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SUPREME COURT OF INDIA
N.L. UNTWALIA, R.S. PATHAK AND E.S. VENKATARAMIAH, JJ.
M/s. Babu Ram Jagdih Kumar and Co., Appellant
Versus
State of Punjab and others, Respondents.
Civil, Appeals Nos. 1028 to 1035 of 1976, D/- 4-5-1979.
WITH
M/s. Aggarwal Rice and General Mills and others etc. etc., Appellants
Versus
State of Punjab and others, Respondents.
WITH
M/s. Surindra Rice Mills and others, Appellants
Versus
State of Punjab and others, Respondents.
WITH
M/s. Ram Nath Prem Kumar and others, Appellants
Versus
State of Punjab and others, Respondents.
AND
M/s. Dhani Rice Mills and others, Appellants
Versus
State of Punjab and others, Respondents.
Advocates appeared
Mr. M. C. Bhandare, Sr. Advocate, Mr. A.K. Sen, Sr. Advocate (In CA No. 1029 of 1976), Mrs. Sunanda Bhandare, Mr. A. N. Karkhanis, Miss Malini Poduval, and Mr. G.R. Sethi, Advocates (In CA No. 1031 of 1976), for Appellants; Mr. Soli, J. Sorabjee, Addl. Sol. Genl. (In CA No. 1028 of 1976), (Mr. Hardev Singh, Advocate with him), for Respondents.
Constitution of India, 1950 – Article 136 – Punjab General Sales Tax Act, 1948 – Sections 2, 5, 6, 31 – Purchase Tax – Payment of – Appellants are dealers in paddy and engaged in the business of millers in the State of Punjab – They buy paddy from growers or katcha adatias, convert it into rice and sell rice – Most of the rice manufactured by them is purchased by the State Government under food procurement orders – In these appeals by special leave court is called upon to pronounce on the validity of Section 31 of the Punjab General Sales Tax Act, 1948 Notification issued thereunder by the Government of Punjab and the liability of the appellants to pay purchase tax under the Act in respect of the turnover relating to the purchases of paddy made by them during the relevant period – Held, Taxable event is the purchase of paddy and not its sale which alone attracts Section 5 (2) (a) (ii) of the Act and taxable person, that is person liable to pay tax, is the purchaser and not the seller – Appellants cannot, therefore, complain that any exemption granted to them by the Act has been taken away – Even though the liability to pay purchase tax may be on the appellants, it is bound to have repercussions on the price at which they buy paddy and the price at which rice manufactured by them out of that paddy is sold by them – Tax payable under the Act admittedly being an indirect tax, the tax burden would ordinarily fall on the consumer of rice and not on any of the intermediaries including the appellants – Impugned notification cannot, therefore, be treated as one issued against the policy of the statute – Court hold that Section 31 of the Act and the Notification issued thereunder do not suffer from the vice of excessive delegation of legislative power – Court may at this stage refer to one other subsidiary argument urged on behalf of the appellants – It is argued that because paddy and rice are not different kinds of goods but one and the same, inclusion of both paddy and rice in Schedule C to the Act would amount to imposition of double taxation under the Act – There is no merit in this contention also because the assumption that paddy and rice are one and the same is erroneous – Appeal Dismissed
Judgment
VENKATARAMIAH, J.:- In these appeals by special leave we are called upon to pronounce on the validity of Section 31 of the Punjab General Sales Tax Act, 1948 (hereinafter referred to as the Act), the Notification dated the 15th January, 1968 issued thereunder by the Government of Punjab and the liability of the appellants to pay purchase tax under the Act in respect of the turnover relating to the purchases of paddy made by them during the relevant period.
2. The appellants are dealers in paddy and engaged in the business of millers in the State of Punjab. They buy paddy from growers or katcha adatias, convert it into rice and sell rice. Most of the rice manufactured by them is purchased by the State Government under food procurement orders.
3. A brief history of the relevant provisions of the Act is as follows:-
Under the Act as it was orginally enacted, there was no provision levying tax on the purchase turnover of the goods dealt with a by a dealer as defined in the Act. The Act was amended by Punjab Act N. 7 of 1958 which received the assent of the Governor on April 18, 1958 and the amending Act came into force at once. The amending Act brought about the following changes in the Act:-
In the long title of the Act, after the word "sale", the words "or purchase" were inseted. Clause (d) of Section 2 of the Act which defined the expression dealer was amended so as to bring within the scope of that expression a person who purchased any goods in the course of trade or business. The turnover relating to purchases made by a dealer subsequent to the commencement of the amending Act of certain goods was made liable to payment of tax. The word purchase was defined by clause (ff) of Section 2 which was introduced by the amending Act as follows:-
"2. (ff) purchase with all its grammatical or cognate expressions, means the acquisition of goods other than sugarcane, food grains, and pulses for use in the manufacture of goods for sale for cash or deferred payment or other valuable consideration otherwise than under a mortgage, hypothecation, charge of pledge." ..... (The rest of clause is not necessary for the purpose of these cases).
4. Section 4 of the Act was amended by imposing tax on purchases also subject to Sections 5 and 6 of the Act. It is, however, seen from clause (ff) of Section 2 that the purchase of foodgrains was not covered by the definition and remained unaffected by the above amending Act.
5. The Act was further amended by Punjab Act No. 13 of 1959 which deleted the words "other than sugarcane, foodgrains and pulses" in clause (ff) of Section 2. Section 6 of the Act was repealed and substituted by a new section which read as follows:-
"6. Tax-free goods- (1) No tax shall be payable on the sale of goods 1477 specified in the first column of Schedule C subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax or purchase tax on the sale or purchase, as the case may be, of goods which are declared tax free from time to time under this section.
(2) The State government after giving by notification not less than three months notice of its intention so to do may be like notification add to or delete from Schedule B or Schedule C and thereupon Schedule B or Schedule C, as the case may be, shall be deemed to be amended accordingly.
6. It is seen from the above provision that the turnover relating to the sale of goods mentioned in the first column of Schedule C to the Act subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof was exempted from payment of tax.
7. By Punjab Act No. 24 of 1959, the above Section 6 was substituted by a new section which read as follows:-
"6. Tax-free goods. - (1) No tax shall be payable on the sale of goods specified in the first column of Schedule B subject to the conditions and exception, if any, set out in the corresponding entry in the second c
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