LexSTATE OF PUNJAB AND ORS. versus M/S. SHAKTI COTTON COMPANY
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A B c D E F G H STATE OF PUNJAB AND ORS. v. M/S. SHA.KT! COTTON COMPANY November 5, 1971 289 [C. A. VAIDIALINGAM, P. JAGANMOHAN REDDY AND K. K. MATHEW, JJ.] Punjab General Sales Tax Act, 1948 as amended the Punjab General Sales Tax (Amendment and Validation) Act 7 of 1967-Cotton pur· chased b.v dealer and subjected to ginning process-ResulPing products i.e. cotton seeds and ginned cotton sold,--Exemption under s. 5 (2) (a)(vi) whether al'ailable to dealer-Cotton one of declared goods under s. 2.(c) read with s. 14 of Central Sales Tax, Act, 1%6-Assessments in respect of declared goods made under Punjab Act as it stood on April I, 1960 held invalid-Validation under Act 7 of 1967-Reassessment undl'r s. l IAA of Act as amended. The respondents were registered dealers under the Punjab General Sales Tax Act, 1948. In proceedings relatjng to the years 1960-61. 1961· 62 and 196~·63 the question that fell for consideration was whether their daim under s. 5 ( 2) (a) (vi) of the Act in respect of cotton purchased by them and later sold by them after ginning as ginned cotton and cotton seeds could be allowed. . The assessing authorities disallowed the claim for exemption in respect of cotton seeds and allowed ooly purlial exemj>" ti on in respect of ginned cotton. The respondents filed v. nt petitions m the Punjab High Court. The petitions were allowed by the Single Judge who relied on a judgment of the same High Court in Patd Cotton Com- pany Private Ltd. v. StoJe of Punjab wherein it had been held that when a dealer buys unginned cotton which is mixed with cotton seeds and separates the two. bv process of ginning and proceeds to sell both the ginned cotton and the cotton seeds, the dealllr in fact s~lls the entire goods which he had purchased. Appeals were filed by the State before the Division Bench but were dismissed In Umlne. However a certificate of fitness to appeal to this Court was granted. In the appeals filed by the State before this Court reliance was placed on the judgment of this Court in Mis. Chandulal K/shan Lars case wherein it had been held that ginning was a manufacturing process and the deduction under s. 5 ( 2) (a) (vi) could not be allowed in respect of cotton seeds obtamod after ginning. The respondents relied on the decision of .this Court in · Bhawan Cotton Mills Ltd. and the char~es made in the Act by the Punjab General Sales Tax (Amendment and Validation) Act 7 of 1967. HELD : In Bhawani Cotton Mi/ls Ltd. a case relating to assessment years 1961 ·62 and 1962-63, this Court held that the scheme of Jevv of pur- chase tax under s. 2 (ff) read withs. 5 and specially the terms of s. 5(2) (a)(viJ of the Act was illegal in that contrary to the provisions of s. 15 of the Central Sales Tax Act, 1956. no definite sta~e at which the pur- chase tax in respect of cotton. a declared commodity, was to be levied, had been indicated. As a result of this Judgment sales tax under the Act as it stood on Aoril I. 1960 on declared goods became illegal and void. The decision in Ml s Chandulal Kishori/a/ was given without taking in· 10 account the decision in Bhawani Cotton Mills or the provisions of Act 7 of 1967. Nor di<! it take into consideration all the points <it issue between the oarties. The appeals of the State could not therefore be straightway allowed on tbe basis of M / s. Chandulal Kishori/lll's case. [298 0; 304 H-305 CJ 290 SUPREME COURT REPORTS [1972] 2 S.C.R. Act 7 .of 1967 was passed in order to retrosPl'Ctively remove the de· f~ts in the Ac( pointed out by this Court in Bhawani Cotto11 Mills. The validity of the Amending Act was upheld by this Court in Rattan Lal & Co.'s case. The new s. !!AA added in the Act bys. 9 of the Amendment A~\. casts a duty on the assessing authority, even without any application being made by the assessee in that behalf, to review all assess· meats and re-as~essments made before the commencement of the Amend· ment Act in respect of declared goods. There was no controversy that tt.e assessment orders in the present cases had been made before the date of the commencement of the Amendment Act. If so the· assessing autho· rity had to exercise his jurisdiction under s. I !AA. It was also oblig1tory on bis part to vary and revise the previous orders of assessment so as to bring tbem in conformity with the provisions of the Act as amended by the Amendment Act after following the procedure indicated therein
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