BHAWANI COTTON MILLS LTD. versus STATE OF PUNJAB & ANR.

Citation: [1967] 3 S.C.R. 577 · Decided: 10-04-1967 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
BHAWANI COITON MILLS LTD. 
v. 
STATE OF PUNJAB & ANR. 
April 10, 1967 
[K. SUBBA RAO, C.J., J. C. SHAH, S. M. SIKRI, V. RAMASWAMI 
AND C. A. VAIDIALINGAM, JJ.] 
Pun;ah General Sales Tax Act (46 of 1948), ss. 2(ff), 5(1) second 
proviso and 5(2)(a) (vi) and Central Sale. Tax Act (74 of 1956), s. 
IS(a)-Wltetlter provisions of State Act in conflict with those of Central 
Act. 
c 
Notification in 1958 under s. 5(1) prescribing rate of purchase tax-
Amendment of word "purchase"-No fresh Notifictltfon-Lega/ity of levy 
of purchase tax. 
D 
E 
The definition of the word "purchase" 
was first introduced in the 
Punjab General Sales !ax ~t, 194~, in, 1958. As .the rate of tax to b<> 
levied was to be contained m a Not1ficat1on to be issued under s. 5 (I) 
of the Act, a Notification was issued in Aptil 195S regarding the rate 
of tax on tbe purchase of goods "for use in the manufacture of goods. 
for sale", as per the tben definition of "purchase". The definition of 
"purchase" was amended twice in 1959 and again by Punjab Act 18 of 
1960. The definition after these amendments has reference to the good~ 
specified in Schedule C to the Act an item of which relates to cotton. 
and, after the 1960 amendment the clause "for use in the manufacture· 
of ~oods for sale" was omitted. After those 
amendments, 
no fresh 
Notification prescribing the rate of tax on the purchase of goods 
was 
issued till September 26, 1961. 
F 
The appe,Jlant was a cotton ginning factory and was a dealer re¥is· 
tered under the Act. Under s. 10, it had to send quarterly returns with-
in the time specified and when sending the returns had to pay the amount 
of tax, in accordance with the returns which should also show the gross 
turnover. Failure to do so was an offence and subjected the dealer to 
heavy penalties. The appellant filed returns for the assessment years 
1960-61, 1961-62 and 1962-63 and paid certain amounts of tax which, 
according to it were due from it. The assessing authority passed orders 
of assessment, including in the appellant's turnover the amounts repre-
senting the purchases of cotton made by the appellant for each of the 
yfla(s. The appellant thereupon filed writ petitions challenging the three 
assessment orders on the ground that the second proviso to s. 5 ( 1) and 
s. 5(2)(a) (vi) of the Act, enabling the State to collect purchase tax in 
respect of cotton, were opposed to s. 15(a) of the Central Sales Tax Act, 
1956 and that, in consequence, it was not liable to pay any purchase tux 
for tbe. ~Slles,,ment years in respect of cotton. The High Court rejected 
the petrt11ons. 
G 
In appeal to this Court, 
HELD: (1) (By Full Court) As no fresh Notification was issued tiU 
September 26, 1961, the orders of assessment for the two years 1960-61 
H 
and 1961-62 could not be sustained. [592 H; 593 BJ 
The levy of tax could not be sustaiiied under the Notification of 195S 
on the basts of s. ~2 of the Punjab General Clauses· Act. That ~ection 
ha, no application, because the definition of "purchase" on the basis of 
L7Sup.Cl/67-7 
578 
Sl!Plll!Mll COllllT llllPO!lTS 
[t 967] 3 s.c.R 
wblch that NotHlcatlon wu 111ued 11 lnconalltent with the dellnltlon of 
"purchue" 111 It atoocl a!tor lta nmll!ldment In 1%0. (5928-P] 
Pu:lher, If tho levy la to be 1ull1lned on the bull et the Not!aaadon 
of 1958 the State coilld levy tax only on the cateaory of purobu• "tor 
UJO In iho manufacture of 1oods for ·1111", But II wu not open to Ille 
State to make 8uch a cholee. 
(5!120) 
(2) (Per Subba Rao, C.J., Shih and Voldlallnaam, JI.) f!ven though 
there w11 A notlllcatlon bin& the rate of tu tor Ille yw 1962-63, tho 
order of 111H1ment for that yur and alto for tho two yoal'I 1960-51 and 
1961·62 1hould be ctUAlhld on tho ground thot tha 11rovl1lon1 of tho 
St1to law under whlcll they were made violated 1. 15 ot the Central Aot. 
[591Al 
Under 1. 15(a) of thr Central Aet In mpoct of eommodltlu llko 
eotton which coma und1r tht ca«igory of "doclartd good~" ftl dt&ned In 
s, 2(c) of tho Ctntrlll .Ut, tilt purclim Ill OA11 be levied only at on• 
litAg1. 
'1111 1111nH of ono .. t1p tu111lon oon1l118 of llnllon of 11 1lnat1 
f)Oint or 1tag1, olther by the Stolt Aot or th@ l'llll!i framl!ll th11r1u11dor. A 
mero lnju111t111n by the Loll1l111ur1, ft! oontilnld In the Heond ~llO to 
"· s (I) llf Iii@ Sthill Alli, tllat the fAlll 1hould 1101 Ila hll!htr lhAll tho 000 
find In the Central Aot, n11d thM tho levy mmt be nt one ~Inge 01 ml!IP 
t1011ed hi

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