JUDGMENT

B. P. JEEVAN REDDY, J.:- Writ Petition (C) No 382 of 1979 is instituted by Jagatjit Sugar Mills Co. Ltd. for the issuance of an appropriate writ, order or direction restraining the respondents (State of Punjab and the Assessing Authority, Sales Tax, Kapurthala) from giving effect to Annexure-C notice whereunder the second respondent has called upon the petitioner to show cause why penalty should not be levied upon it under Section 10(6) of the Punjab General Sales Tax Act, 1948 on account of its failure to pay the tax due under Section 10(4) of the Act.

2. The petitioners case is : for the purpose of manufacturing sugar, it purchases sugarcane from the cane-growers and co-operative societies comprised of cane-growers. Sugarcane is an agricultural produce within the meaning of Item-39 of Schedule-B to the Act and, therefore, exempt from tax. Inasmuch as the said sugarcane is sold to the petitioners mills by growers of sugarcane themselves, no sales tax or purchase tax is leviable on the sale or purchase of sugarcane. This position has been affirmed by a learned single Judge of the Punjab and Haryana High Court in Malwa Sugar Mills Co. Ltd. v. Assessing Authority, (1979) 38 STC 39. The decision was affirmed in Letters Patent Appeal. A Special Leave Petition preferred by the State was also dismissed. Though the subsequent decision of the Division Bench in Babu Ram Jagdish Kumar and Co. v. State of Punjab, (1976) 38 STC 259 was not concerned with sugarcane - but with paddy alone which is one of the items mentioned in Schedule-C - and though the said decision did not even refer to the decision in Malwa Sugar Mills, it was held erroneously by a Full Bench of the Punjab and Haryana High Court in Desh Raj Parshotam Lal v. State of Punjab, (1978) 42 STC 429 , that the said Division Bench had the effect of overruling the decision of the learned single Judge in Malwa Sugar Mills. This holding of the Full Bench is incorrect as a fact and untenable in law. No purchase tax is payable under the Act on the purchase of sugarcane by the petitioners mills and hence, there is no question of the petitioner failing to pay the tax due within the meaning of Section 10.

3. The State of Punjab has filed a counter- affidavit denying and disputing the correctness of the several allegations made by the petitioner. The State maintains that purchase tax is leviable on the purchase of sugarcane by the petitioner under the provisions of the Act and that the impugned notice was rightly issued to it for its failure to pay the tax due.

4. The question that squarely arises in this writ petition is whether the petitioner-Sugar Mills is liable to pay the purchase tax on the sugarcane purchased by it from the growers of sugarcane?

5. For answering this question, it is necessary to refer to a few relevant provisions of Punjab General Sales Tax Act, 1948. Section 2 of the Act defines certain expressions occurring in the Act Clause (d) defines "dealer" to mean "any person including a department of Government who in the normal course of trade sells or purchases any goods in the State of Punjab..." (The rest of the definition need not be set out herein, not being relevant for the purpose of this case.) The expression "goods" is defined by clause (e) to mean. "all kinds of movable property and goods consumed at business premises other than newspapers, actionable claims, stocks, shares or securities and includes all materials, commodities and articles including the goods (whether as goods or in some other form) involved in the execution of a works contract or those goods which are used in the fitting out, improvement or repair of movable property". The expression "purchase is defined in Cl. (ff). Insofar as it is relevant, it reads : "purchase with all its grammatical or cognate expressions, means the acquisition of goods specified in Schedule C or of goods on the purchase whereof tax is payable under any provision of this Act for cash or deferred payment or other val