M/S JAGATJIT SUGAR MILLS ETC. versus STATE OF PUNJAB AND ANR.

Citation: [1994] SUPP. 4 S.C.R. 194 · Decided: 04-10-1994 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Dismissed

Judgment (excerpt)

A 
R 
MIS JAGATJIT SUGAR MILLS ETC. 
v. 
STATE OF PUNJAB AND ANR. 
OCTOBER 4, 1994 
(B.P. JEEVAN REDDY, SUHAS C. SEN AND 
K.S. PARIPOORNAN, JJ.] 
Punjab General Sales Tax Act, 1948 : 
C 
Sections 2(ff), 4(2-A) (As inserted by amendment in 1960), 4-B(As 
introduced by Amendment Act 3 of 1973), 5,6, 10(4) and 10(6}-Schedule-
B-ftem 39-Schedule-C. 
Sales T~rchase T~Sugar Mill-l'urchase of sugar cane from 
canegrowers and co-operative societies comprised of canegrowers-Liability 
D to pay !~Sugarcane being agricultural produce held exempt from tax on 
sale by virtue of section 6 read with Schedu/e-B-But held liable to tax on 
its purchase by virtue of section 4(1)-0bject of Section 4-B and essential 
requirements of levy of purchase tax discussed. 
E 
The Petitioner-Mill was manufacturing sugar and for that purpose 
it was purchasing sugarcane from the cane growers and cooperative 
societies comprised of cane growers. The Assessing Authority under the 
Punjab Sales Tax Act issued notice to it proposing levy of penalty under 
Section 10(6) of Punjab General Sales Tax Act, 1948 for its failure to pay 
tax doe under Section 10(4) of the Act. The petitioner denied its liability 
F to pay tax and filed a writ petition in this Court seeking directions to 
restrain the respondents from giving effect to the notice. In the connected 
petitions also the same question is involved. 
On behalf of the petitioners it was contended that (i) sugarcane 
G being an agricultural produce within the meaning of Item 39 of Schedule·B 
of the Act was exempt from tax; (ii) Schedule-B goods are exempt from tax 
on their sale by virtue of Section 6 and exempt from Purchase tax on their 
purchase by virtue of Section 4-B; (iii) in view of the expression "dealing 
exclusively in goods declared tax free under Section 6" the goods referred 
to by Section 6 and as mentioned in Schedule Bare exempt both from sales 
H 
tax and purchase tax; and (iv) the definition of purchase under Section 
194 
J. SUGAR MILLS v. STATE 
195 
2(11) supports the view that only the goods mentioned in Scbedule-C are A 
subject to purchase tax and no other goods. 
Dismissing the petitions, this Court 
HELD : 1. Section 6 of the Punjab General Sales Tax Act, 1948 
exempts the sale of goods mentioned in Schedule-B from tax, subject to the B 
conditions and exceptions, if any, set out in the corresponding entry in the 
second column· of the said Schedule. Undoubtedly, sugarcane is an agricul-
tural produce within the meaning of ltem-39 of Scbedule-B and it is exempt 
from tax on its sale when its is sold by a person or a member of bis family 
who bad grown the said produce himself or has grown it on any land on C 
which be has any interest whether as a owner or usufructary mortgagee, 
tenant or otherwise. Item 39 of Scbedule-B operates to exempt the sale of 
agricultural produce from tax only where it is sold by the grower himself. 
Therefore, sugarcane is exempt from tax on its sale. (201-H, 202-A, BJ 
2. Under Section 4(1), the tax is levied both on sales and purchases. D 
It is, however, unreasonable to presume that the Legislature wanted to tax 
both the seller and purchaser in respect of the same transaction - an 
aspect mainfested in part by sub-section (2-A). The policy of law is to tax 
every transaction of sale, either at the point of sale or at the point of 
purchase, uniess specifically exempted from the tax altogether. Where the E 
seller Is not taxed, the purchaser is taxed. By the same token, where the 
seller is taxed, the purchaser is not. (201-F, GI 
3. It is, therefore, obvious that where the sale of certain goods is 
exempt from tax by virtue of Section 6, their purchase wm be taxed aud 
conversely where the Act expressly taxes the purchase of certain goods F 
their sale simultaneously will be not be taxed - subject, of course, to any 
express provision providing exemptions. In the case of sugarcane, it being 
an agricultural produce - and in cases it is sold by the grower himself • 
such sale is exempt from tax by virtue of Section 6 read with Scbednle-B. 
If so, the purchaser thereof is liable to pay tax on its purchase by virtue G 
of Section 4(1). (205-H, 206-A, BJ 
4. It is idle to contend that Section 4-B imposes purchase tax or is 
the only provision imposing purchase tax. Section 4-B is mainly designed 
to affirm or exempt, as the case may be, the purchase of certain goods from 
purchase tax in certain specified situations. It, of course, does not deal 

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