Judgment

HIDAYATULLAH J.: This appeal by certificate against the judgment of the High Court of Punjab at Chandigarh, dated February 18, 1963 questions the inclusion of certain items in the turnover of Messrs Modi Spinning and Weaving Mills Co. Ltd., Modinagar in the assessment of sales-tax for the year 1959-60. In that year the Company filed a return of its sales showing a gross turnover of Rs. 40,89,954.24 nP and a taxable turnover of Rs. 1,30,296.81 np. In computing the taxable turnover the Company deducted Rs. 10,85,842. 74 nP on account of unginned cotton purchased by it on a certificate of registration granted to it on January 3, 1956. This deduction was not permitted by the assessing Authority, Patiala District, also described as the District Taxation Officer, Patiala District. Exemption from tax was also claimed in respect of purchases of oil seeds amounting to Rs. 4,47,437.33 nP which the Company claimed to exclude from the taxable turnover under S. 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948. This claim was also disallowed by the Taxing Authority. The Company then filed a petition under Arts. 226 and 227 of the Constitution in the High Court but by the order under appeal the petition was dismissed. During the course of the hearing Mr. G. S. Pathak abandoned the claim about oil seeds and no reference need, therefore, be made to that part of the case.

2. The tax is being levied under the Punjab General Sales Tax Act 1948, of 1948). This Act was amended from to time and the amendments with which we are concerned were last made by Punjab XIII of 1959. S. 2(i) defines the "turnover" as including the aggregate of the amounts of the sales and purchases and parts of sales and purchases actually made by any dealer during a given period less any sums allowable as trade discount. S. 4 lays down the incidence of tax and makes every dealer whose turnover exceed the taxable quantum liable to tax. In view of the fact that the turnover of the Company exceeds the taxable quantum there is no need to discuss the section in detail. The section lays down the definition of taxable quantum and the Company is within that definition. S. 5 then provides as follows:-

"5. Rate of tax.

(1) Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates not exceeding four naye paise in a rupee, as the State Government may by notification direct:

Provided. . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . .

Provided further that the rate of tax shall not exceed two naye paise in a rupee in respect of any declared goods as defined in cl. (c) of S. 2 of the Central Sales Tax Act, 1956, and such tax shall, not be levied on the purchase or sale of such goods at more than one stage: (This was inserted with effect from 1st April, 1960 by Act No. 18 of 1960).

Provided. . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . .

(2) In this Act the expression taxable turnover" means that part of a dealer s gross turnover during any period which remains after deducting therefrom-

(a) his turnover during that period on

(i) ...............

(ii) sales to a registered dealer of goods declared by him in a prescribed form as being intended for resale in the State of Punjab or sale in the course of inter-State trade or commerce or sale in the course of export of goods out of the territory of India or of goods specified in his certificate of registration for the use by him in the manufacture in the State of Punjab of any goods for sale and on sales to a registered dealer of containers or other materials for the packing of such goods.

Provided that in case of such sales, a declaration duly filled up and signed by the registered dealer to whom the goods are sold and containing prescribed particulars on a prescribed. form is furnished by the dealer who sells the goods:

Provided further that when such goods are used by the dealer to whom these are sold for purposes other than those for