M.M. KUMAR, J. - At the instance of the assessee - dealer an application under section 22 of the Punjab General Sales Tax Act, 1948 (for brevity, "the Act") was filed before the Sales Tax Tribunal, Punjab (for short, "the Tribunal") for referring two questions of law for the opinion of this court. Accordingly the Tribunal accepted the application opining that substantive questions of law would emerge from the order dated March 26, 1996 passed by the Tribunal in Appeal No. 556 of 1994-95 in respect of assessment year 1991-92. Hence it has referred the following questions for the opinion of this court :

(i) Whether, in the facts and circumstances of the case, provisions of section 4B are attracted when a part of by-product, i.e., oil-cakes valuing Rs. 48,30,399 was sent outside the State of Punjab for sale on consignment basis and the entire oil and rest of the oil-cakes (produced from cotton seeds purchased within the State of Punjab) were sold within the State of Punjab ?

(ii) In case the reply to question No. 1 is in affirmative; Is tax under section 4B not leviable in respect of oil-cakes valuing Rs. 48,30,399 sent for sale outside the State on the proportion between Rs. 48,30,399 and rest of the sales or on the proportionate price of cotton seeds based on yield percentage of oil and oil-cakes produced from cotton seeds instead of Rs. 48,88,879 ?

Brief facts of the case as set out in the order of reference dated May 12, 1997 are that the assessee - dealer is a registered dealer under the sales tax laws and is engaged in the business of procuring cotton seeds and extracting oil from it. A bye-product, namely, oil-cakes (khal) is also produced in the process of extracting oil from cotton seed. The assessee - dealer sold oil cakes amounting to Rs. 48,30,399 on consignment basis, i.e., oil-cake was sent for sale to the dealers outside the State of Punjab. The dealer filed all his returns showing his gross turnover at Rs. 4,99,90,886.77. The Assessing Authority expressed dissatisfaction with the returns and issued a notice in form ST-XIV. After granting ample opportunity, the Assistant Excise and Taxation Commissioner (I)-cum-Assessing Authority, Hoshiarpur passed an order dated May 27, 1993 creating an additional demand of Rs. 1,83,993 by concluding that the dealer was liable to pay purchase tax under section 4B of the Act in respect of cotton seed that was used as raw material by the dealer for manufacturing the by-product oil-cakes. In other words the Assessing Authority levied purchase tax under section 4B on the purchase of cotton seed corresponding to oil-cake sold on consignment basis determined by her excluding the profit and expenses of Rs. 2,41,520 out of the total consignment sales. The observations of the Assessing Authority read thus :

"Total consignment amounts to Rs. 45,30,399. The dealer is engaged in the manufacturing of khal from the raw material of cotton seed. Thus taxable goods manufactured at Hoshiarpur are despatched to third parties for sale. Therefore, the dealer is also liable to pay tax under section 4B in respect of goods and raw material used by him for the manufacturing of taxable goods - which are later on sent to third parties situated out of the State of Punjab. Thus purchase tax under section 4B of the State Act will be leviable on the purchases of goods made within the State of Punjab that have been used in the manufacture of goods sent for sale on the consignment basis. During the course of assessment proceedings a show-cause notice was issued on March 24, 1993 for penal (penalty ?) and interest action under sections 10(6) and 11 of the Act as the dealer has not deposited tax involved under section 4B of the Act. In view of the honourable Supreme Court of India ruling in the case of Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98, liability to pay tax under section 4B of the Punjab General Sales Tax Act, 1948 has been confirmed. The learned counsel has furnished written explan