STATE OF PUNJAB Vs. CHANDU LAL KISHORI LAL:KRISHNA COTTON DAL AND OIL FACTORY:GURBAX SINGH MADAN LAL

JUDGEMENT

(1.) In this case the respondent is a partnership firm carrying on the business of buying and selling cotton and also of ginning and pressing cotton at Barnala. The respondent purchased unginned cotton and after ginning the cotton by a mechanical process and removing the seeds sold the ginned cotton to customers outside the State. For the period from 1st April, 1961 to 31st March, 1962, the respondent paid purchase tax on the purchase turnover. In respect of cotton-seeds sold by it to registered dealers, the respondent claimed deduction from the purchase turnover under S. 5 (2) (a) (vi) of the Punjab Sales Tax Act, 1948 (Act No. 46 of 1948). But the assessing authority did not allow the deduction holding that the goods sold viz., cotton-seeds were not the goods in respect of which purchase tax had been levied. In other words, the assessing authority took the stand that the unginned cotton underwent a manufacturing process and the goods produced were different from those purchased. So the respondent firm was assessed to pay a tax of Rs. 16,452 by the order of the assessing authority dated 11th September, 1963. The respondent firm thereafter filed a writ petition No. 1917 of 1963 in the Punjab High Court for quashing the assessment. The writ petition was allowed by the High Court which quashed the assessment and directed the assessing authority to re-determine the tax in the light of its judgment. In allowing the writ petition of the respondent the High Court followed its previous decision in Patel Cotton Company Private Ltd. v. State of Punjab, 1964-15 STC 865 (Punj). The appellants preferred a Letters Patent Appeal which was dismissed. The present appeal is brought by certificate from the judgment of the Punjab High Court dated 31st March, 1965.

(2.) It is necessary at this stage to set out the relevant provisions of the Punjab Sales Tax Act, 1948 (Act No. 46 of 1948) (hereinafter called the Act). Section 2 (ff) omitting immaterial portions defines 'purchase' thus:" -

(3.) Section 2 (c) of the Central Sales Tax Act, 1956 (Act No. 74 of 1956) defines 'declared goods' to mean goods declared under Section 14 to be of special importance in inter-State trade or commerce. Under Section 14 of this Act certain goods were declared to be of special importance in inter-State trade or commerce and they included cotton that is to say all kinds of cotton (indigeneous or imported) in its unmanu factured state, whether ginned or unginned, baled, processed or otherwise, but not including cotton waste. Section 15 of the Central Sales Tax, 1956 has been amended from time to time. Originally Section 15 reads as follows:-