been finished (i. e. , manufactured ). The petition then refers to a Supreme Court decision holding that work done by a contractor could not be deemed to be a sale of the raw material which is utilised in building contracts. The impugned order dated 8th of July, 1958, has then been described as wholly arbitrary and in utter disregard of Section 5 (2) (a) (ii) of the Act and of the terms of the registration certificate. The word "manufacture" is also alleged to include the work of processing by bleaching, dyeing, printing and finishing. The imposition of the tax is said to be without any legal authority, infringing the petitioner's fundamental right to carry on trade, thus violating article 19 (i) (g) of the Constitution. The alternative remedy provided by the statute is described as onerous because no appeal is entertainable unless the amount of tax is paid as a condition precedent, though it is also stated in the petition that the petitioner has already filed an appeal before the appellate authority under Section 20 of the East Punjab Act No. XLVI of 1948, which appeal, according to the petition, will not be entertained unless the tax assessed is paid. The general rule that there will be no interference under Article 226 of the Constitution, when ordinary legal remedies are available, is claimed on this ground to be inapplicable to the present case; it is urged that the imposition of the tax in question is an encroachment upon the fundamental rights of the petitioner and also that the legal provisions have been wrongly construed.
(2.) IN the written statement it is denied that the petitioner is entitled to make tax-free purchases, on the basis of the registration certificate, of goods for use in the manufacture of articles for sale, which do not belong to him. It is also controverted that the petitioner could purchase raw materials free of tax for dyeing, bleaching and finishing other dealers' products under Section 5 (2) (a) (ii ). It is asserted that, under this provision of law, the raw material could only be purchased free of tax, on the strength of the registration certificate, by the petitioner, for the manufacture of goods for sale by him, or in the execution of any contract; the work of bleaching, dyeing etc. , done by the petitioner is contended not to fall within the purview of the term "contract" as defined in Clause (c) of Section 2 of the Act and the goods which were dyed or bleached or finished did not belong to him and there was no sale thereof by him. He could not, therefore, utilise the raw material purchased tax-free for this purpose the said material having been consumed by him, the Assessing Authority rightly assessed the price thereof in his hands. It has also been pleaded that the petitioner, having filed an appeal before the Deputy Excise and taxation Commissioner, Jullundur, against the impugned order of assessment, he should have awaited the result of his appeal and should not have approached this Court for relief by way of a writ under Article 226 of the Constitution.
(3.) I may here state that this petition initially came up for hearing before Grover, J. , but in view of the general importance of the point involved the matter has now been placed before us for disposal.;