STATE OF PUNJAB & OTHERS ETC.ETC versus M/S. PERFECT SYNTHETICS ETC ETC.

Citation: [2008] 4 S.C.R. 582 · Decided: 07-03-2008 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
(2008] 4 S.C.R. 582 
STATE OF PUNJAB & OTHERS ETC.ETC. 
v 
M/S. PERFECT SYNTHETICS ETC ETC. 
(Civil Appeal No.1072 of 2008) 
MARCH 7, 2008 
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] 
Punjab General Sa/es Tax Rules, 1949 -
r. 29(xii) -
Deduction form taxable turnover- Denial of- On the ground 
c that raw material purchased were not subjected to tax by virtue 
of exemption- Propriety of - Held: Assessee is entitled to the 
benefit of deduction from taxable turnover - Punjab General 
Sa/es Tax Act, 1948 - ss.5(1-A) and 5(2) - Notification No. 
SO 38/PA. 46148 S-5190 dated 25.07.1990. 
D 
Respondent-assessee is a company registered 
under Punjab General Sales Tax Act, 1948. It used to 
manufacture yarn which used to be sold in intra-State sale 
and tax on finished goods were paid. Some of the units 
from whom it purchased raw-material were exempted 
E from payment of tax under Punjab General Sales Tax 
(Department and Exemption) Rules, 1991. 
Appellant-Revenue denied deduction to the 
assessee wr.29(xii) of Punjab General Sales Tax Act, 1949 
on taxable gross turnover on the ground that the 
F purchase of raw-material which the assessee bought from 
the exempted units, was not subjected to tax at first stage 
of sale. Assessee took recourse to litigation. Decision of 
the High Court was in favour of the assessee. Hence the 
G 
H 
present appeal. 
Dismissing the appeal, the Court 
HELD: 1.1 It cannot be said that the words 
"subjected to tax' in Rule 29(xii) of Punjab General Sales 
Tax Rules, 1949, would mean g.::ods which had suffered 
582 
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STATE OF PUN~AB & OTHERS ETC. ETC. v. MIS. 
583 
PERFEC-.- SYNTHETICS ETC. ETC. 
the tax under Section 5(1-A) of the Punjab General Sales 
A 
Tax Act, 1948. The 1948 Act refers to single point levy of 
tax on the first sale. The Notification No. SO 38/P.A. 46/48 
S-5/90 dated 25. 7 .1990 specifically incorporates the 
provisions of Rule 9 of Punjab General Sales Tax 
(Deferment and Exemption) Rules, 1991 whereby B 
exemption is only qua payability and not in respect of 
assessment. Under the scheme of the 1948 Act, the 
calculated tax gets appropriated towards the scheme 
entitlement. Taking this linkage into account, the words 
"subjected to tax" cannot be equated to the words "having c 
suffered tax." [Paras 13 and 14] [588-D, F, G, H; 589-B, C] 
1.2 Since Rule 29(xii) refers to the purchase value of 
the goods which stood subjected to tax it becomes clear 
that under the scheme of 1948 Act even the eligible unit 
has to be assessed to tax. In the present case, the Court D 
is concerned with Section 5(1-A) of 1948 Act which, refers 
to the stage at which the tax has to be levied, namely, first 
stage of sale. Rule 29(xii) does not say the goods should 
have suffered tax or the tax should have been paid or that 
the goods had been subjected to tax under Section 4 or E 
under the said Act. [Paras 14 and 16] [589-F; 592-F, G; 
593-A] 
Mis. Gannon Dunkerley 1r d Co. and Ors. vs. State Jf 
Rajasthan and Ors. 1993 (1) SCC 364; State of M.P and 01s 
vs Indore Iron and Steel Mtfl.., Pvt. ~2d. 1998 (6) SCC 416 -
F 
.. 
distinguished. 
" 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 
1072 of 2008. 
From the final Judgment and Order dated 4.07.2006 of 
the High Court of Punjab and Haryana at Chandigarh in Civil G 
Writ Nos. 2272 of 2006, 10527 of 2005, 10528 of 2005, 10786 
of 2005. 16432 of 2005. 301 of 2006. 2477 of 2006, 3452 of 
~-
2006, 375~ of 2006. 3771 of 2006 and 4456 of 2006. 
Marabir S~ngh, Ajay Pai. Nikhil Jain, S.P. Singh Chauhan 
H 
584 
SUPREME COURT REPORTS 
[2008] 4 S C.R. 
A and Sanjay Jain for the Appellants. 
... 
S. Ganesh, Dalip Singh Brar, Ashok Kumar Singh, 
Surender Dutt Sharma, Naresh Kr. Gaur, S. B. Meitei, Seeraj 
Bagga. S. Bagga and M.P. Devanath for the Respondents. 
B 
The Judgment of the Court was delivered by 
KAPADIA, J. This civil appeal filed by the State of Punjab 
is directed against judgment and order dated 4.7.06 passed 
by Punjab and Haryana High Court in CWP No.2271 of 2006 
c 
by which it has been held that the assessee was entitled to 
deduction under Rule 29(xii) of the Punjab General Sales Tax 
Rules, 1949 (for short, "1949 Rules"). 
2. Respondent-assessee M/s. Perfect Synthetics is a 
partnership firm engaged in the business of purchase, sale and 
D manufacturing of yarn. In this civil appeal we are concerned with 
assessment year 2001-02. Assessee is registered under Punjab 
General Sales Tax Act, 1948 (for short, "1948 Act").
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