STATE OF PUNJAB & ORS. versus M/S. CHANDU LAL KISHORI LAL & ORS. ETC.

Citation: [1969] 3 S.C.R. 849 · Decided: 27-02-1969 · Supreme Court of India · Bench: M. HIDAYATULLAH · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
G 
H 
STATE OF PUNJAB & ORS. 
v. 
M/S. CHANDU LAL KISHORI LAL & ORS. ETC, 
February 27, 1969 
[M. HIDAYATULLAH, C.J., V. RAMASWAMI AND G. K. MITTEll, JJ.J 
Punjab Sal« Tax Act (Punj. 46 of 1948), s. 5(2)(a)(vi)-Deduction 
of Jale price of cotton seeds from purchase turnover if permissible. 
. The respondent a dealer purchased unginned cotton and after gin-
nmg the cotton and removing the seeds sold the ginned cotton to custo-
mers outside the State. 
The respondent paid purchase tax on the pur-
chase 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. But the as"""ing autho, 
rity did not allow the deduction holding that the goods sold viz .. cotton 
seeds were not the goods in respect of whitjb purchase tax had been levied 
as the unginned cotton underwent a manufacturing process and the goods 
produced were different from those purchased. 
The respondent filed a 
writ petition in the High Court, which was allowed and the State's Letters 
Patent Appeal was dismissed. 
Allowing the State's appeal, this Court; 
HELD: The respondent was not entitled to deduction under s. 5(2) 
(a) (vi) of tlle Act in respect of cotton seeds sold by it to registered 
dca1ers. 
"Declared goods" in s. 14 of the Central Sales Tax Act 1956 are in-
dividually specified undc'r separate items. "Cotton ginned or unginned" is 
treated as a single commodity under one item of declared goods. 
It is 
evident that cotton ginned or unginned being treated as a single com-
modity and as a single spe~s ·of declared goods cannot be aubject under 
'· 15(a) of the Central Sales Tax Act to a tax exceeding two per cent of 
the sale or purchase price thereof or at more than one state. But so far 
as cotton seeds are concerned it cannot be held that the sale of cotton 
seeds mu•! be treated as a sale of declared goods for the purpose of s. 
l S (a) or (b) of the Central Sales Tax Act, 1956. Cotton in ita unginoed 
~tate contaim cotton seeds, but it is by a manufacturing process that the 
cotton and the seed are separated and it i• not correct to oav that the 
seed so separated is cotton itself or part of the cotton. They are two 
distinct commercial good• though before the manufacturing process the 
se·eds mi£ht have been a part of the cotton itself. [853 E] 
Pott/ Cotton Company Private Ltd. v. State of Punjab & Ors., 15 
S.T.C. 865, disapproved. 
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2516 
to 2519 of 1966. 
Appeals from the onlers dated February 10, 1965, March 
31, 1965 and March 19, 1965 of the Punjab High Court i!J Letters. 
Patent Appeals Nos. 38, 36, 100 and 74 of 1965, respectively and 
Civil Appeals Nos. 806 and 807 of 1967. 
8 50 
SUPREME COURT REPORTS 
(I 969] 3 S.C.R 
Appeals from the judgments and. orders dated September 28. 
A 
1964 of the Punjab High Court in Civil Writ Nos. 2159 and 2309 
of 1963. 
V. D. Molzajan and R. N. Saclzthey, for the appellants (in all 
the appeals). 
Harder Singh, for the respondents (in C.As. Nos. 2517 "1!ri 
2519 of 1966) and for the respondents (in C.As. Nos. 806 and 
807 of 1967). 
Civil Appeal No. 2518 of 1966 
The Judgment of the Court was delivered by 
Ramaswami, J. 
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 pur-
chased unginned cotton and after ginning the cotton by a mechani-
cal process and removing the seeds sold the ginned cotton to cus-
tomers outside the State. 
For th~ period from 1st April, 1961 
to 31st March, 1962 the respondent paid purchase tax on the pur-
chase turnover. In respect of cotton seeds sold by it to registered 
dealers, the respondent claimed deduction from the purchase turn-
over 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 un-
ginned 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 oq:ler of the 
assessing authority dated 11th September, 1963. The respondent 
firm thereafter filed a writ petition No. 1917 

Excerpt shown. Read the full judgment & AI analysis in Lexace.