- (1.) IN order to appreciate the contention raised in this petition under Article 226 of the Constitution of India, the following facts need to be stated : The petitioner-firm is a registered dealer under the Punjab General Sales Tax Act, 1948, and is running an oil mill at Khanna, District Ludhiana. For its business, it purchases groundnuts and produces oil therefrom. The Assessing Authority, vide its order dated 15th November, 1961, imposed purchase tax on the petitioner to the tune of Rs. 54,675. 50 for the assessment year 1959-60, i. e. , from 1st April, 1959, to 31st March, 1960. This assessment and levy were affirmed in appeal.
(2.) THE petitioner challenged the abovesaid orders of assessment through Civil Writ Petition No. 3072 of 1968 in this Court and the same was allowed on 30th April, 1973, following the judgment of the Supreme Court in Bhawani Cotton Mills Ltd. v. State of Punjab [1967] 20 S. T. C. 290 (S. C.) and, while quashing the orders of assessment, the learned single Judge left it open to the Assessing Authority to review the previous order of assessment in the light of the Punjab General Sales Tax (Amendment and Validation) Act, 1967, which piece of legislation had been brought about to overcome the abovesaid judgment of the Supreme Court in the Bhawani Cotton Mills' case [1967] 20 S. T. C. 290 (S. C. ). It was also left open for the petitioner to raise any defence showing their non-liability to the levy of purchase tax. As a result of this judgment in Civil Writ Petition No. 3072 of 1968, the abovesaid amount of tax was refunded to the petitioner and now notice, annexure P-2, has been issued to him to show cause as to why the earlier assessment made for the year 1959-60 should not be reviewed to bring the same in conformity with the Punjab General Sales Tax (Amendment and Validation) Act, 1967. It is this notice, which is now impugned in these proceedings. The ground of attack is rested on Section 15 (a) of the Central Sales Tax Act, 1956, on the plea that the stage for the levy of purchase tax on groundnuts, which is undisputably declared goods under Section 14 of the Central Act and the levy of tax thereon is to be governed by Section 15 of the said Act, is neither definite nor ascertainable under the Punjab General Sales Tax Act, as it stood at the relevant time, i. e. , the period of assessment from 1st April, 1959, to 31st March, 1960. Under the provisions of the Act, as these stood at that time, there is possibility of the tax being levied at more than one stage or both the taxes, i. e. , purchase tax or sales tax, being levied on the same goods. To examine the argument, a reference to the provisions of Section 15 of the Central Sales Tax Act is necessary and the same is reproduced hereunder : Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage ; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, and tax has been paid under this Act in respect of the sale of such goods in the course of inter-State trade or commerce, the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State.
(3.) ON the basis of this section, a similar argument was raised in the Bhawani Cotton Mills' case [1967] 20 S. T. C. 290 (S. C.) on the ground that levy of purchase tax on cotton was neither definite nor ascertainable in the Act, as it then stood, and there was a possibility of the tax being levied at more than one stage. The argument of Mr. Rampal in reply to the effect that Section 15 of the Central Act only bars the imposition of the same tax at two stages and has nothing to do with the imposition of both the taxes, i. e. , sales tax and purchase tax, is an over-simplification of the whole issue. This is just contrary to what the Supreme Court has said in the Bhawani Cotton Mills' case [1967] 20 S. T. C. 290 (S. C.) and thus does not need any further consideration. While examining this argument, the Supreme Court has observed in the said judgment that the provisions of Section 15 (a) of the Central Act make it mandatory that tax shall not be levied at more, than one stage. After going through the various provisions of the Rules and the forms prescribed thereunder, it was further observed that there might be cases where a non-registered dealer might intervene and even if such dealer had intervened, it was clear that under Section 15 (a) of the Central Act the tax could not be levied at more than one stage. It was further observed that there was no machinery by which a dealer could ascertain whether his vendor of the declared goods had paid the tax already. Even otherwise, it would be seen that if a dealer A sold the declared goods to B six months after the close of the year (B being a registered dealer), A became liable to purchase tax. But if B sold again after the period mentioned in Sub-clause (vi) of Section 5 (2) (a) of the Punjab General Sales Tax Act, he would also be liable to pay purchase tax. That means, in respect of the same item of declared goods, more than one person was liable to pay tax and the tax was also levied at more than one stage. That is not permissible under Section 15 (a) of the Central Act. In the light of these observations, Mr. Anand Swaroop, the learned counsel for the petitioners, submits that according to Section 15 (a) of the Central Sales Tax Act, neither both the taxes, i. e. , the purchase tax or the sales tax, can be levied on the same goods nor can the same tax, i. e. , either sales tax or purchase tax, be levied at more than one stage. So far as the fixation of a stage for the payment of a tax, i. e. , either the sales tax or the purchase tax, is concerned, that has clearly been determined by the provisions of Sub-section (3) of Section 5 of the Punjab General Sales Tax Act, which provision was brought about by Punjab Act No. 7 of 1967 with effect from 1st October, 1958. So far as the payment of either of the taxes, i. e. , the purchase tax or the sales tax, is concerned, the controversy has been set at rest by Sub-section (2-A) of Section 4 of the Punjab General Sales Tax Act, which was inserted by Act No. 18 of 1960 with effect from 1st April, 1960. This provision reads as under : Notwithstanding anything contained in Sub-sections (1) and (2), no tax on the sale of any goods shall be levied if a tax on their purchase is payable under this Act.;