Hotel Balaji & Ors Vs. State of Andhra Pradesh & Ors [1992] INSC 214 (22 October 1992)
[S. RANGANATHAN, V. RAMASWAMI AND B.P. JEEVAN REDDY, JJ.]
ACT:
Andhra Pradesh General Sales Tax Act, 1957:
Section 6-A-Levy of tax on turnover relating to purchase of certain goods-Nature of tax Neither use tax, consumption tax nor consignment tax Hence valid.
Section 15B r/w Rule 42-E-Levy of purchase tax Nature of tax on purchase price of raw materials and not on manufactured products-Not a tax on consignment-Legislature competent to levy such tax as long as the levy retains the character of tax on sale-Validity of the provision upheld.
Uttar Pradesh Sales Tax Act, 1948 :
Section 3-AAAA-Purchase tax-Levy of-Nature of levy- Legislature-Whether competent to levy such a tax.
Constitution of India, 1950 :
Seventh Schedule-List ll-Entry 54-Sales Tax Acts of Gujarat, Andhra Pradesh and Uttar Pradesh-Sections: 6-A, 15-B and 3- AAAA respectively Legislative competence of and validity of the provisions.
Interpretation of Statutes :
Liberal Construction-To be avoided if it defeats the manifest object and purpose of the statute-Reasonable construction to be followed-Where two constructions possible, the one which sustains constitutionality to be preferred.
HEADNOTE:
The constitutional validity of S.15B of Gujarat Sales Tax Act, S.3-AAAA of Uttar Pradesh Sales Tax Act and S.6A of the Andhra Pradesh General Sales Tax Act was challenged in the present Appeals, Writ Petitions SLPs and Transferred case.
S.15-B of the Gujarat Sales Tax Act, 1969 was introduced by Amendment Act, 1986. It provided for levy of additional purchase tax on raw materials purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent's place of business outside the State but within India. By the Amendment Act, 1987, the section was substituted.
Writ Petitions were filed before the High Court challenging the validity of unamended S.15-B on the ground that it levied a consignment tax and hence was outside the competence of State Legislature. During the pendency of the writ petitions, S.15-B was substituted by an Ordinance.
Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance. S.15-B was given retrospective effect from 1.4.1986, the date on which it first came into force. In view of the said Amendment Act, the Writ Petitions came to be dismissed as infructuous. A fresh batch of Writ Petitions were filed challenging the validity of substituted S.15-B on the ground that it continued to be a consignment tax. The High Court having dismissed the Writ Petitions, the matter has come up before this Court.
Section 3-AAAA of the U.P. Sales Tax subjected the purchase Of "goods liable to tax at the point of sale to the consumer" to purchase tax payable by the purchasing dealer, in a case where the selling dealer was not liable to pay the sales tax on such sale. Purchase tax was payable at the same rate as the sales tax. If, however, the purchasing dealer resold such goods within the State or in the course of inter-State trade or commerce, he was not liable to pay the purchase tax. While the Civil Appeals were pending in this Court as regards the validity of S.3-AAAA, the High Court, while deciding some Writ Petitions, applied the ratio in Good Year and held that section was ultra vires the legislative competence of the State Legislature. It held that under the said provision the taxable event was not the purchase of the goods by the purchasing dealer but the subsequent event namely use of the said goods in the manufacture of other goods and their despatch without effecting a sale within the State of U.P. to a place outside U.P. To overcome this decision an Ordinance was issued which was later replaced by the U.P. Sales Tax (Amendment) Act, 1992, the constitutional validity of which has been challenged before this Court.
In the A.P. Sales Tax Act Section 6-A was inserted by the Andhra Pradesh General Sales Tax (Amendment) Act of 1976 with effect from 1.9.76. The effect was that tax payable at sale point became tax payable on purchase point in certain circumstances. Writ Petitions were filed before the High Court challenging the validity of S.6-A. It was contended that the notification issued under S.9 of the Act exempted from tax certain goods which were sought to be taxed under S.6-A and that S.6-A was in fact a consumption or consignment tax and hence void. Unable to succeed before the High Court, the assessees challenged the vires of the said section before this Court.
Apart from challenging the constitutional validity of the above-said provisions of the three State Sales Tax Acts, the correctness of Good Year India Ltd v. State of Haryana, [1990] 2 SCC 71 which invalidated certain purchase tax levied by the Haryana and Maharashtra Sales Tax Acts, was also questioned by the Revenue before this Court.
Dismissing the matters. this Court,
HELD: (By the Court): S.15B of the Gujarat Sales Tax, 1969, S.3AAAA of Uttar Pradesh Sales Tax Act, 1948 and S.6-A of the Andhra Pradesh General Sales Tax Act, 1957 are intra vires the powers of the respective State Legislatures and hence valid. [249-D] Per B.P Jeevan Reddy, J: (for himself and V. Ramaswami, J.)
1. The necessity and significance of the delegated legislation is well-accepted and needs no elaboration. They cannot travel beyond the purview of the Act. Where the Act says that Rules on being made be deemed "as if enacted in this Act", the position may be different. But where the Act does not say so, the Rules do not become part of the Act.
[212-B, Cl Halsbury's Laws of England (3rd. Edn.) Vol. 36, referred to.
2. Entry 54 of List 11 of Seventh Schedule to the Constitution must receive a liberal construction, it being a legislative entry. The Legislature cannot be confined to only one form of levy. So long as the levy retains the basic character of a tax on sale, the Legislature can levy it in such mode or in such manner as it thinks appropriate, the well-established principles in such matters being that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act. The Legislature must be presumed to know its limitations and act within those limits. Transgression must be clearly established, and is not to be lightly assumed. [214-H; 215-A, B]
3. A person other than a registered dealer is not amenable to the discipline of the Sales Tax Act. He cannot indeed collect any tax and, therefore, will not make over or pay any tax. This the legislature is justified in presuming.
If, however, in any case it is proved that such person has paid the tax, the purchasing dealer will get an exemption to that extent. If a benefit is claimed by the purchasing dealer, it is for him to prove the fact which enables him to claim the benefit. That burden cannot be passed on to any one else. [222-C, D]
4. So far as registered dealers are concerned, all that the purchasing dealer need to prove is that the said goods have already been or may be subjected to tax under State Act or Central Sales Tax Act. On this score, there is no difficulty for the purchasing dealer. From the bill given by the selling dealer, the purchasing dealers can prove the payment. Or he can simply prove, as a matter of law that the said goods are liable to be taxed under any other provision of the Act or under the Central Sales Tax Act.
[222-E, F]
GUJARAT SALES TAX ACT/RULES:
5.1. S.15-B of the Gujarat Sales Tax Act read as a whole, is applicable only to those goods which are used in the manufacture of other goods. The levy is upon the purchase price of raw material an not upon the value of the manufactured products. [214-G, H] 5.2. Rule 14E of Gujarat Sales Tax Rules along with S.15B of the Gujarat Sales Tax Act provide for set off etc., in case the manufactured goods are sold within the State of Gujarat. It no doubt means that set off etc. is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturer's own depots or to the depots or his agents outside the State of Gujarat. There is nothing objectionable in the State doing so. It cannot be said that by reading Rule 42-E into S.15-B, the levy becomes a consignment tax.
[213-E-F] Godrej & Boyce Mfg. Co. v. Commissioner of Sales Tax, (1992) 4 J.T.(S.C.) 317 and Andhra Sugars Ltd. & Anr. v The State of Andhra Pradesh and Anr., 21 S.T.C. 212, relied on.
Goodyear India Ltd. v. State of Haryana, [1990] 2 SCC 71, dissented from.
Ramkrishna v. State of Bihar, A.l.R. 1963 S.C.1667, referred to.
U.P. SALES TAX ACT:
6.1. All that section 3-AAAA of the U.P. Sales Tax Act prior to its substitution in 1992 provided was; (i) where the goods liable to tax at the point of sale to the consumer are sold to a dealer (ii) in circumstances in which no sales tax is payable by the sellers and (iii) the purchasing dealer does not re-sell the said purchased goods within the State or in the course of inter-state trade or commerce (iv) the purchasing dealer shall be liable to pay the tax which would have been payable by the seller. (v) If, however, it was proved that the said goods have already suffered tax under section 3-AAAA, no purchase tax was payable under section 3-AAAA. It is obvious that the section did not speak of the purchased goods being used in the manufacture of other goods nor of the manner of disposal or despatch of such manufactured goods. The only two conditions stipulated (which conditions are not to be found in the present Section 3-AAAA) were that if the purchased goods are sold within the State or sold in the course of inter-state trade or commerce, the tax under it is not payable. This is for the simple reason that in both the contingencies, the State would get the revenue (in one case under the State Sales Tax Act and in the other case, under the Central Sales Tax Act).
The policy of the legislature is not to tax the same goods twice over. The fact that in a given case, the purchased goods are consigned by the purchaser to his own depots or agents outside the State makes no difference to the nature and character of the tax. By doing so, he cannot escape even one-time tax upon the goods purchased, which is the policy of the Legislature. The tax was directed towards ensuring levy of tax at least on one transaction of sale of the goods and not towards taxing the consignment of goods purchased or the products manufactured out of them. [223-G-H; 224-A-D] 6.2. There is no vagueness in the provision viz. sub- sec.(2) of S.3-AAAA of U.P. Sales Tax Act nor can it be said that it placed heavy and uncalled- for burden upon the purchasing dealer or that it is not practicable for the purchaser to establish that the seller (other than the registered dealer) has paid the tax or not. [222-B] 6.3. The difficulty has really arisen because of the attempt to look to the provisions of Section 3-AAAA through the prism of Goodyear. There is a substantial and qualitative difference between the language employed in Section 9 of Haryana Act and Section 13-AA of Bombay Act on the one hand and in Section 3-AAAA of U.P. Act on the other (as it stood prior to 1992 Amendment Act or for that matter as it stands now). These basic differences cannot be ignored. [1224-E] Constitutionality of Section 3-AAAA of the U.P. Sales Tax Act ought to be judged on its own language and so judged, the Section, both before and after the 1992 Amendment, represents a perfectly valid piece of legislation. It is relatable to and fully warranted by Entry 54 of List 11 of the Seventh Schedule to the Constitution.
[224-F] Goodyear India Ltd v. State of Haryana, [1990] 2 SCC 71, dissented from.
ANDHRA PRADESH GENERAL SALES TAX ACT/RULES:
7.1. The real object of clauses (i) to (iii) in Section 6-A of the A.P. Sales Tax Act is not to levy a consumption tax, use tax or consignment tax but only to point out that thereby the purchasing dealer converts himself into the last purchaser in the state of such goods. The goods cease to exist or cease to be available in the State for sale or purchase attracting tax. In these circumstances, the purchasing dealer of such goods is taxed, if the seller is not or cannot be taxed. The tax imposed by S.6-A cannot be described either as use tax, consumption tax or consignment tax. It is a purchase tax perfectly warranted by Entry 54 of List-ll of the Seventh Schedule to the Constitution.
[230-G & 231-B] 7.2. While exempting the sale or purchase of any specified class of goods the Government is empowered to specify whether the exemption operates at all points or any specified points in the series of sales or purchase of successive dealers. Several notifications have been issued the Government from time to time exempting certain dealers or exempting certain goods at the point of sale or purchase, as the case may be. G.O.Ms. 1091 is one of them.
The exemption is couched in qualified form. Thus, it is not a general exemption but a qualified one. In the light of the specific scheme of Section 9 of the A.P. Sales Tax Act and the language of G.O.Ms No. 1091, the exemption at the point of sale by a particular category of persons cannot be construed as operating to exempt the purchase tax under Section 6-A of the Act, as well, much less in all cases.
[233-B, C] 7.3. Fresh milk was taxable as general goods under Section 5(l) of the Andhra Pradesh Sales Tax Act before it was amended by Amendment Act 4 of 1989. After the coming into force of the said Amendment Act, it falls under Schedule VII, (which was introduced simultaneously with the said Amendment Act) aud which takes in all goods other than those specified in first to sixth Schedules. Milk was subject to multi-point tax prior to the said Amendment Act whereas after the said amendment it has become taxable only at single point namely, point of first sale in the State. If fresh milk was not at all taxable under the Act, there was no necessity to issue notifications exempting its sale in certain situations.[227-C-D] Goodyear India Ltd. v. State of Haryana [1990] 2 SCC 71, dissented from.
RATIO OF GOODYEAR - RECONSIDERATION OF:
8.1. The ingredients of Section 9 of Haryana Sales Tax Act are: (i) a dealer liable to pay tax under the Act purchases goods (other than those specified in Schedule B) from any source in the State and (ii) uses them in the State in the manufacture of any other goods and (iii) either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches the manufactured to a place outside the State in any manner otherwise than by way of sale in the course of an inter- state trade or commerce or in the course of export outside the territory of India within the meaning of sub-section (1) of Section 5 of the Central Sales Tax Act, 1956. If all the above three ingredients are satisfied the dealer becomes liable to pay tax on the purchase of such goods at such rate, as may be notified under Section 15. It applies only in those cases where (a) the goods are purchased (referred to as material) by a dealer liable to pay tax under the Act in the State, (b) the goods so purchased cease to exist as such goods for the reason they are consumed in the manufacture of different commodities and (c) such manufactured commodities are either disposed of within the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of sale or despatched to a place outside the State otherwise than by way of an inter-State sale or export sale. It is evident that if such manufactured goods are not sold within the State of Haryana, but yet disposed of within the State no tax is payable on such disposition; similarly where manufactured goods are despatched out of State as a result of an inter-State sale or export sale no tax is payable on such sale. Similarly against where such manufactured goods are taken out of State to manufacturers own depots or to the depots of his agents no tax is payable on such removal.
Goodyear takes only the last eventuality and holds that the taxable event is the removal of goods from the State and since such removal is to dealers own depots/agents outside the State it is consignment which cannot be taxed by the State Legislature. This is not correct. The levy created by the said provision is a levy on the purchase of raw material purchased within the State which is consumed in the manufacture of other goods within the State. If however the manufactured goods are sold within the State no purchase tax is collected on the raw material evidently because the State gets larger revenue by taxing the sale of such goods. (The value of manufactured goods is bound to be higher than the value of the raw material). The State Legislature does not wish to - in the interest of trade and general public - tax both the raw material and the finished (manufactured) product. This is a well-known policy in the field of taxation. But where the manufactured goods are not sold within the State but are yet disposed of or where the manufactured goods are sent outside the State (otherwise than by way of inter-State sale or export sale) the tax has to be paid on the purchase value of the raw material. The reason is simple: if the manufactured goods are disposed of otherwise than by sale within the State or are sent out of State (i.e. consigned to dealers own depots or agents) the State does not get any revenue because no sale of manufactured goods has taken place within Haryana. In such a situation the State would retain the levy and collect it since there is no reason for waiving the purchase tax in these two situations. [239-B-D; 240-A-D] 8.2. In the case of inter-State sale the State of Haryana does get the tax-revenue - may not be to the full extent. Though the Central Sales Tax is levied and collected by the Government of India Article 269 of the Constitution provides for making over the tax collected to the State in accordance with certain principles. Where of course the sale is an export sale within the meaning of Section 5 (1) of the Central Sales Tax Act (export sales) the State may not get any revenue but larger national interest is served thereby.
It is for these reasons that tax on the purchase of raw material is waived in these two situations. Thus, there is a very sound and consistent policy underlying the provision.
The object is to tax the purchase of goods by a manufacturer whose existence as such goods is put and end to by him by using them in the manufacture of different goods in certain circumstances. The tax is levied upon the purchase price of raw material, not upon the sale price - or consignment value - of manufactured goods. Levy materialises only when the purchased goods (raw material) is consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way of sale or are consigned to the manufacturing-dealers' depots/agents outside the State of Haryana. Such postponement does not convert what is avowedly a purchase tax on raw material (levied on the purchase price of such raw material) to a consignment tax on the manufactured goods. Saying otherwise would defeat the very object and purpose of Section 9 and amount to its nullification in effect. The most that can perhaps be said is that it is plausible to characterise the said tax both as purchase tax as well as consignment tax.
But where two interpretations are possible, one which sustains the consititutionality and/or effectuates its purpose and intendment and the other which effectively nullifies the provisions, the former must be preferred, according to all known canons of interpretation.
[240-E-H; 241-A-C] 8.3. In several enactments tax is levied at the last sale point or last purchase point, as the case may be. The last purchase point in the State can be determined only when one knows that no purchase took place within the State thereafter. But that can only be known later. If there is a subsequent purchase within the State, the purchase in question ceases to be the last purchase. Applying the logic of the dealers, it would not be possible to tax any goods at the last purchase point in the State, inasmuch as the last purchase point in regard to any goods could be determined only when the goods are sold later and not when the goods are purchased. [241-F-G] 8.4. The scheme of Section 9 of Haryana Sales Tax Act is to levy the tax on purchase of raw material and not to forego it where the goods manufactured out of them are disposed of (or despatched, as the case may be) in a manner not yielding any revenue to the State nor serving the interests of the nation and its economy. The purchased goods are put an end to by their consumption in manufacture of other goods and yet the manufactured goods are dealt with in a manner as to deprive the State of any revenue; in such cases, there is no reason why the State should forego its tax revenue on purchase of raw material. It would not be right to say that the tax is not upon the purchase of raw material but on the consignment of the manufactured goods.
It is well settled that taxing power can be utilised to encourage commerce and industry. It can also be used to serve the interests of economy and promote social and economic planning. It is also not right to concentrate only on one situation viz., consignment of goods to manufacturer's own depots (or to the depots of his agents) outside the State. Disposal of goods within the State without effecting a sale also stands on the same footing, an instance of which may be captive consumption of manufactured products in the manufacture of yet other products. Once the scheme and policy of the provision is appreciated, there is no room for saying that the tax is on the consignment of manufactured goods.[243-G-H; 244-A-F] 8.5. When the tax is levied on the purchase of raw material, on the purchase price - and not on the manufacture of goods or on the consignment value (such a concept is unknown to Haryana Act) or sale price of the manufactured goods - the construction placed in Goodyear runs against the very grain of the provision and has the effect of nullifying the very provision. By placing the said interpretation, Section 9 has been rendered nugatory. The tax purports to be and is in truth a purchase tax levied on the purchase price of raw material purchased by a manufacturer. [247-A-C] 8.6.S. 13AA of the Bombay Sales Tax Act is substantially similar to Section 9 of Haryana Sales Tax Act. Whatever is said with respect to the Haryana provision applies equally to this provision. [249-D] Andhra Sugars Ltd. & Anr. v. The State of Andhra Pradesh & Anr., 21 S.T.C. 212 and State of Tamil Nadu v. Kandaswami, 36 S.T.C. 191, relied on.
Goodyear India Ltd. v. State of Haryana, [1990] 2 SCC 71, dissented from.
Mukerian Papers Ltd. v. State of Punjab, [1991] 2 S.C.C. 580, Explained.
Murli Manohar and Company v. State of Haryana [199]1 1 S.C.C. 377, distinguished.
Malabar Fruit Products Co. v. S.T.O., 30 S.T.C. 537, approved.
Hindustan Lever Ltd. v. State of Maharashtra, 79 S.T.C.
255; J.K Steel Ltd. v. Union of India, A.l.R. 1970 S.C.
1173; Bata India Ltd. v. State of Haryana, 54 S.T.C. 226;
Desraj Pushp Kumar Gulati v. State of Punjab, 58 S.T.C. 393;
Commissioner of Wealth Tax, Bihar and Orissa v. Kirpa Shankar Daya Shankar Vorah, (1971) 81 ITR 763; Yusuf Shabeer and Ors. v. State of Kerala and Ors., (1973) 32 S.T.C. 359 and Income Tax Commissioners for City of London v. Gibbs, (1942) 10 ITR Suppl. 121 (H.L.), referred to.
Per Ranganathan, J. (Concurring):
1. The provisions of the U.P. and Gujarat Sales Tax Acts are clearly beyond challenge. The section in the U.P.
Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances. The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner. The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter-State trade or commerce. It certainly comprehends a power to tax the last sale in the State of certain goods.
The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State's Legislative power. It is true that one has to look at not merely the form but the substance of the statute and examine what exactly is the purport behind the levy, but should not permit one's imagination to read a purpose or words into the statute which are not there. 1198-C-G]
2. The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax. Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer. It has no concern, with what the manufacturer does with the manufactured goods. Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials. The concession provided by rule 42E of the Gujarat Sales Tax Rules is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
[198-H; 199-A, B]
3. The marginal title to the provisions under challenge indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances.
The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat). It is designated as a purchase tax. It is levied on the turnover of such purchases. There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer. It is very difficult to read into these provisions any ulterior motive on the part of the States to levy a tax on use, consumption or consignment in the guise of a purchase tax. The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts. Even in the context of those Acts, it may be equally plausible to consider the provisions either as a purchase tax or a tax on consignment. There is no such ambiguity in the language used in these provisions, and the levy is only of a purchase tax. Such a levy is clearly within the domain of the State Legislature. [199-C-F]
4. A person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale.
From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter-State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods - the sale price of which will also include the price of raw materials on which apriori the State could have only got a lesser amount of tax - and to tax both would escalate the price and affect the consumer. Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency. If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale. In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1)(b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation and emphasis placed on consignment being a sine qua non of the levy. This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected or considered. This approach would basically alter the parameters and remove the provision from the area of vulnerability. [200-F-H; 201-A-D]
5. It is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way. The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else. The more appropriate test would be to see whether the ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State. In this view of the matter the levy under the A.P. Act is also within the legislative competence of the State. [201-E, F; 202-A, B]
6. The conclusion reached as to the vires of the provisions under challenge is contrary to the conclusion reached in Goodyear on somewhat analogous provisions. No final conclusion is expressed as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes considered there, or would need a second look and fresh consideration in the context of what has been said now. There is no hesitation to accept the point of view now presented and which appeals to be more realistic, appropriate and preferable, particularly the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view taken in Goodyear. Consistency, for the mere sake of it, is no virtue. [202-C, D] Distributors (Baroda) P. Ltd. v. Union of India, (1985 )155 I.T.R. 120 S.C., relied on.
Goodyear India Ltd. v. State of Haryana, [1990] 2 SCC 71, referred to.
ORIGINAL JURISDICTION: Writ Petition (c) Nos. 655-69 of 1983.
(Under Article 32 of the Constitution of India).
WITH
W.P. (C) 8131-33/82, 8125-30/82, 8349-8368/52, 8146- 8166/82, 9610 9630/82, 3756-87/83, 3698-3755/83, 947-960/83, 250/86, C.A. Nos. 4099 4103/82, 10753-57/83, 10758-60/83, 10761/83, W.P. (C) No. 12834/85, C.A. Nos. 1280-83/92, 4737/91, 4302/91, 3410/91, 3481/91, 2850/91, 3171/91, 2866/91, 3905-12/91, 4202- 05/91, 70/92, SLP(C) No. 1045/89, T.C. (C) No. 220/88, W.P. (C) No. 175/92.
G. Ramaswamy, Attorney General, G.L. Sanghi, B.K. Mehta, Santosh Hegde., R.R. Aggarwal, Anil B. Divan, H.N. Salve, K. Parasaran, Ms. Suman Bose, Dr. Debi Pal, A.B. Rohtagi, R.N. Sachthey, A.C. Gulati, B.B. Sawhney, Mrs. Janaki Ramachandran, S. Ganesh, Ravinder Narain, S.Sukuraman, D.K. Sinha, J.R. Das, J. Gupta, Ashok K. Srivastava, H.S. Munjral, S. Walia, G. Bansal, D.P. Mukherjee, R. Mohan, Mukul Mudgal, A. Subba Rao, Ms. Lata Krishnamurti, M.N. Shroff, D. Dave, Ms. Deepa Dixit, K.J. John, A.T.M. Sampath, P. Sen, G.S. Chatterjee, Ashok Mathur, M. Haravu, V.J. Francis, V. Subramaniam, P.S. Seetharaman, Ms. Indu Malhotra, A.S. Bhasme, R.B. Misra Dr. B.S. Chauhan, Ajay K. Aggarwal, Ms. Radha Rangaswamy, Anil Sachthey, Badri Nath Sharma, T.V.S.N. Chari, B. Kanta Rao and Ms. Suruchi Aggarwal for appearing parties.
The Judgments of the Court were delivered by RANGANATHAN, J. Taking a cue from the decision of this Court in Goodyear India Ltd. v. State of Haryana [1990] 2 S.C.C. 71, to which I was a party, a contention has been raised, in these appeals and writ petitions, that corresponding provisions of the Gujarat Sales Tax Act, the U.P. Sales Tax Act and the Andhra Pradesh General Sales Tax Act, are ultra vires the powers of the State Legislature insofar as they seek to levy a purchase tax in certain circumstances. My learned brother, Jeevan Reddy, J., has discussed the provisions and contentions elaborately and exhaustively in his judgment. It is unnecessary for me to set out over again the statutory provisions considered in Goodyear or those which are challenged in these petitions and appeals or the details of the decision in Goodyear as these have been discussed in great detail in the judgment of my learned brother. I however, think that I owe it to myself to add a separate judgment as I was a party to Goodyear and explain my views on the provisions presently under challenge in the light of what has already been stated by me in Goodyear.
So far as the U.P. Sales Tax Act is concerned, I do not think that the impugned provision of the said Act (viz. S.3AAAA, as inserted in 1992 with retrospective effect from 1.4.1974) bears any comparison with the provisions that were considered in Goodyear. S.3AAAA is a very simple provision.
According to its marginal note, its effect is the imposition of a liability to purchase tax on certain transactions. This liability is attracted in respect of goods, which are liable to tax at the point of sale to the consumer. In other words, the goods in question as such have run through their gamut of sales in the State. There will be no more sales in the State of the goods in that form, which can be taxed by the State, whether intra-State or inter-State, or in the course of export. Such goods are then made liable to tax in the hands of a purchaser dealer-cum-consumer either because he purchases them from a registered dealer by whom tax is not payable or because he purchases them from a person other than a registered dealer i.e. a person who is not accessible to the revenue, whose sales cannot be easily verified or from whom tax may not be easily recovered. To put it differently, since the tax is at the point of sale to the consumer, the Legislature, in order to ensure that goods do not escape tax in the State altogether, make the purchaser liable in respect of the last sale in the State of the goods in question, if otherwise the sale of the goods have not borne tax earlier in the State. This, on the face of it, is a provision which seems to be perfectly within the legislative competence of the State Legislature.
The argument urged on behalf of the assessees, however, is that no person can be said to be the "consumer" of the goods in the State unless he consumes the goods himself or utilises the goods (where they are in the nature of raw material) for the manufacture or production of other goods.
It is urged, therefore, that as no sale can be postulated to be a sale to the consumer unless and until one of the above events happen, the real taxable event is not the purchase of the goods but their consumption, manufacture or production in the State, or their despatch, otherwise than by way of a sale outside the State, whether in the same form or in a manufactured condition. It is therefore said that, in substance, the statutory provision is no different from the one considered by us in Goodyear and that the ratio of Goodyear will apply here equally.
So far as the Andhra Pradesh provision is concerned, the argument is the same, with an added advantage to the assessees that the section brings out more emphatically their point of view. Under section 6-A(i), purchase of goods from a registered dealer is subjected to tax because, though the sale or purchase of that item of goods is generally liable to tax, no tax became payable by the registered dealer on the sale because of the circumstances set out in section 5 or 6. This corresponds to s. 3AAAA(a) of the U.P.
Act. As against this, clause (ii) of section 6-A deals with purchase of goods liable to tax from a person other than a registered dealer and imposes a liability to pay tax where the goods purchased are consumed by the purchaser either in the manufacture of other goods for sale or otherwise and the goods are disposed of otherwise than by way of sale or despatched outside the State otherwise than in the course of inter-State trade or commerce. In other words, the real taxable event for the charge under section 6-A(ii), it is said, is not the purchase of goods but the consumption, manufacture or consignment of the same or other goods outside the State. If that be so, it is said, the imposition is ultra vires the State Legislature on the principle of the decision in Goodyear.
So far as the State of Gujarat is concerned, the provisions of section l5B, inserted by a retrospective amendment of 1990, are somewhat different. Cutting out certain words not relevant in the present context, it provides that where a dealer, being liable to pay tax under the Act, purchases any taxable goods and uses them in the manufacture of taxable goods, a purchase tax will be levied on the turnover of such purchases. Rule 42-E, which was also framed w.e.f. 1.5.90, provides that, where the assessee is a registered dealer and the goods manufactured by him have been sold in the State of Gujarat, he will be entitled to relief in respect of the purchase tax levied under section l5B. Here again, it is argued, the provision is tainted because it refers to manufacture of the purchased goods and the rule ensures that no purchase tax is levied if the manufactured goods are sold in the State itself; in other words, the levy comes in only if they are consigned outside the State, attracting Goodyear.
It will be seen at once that the three provisions under consideration vary from one another. S.3AAAA of the U.P. Act does not make the tax conditional on the use or consumption of raw materials purchased or the manner of dealing with the goods manufactured out of such purchases of raw materials.
Section 15B of the Gujarat Act is slightly different. It talks of the use of the goods purchased in the manufacture of other taxable goods but it does not make any reference to the consumption of the goods otherwise or their despatch or consignment. The Andhra Pradesh Act is more elaborate and deals with various situations in relation to the purchased goods.
2Of these, I am of opinion that the provisions of the U.P. and Gujarat Acts are clearly beyond challenge on the grounds put forward by the petitioners. The section in the U.P. Act is a very direct and simple provision to the effect that a tax will be levied on purchases made within the State in certain circumstances. The ambit of Entry 54 in the State List in the Constitution of India must be interpreted in the widest possible manner. The State has full powers to levy a tax with reference to sales or purchases inside the State and to a certain extent even sales made in the course of inter-State trade or commerce.
It certainly comprehends a power to tax the last sale in the State of certain goods. I have explained earlier the reason why the incidence of tax in such sales is thrown under the Act on the consumer. The tax is nothing but a tax on purchase, pure and simple, well within the scope of the State's Legislative power. The attempt, on behalf of the petitioners, to undertake an analysis of what will eventually happen to the purchased goods where the purchaser is the consumer and, on the basis thereof, to suggest that the legislature really intends to tax consumption, production or consignment is no doubt ingenious but farfetched, artificial and unrealistic. It is true that one has to look at not merely the form but the substance of the statute and examine what exactly it is that the State purports to levy a tax in respect of but one should not permit one's imagination to read a purpose or words into the statute which are not there.
The Gujarat provision is more careful but makes a mention of the purchased goods being used for manufacture.
But, as pointed out by Mukharji J. in Goodyear, these are only words descriptive of a class of goods the purchase of which is sought to be brought to tax. Here again, the intention of the legislature is to tax, at purchase point, a class of goods viz. goods purchased by a manufacturer. It has no concern, unlike the A.P. or Haryana Acts, with what he does with the manufactured goods. Presumably the idea is that the manufacturer is able to profit by adding value to the purchased raw material by utilising the infrastructure, fillips or facilities provided in the State to encourage setting up of industries therein and so can afford to pay tax on the purchased raw materials. The concession provided by rule 42E is an independent provision relieving him and the public consuming the manufactured goods of additional burden where such goods are sold inside the State and get taxed on the added value.
In my opinion, there is considerable force in the substance of the contention of these States that these provisions only impose a tax on purchases. The marginal title to the provisions indicates that their direct purpose is to levy a tax on purchases effected in the State in certain circumstances. The tax is couched as a tax on all goods (in U.P.) and on raw or processing materials and consumable stores (in the State of Gujarat). It is designated as a purchase tax. It is levied on the turnover of such purchases. There is no reference in the U.P. statute to any condition for imposition of the tax except that it should be a sale to the consumer and in the State of Gujarat that it should be a purchase by a manufacturer. It is very difficult to read into these provisions any ulterior motive on the part of the States to Levy a tax on use, consumption or consignment in the guise of a purchase tax. The language of these two provisions is wholly different from that used in the Haryana and Bombay Acts. As I have stated in my judgment in Goodyear, even in the context of those Acts, it may be equally plausible to consider the provision either as a purchase tax or a tax consignment. There is no such ambiguity in the language used in these provisioins. I have no doubt that, so far as these provisions are concerned, on the face of these acts, the levy is only of a purchase tax.
Such a levy is clearly within the domain of the State Legislature.
The Andhra Pradesh Act, however, is different in its arrangement. The provisions of section 6-A of this Act are more or less analogous to the provisions of the Haryana Act considered in Goodyear. The question, therefore, arises as to whether the decision in Goodyear should be applied in the context of the Andhra Pradesh Act. On behalf of the State of Andhra Pradesh - and indeed the other two States also - it has been contended that Goodyear needs reconsideration. Our attention has been drawn to one angle of approach to the statutory provisions in question which had perhaps escaped our notice in the Goodyear case. It was pointed out that the sum and substance of these provisions is that no sale or purchase of any goods should go without being taxed atleast once in the State. Primarily the tax is levied on sales.
Where a registered dealer sells his goods he will be liable to tax normally in respect of the taxable goods except where his turnover does not reach up to the minimum prescribed under the Sales Tax Act. Sometimes, he may not pay any tax or may pay a concessional rate of tax on his sales because of certain declarations or certificates he may receive that the goods will be used inside the State. Again, where goods are purchased from a person other than a registered dealer, the tax at the sales point may escape actual taxation for many reasons: such person may not be a dealer at all or, being an unregistered dealer, the State may not be able to ascertain his whereabouts and ensure that he is taxed or that the tax is collected. In cases where no sales tax is paid at the point of sale, it becomes necessary for the State Legislature to provide that the tax will be met by the purchaser. Invariably in such cases the legislations attach levy of tax to the last purchase made in the State, of a particular item of goods. Of course, the legislation could have simply said that the last purchase in the State will attract tax unless the tax is payable or has been paid at one of the earlier stages of sale and could not have been objected to. But that type of legislative wording might lead to difficult questions as to the definition of the expression "last purchase". That is why the section imposing purchase tax is worded in the manner in which it has been worded in the Andhra and Haryana Acts. As pointed out by the learned counsel for the assessees in the U.P. cases, a person can be said to be the last purchaser of certain goods only when he consumes those goods himself or, in case they are raw materials/stores and the like, unless he uses them in the manufacture of other goods for sale. From this category have to be excluded cases where the manufactured goods are either sold in the State or sold in the course of inter-State trade or commerce because, in those two instances, the State will be in a position to collect the tax in respect of the sale of the manufactured goods - the sale price of which will also include the price of raw materials on which a priori the State could have only got a lesser amount of tax - and to tax both would escalate the price and affect the consumer. Also excluded are cases where the manufactured goods are exported abroad to earn foreign currency. If these situations are borne in mind, one would realise that the language used in the various clauses and phrases used in these legislations is only to levy a tax on the last purchase in the State and not with a view to levy a tax either on the use or consumption of raw materials or on the manufacture or production of manufactured goods or on the despatch of the goods manufactured from the State otherwise than by way of sale. In the Haryana case also the statute mentioned these several alternatives but a consideration of section 9(1) (b) of the Haryana Act as well as of the corresponding clause of the Bombay Act were posed in isolation before us and emphasis placed on consignment being a sine qua non of the levy. This larger concept, namely, that these various alternatives are not set out in the section with a view to fasten the charge of tax at the point of use, consumption, manufacture, production and consignment or despatch but in an attempt to make clear that what is sought to be levied is a tax on raw materials on the occasion of their last purchase inside the State had not been projected before, or considered by us. I am inclined now to think that this is an approach that basically alters the parameters and removes the provision from the area of vulnerability.
It is true that it is difficult to define a last purchase except with reference to the mode of the use of the purchased goods subsequent to that purchase and in that sense the levy of tax can crystallise only at a point of time when the goods have been utilised in a particular way but will it be correct to say that the power of the State to levy a tax on sales or purchases cannot include a right or power to tax goods at the point of their first sale in the State or their last purchase in the State? The mere fact that the purchase cannot be characterised as a last purchase except by reference to the subsequent utilisation of those goods cannot mean that the taxable event is not the purchase but something else. What we are really concerned with in deciding the question of constitutional validity of the levy of a sales tax is to pose the question "Is the tax levied one with reference to the sale or purchase of goods ?" The ambit of the power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State. This I think is a more appropriate test to be applied in these cases rather than the test of "taxable event" l which is somewhat ambiguous in the context. I am not inclined to agree that a tax on the sale or purchase of goods will cease to be so merely because the determination of its character as a last purchase would depend upon certain subsequent events which may be spread over a subsequent period of time. In this view of the matter I am inclined to agree with my learned brother Jeevan Reddy, J. that the levy under the Andhra Pradesh Act is also within the legislative competence of the State.
I am quite conscious that the conclusion I have expressed here as to the vires of the provision impugned is contrary to the conclusion I reached in Goodyear on somewhat analogous provisions. I need not, for the purposes of the present cases, express any final conclusion as to whether the conclusion in Goodyear was rightly reached in the context of the provisions of the statutes there considered or would need a second look and fresh consideration in the context of what has been said here. But, I should not, I think, hesitate to accept the point of view now presented to us which appeals to me as more realistic, appropriate and preferable, particularly when I see that the view one way or the other would affect the validity of a large number of similar legislations all over India, merely because it may not be consistent with the view I took in Goodyear.
Consistency, for the mere sake of it, is no virtue. If precedent is needed to justify my change of mind, I may quote Bhagwati J. (as he then was) in Distributors (Baroda) P. Ltd. v. Union of India, (1985) 155 I.T.R. 120 S.C.:
"We have given our most anxious consideration to this question, particularly since one of us, namely, P.N. Bhagwati, J. was a party to the decision in Cloth Traders' case. But having regard to the various considerations to which we shall advert in detail when we examine the arguments advanced on behalf of the parties, we are compelled to reach the conclusion that Cloth Traders' case must be regarded as wrongly decided. The view taken in that case in regard to the construction of s. 80M must be held to be erroneous and it must be corrected. To perpetuate an error is no heroism. To rectify it is the compulsion of the judicial conscience. In this, we derive comfort and strength from the wise and inspiring words of Justice Bronson in Pierce v. Delameter (A.M.Y. at page 18): "a judge ought to be wise enough to know that he is fallible and, therefore, ever ready to learn: great and honest enough to discard all mere pride of opinion and follows truth wherever it may lead: and courageous enough to acknowledge his errors".
For the reasons above mentioned, I agree with my learned brother and hold that the impunged provisions under all the three enactments are intra-vires the powers of the concerned State Legislature.
B.P. JEEVAN REDDY, J. Validity of provisions of several States Sales Tax enactments imposing purchase tax fall for our consideration in this group of appeals and writ petitions. Initially the matters arising from Andhra Pradesh (writ petitions 655-669/83 Hotel Balaji and Ors. v.
State of Andhra Pradesh and Civil Appeal No. 10753-57/83 Hindustan Milk Food Manufacturers Limited v. State of Andhra Pradesh) came up for hearing. During the course of hearing, counsel for the petitioners/appellants relied upon the decision of this court in Goodyear India Ltd v. State of Haryana (1990) 76 S.T.C. 71 whereas the counsel for the State of Andhra Pradesh challenged the correctness of the said decision and pleaded for re-consideration of the said judgment. It was then brought to our notice that a large number of matters coming from different States raising inter alia the question relating to the correctness or the ratio Or Goodyear were also posted before us. Indeed it was brought to our notice that a bench of three-Judges comprising M.N. Venkatachaliah, A.M. Ahmadi, JJ. and one of us (B.P. Jeevan Reddy, J.) had directed two matters namely State of Punjab v. Industrial Cables India Ltd., C.A. No.
2990 (N.T.) of 1991 and the State of Punjab v. Hindustan Lever Ltd., C.A.480/91 raising a similar question to be posted before a Bench of three-Judges. Those matters are also before us. It is in this manner that a large number of appeals and writ petitions arising from several States came to be posted before us for hearing. During the course of hearing, however, we found that on account of restriction of time it would not be possible for this Bench to hear all the matters. Accordingly, we indicated to the counsel that we shall confine our attention only to three State enactments namely, Gujarat. Uttar Pradesh and Andhra Pradesh. Counsel appearing in these matters have been heard fully. This judgment, therefore, deals only with the validity of Section 15B of the Gujarat Sales Tax Act, Section 3-AAAA of Uttar Pradesh Sales Tax Act and Section 6-A of the Andhra Pradesh Sales Tax Act. We shall first take up Section 15B of the Gujarat Sales Tax Act.
PART- 11 (GUJARAT) Though several appeals and writ petitions from this State are placed before us, it is sufficient to refer to the facts in Civil Appeal No.3410 (N.T.) of 1992 as representative of the facts in all the matters. This appeal is preferred by the writ petitioner against the judgment of a Division Bench of the High (Court of Gujarat upholding the constitutional validity of Section 15B of the Gujarat Sales Tax Act, 1969 as substituted by the Gujarat Sales Tax (Amendment) Act 6 of 1990.
The Gujarat Sales Tax Act, 1969 (being Act No. 1 of 1970) came into effect on and from May 6,1970, replacing the Bombay Sales Tax Act, which was in force in the State of Gujarat till then. Section 15 of the Act levied purchase tax on purchases made by a dealer from a person who is not a registered dealer. Section 15A was introduced by amendment Act 7 of 1983. It provided for levy of concessional rate of tax in respect of purchase of raw material made by Recognised dealers (who are necessarily manufacturers), provided the goods (raw material) purchased by them fell in Schedule II or III (other than prohibited goods). Section 15B was introduced by Amendment Act Or 1986. It provided for levy of an additional purchase tax on raw material purchased by a manufacturing dealer in case he used the said raw material for the manufacture of other goods which he despatched to his own place of business or to his agent's place of business situated outside the State but within India. By an Amendment Act made in 1987, the Section was substituted. There was, however, no substantial change in the Section. Following upon the decision of this court in Goodyear, a batch of writ petitions was filed in the Gujarat High Court challenging the validity of Section 15B on the ground that in truth and effect it levied a consignment tax and, hence was outside the competence of the State Legislature. While the said writ petitions were pending, Section 15B was substituted by an Ordinance being Ordinance No.3 of 1990 issued on 20.4.1990. Subsequently the Gujarat Sales Tax Amendment Act 6 of 1990 was enacted in terms of and replacing the Ordinance. The substituted Section 15(B) was given retrospective effect on and from April 1, 1986, the date on which Section 15(B) first came into force. In view of the said Amendment Act, the batch of writ petitions challenging Section 15(B), as it stood prior to its substitution by the 1990 Amendment Act, were dismissed as having become infructuous. A fresh batch of writ petitions followed questioning the validity of the substituted Section 15(B), again on the ground that it continued to be, in essence, a consignment tax. The contention was that Section 15(B) must be read along with Rule 42(E) of the Gujarat Sales Tax, Rules (inserted by Notification dated 1.5.90) and if so read, the position is the same as was obtaining prior to 1990 Amendment. Yet another ground urged was that the levy imposed by the new provision is really in the nature of an excise duty, and thus beyond the competence of the State legislature. The assessees placed strong reliance upon the decision of the Division Bench of the Bombay High Court in Hindustan Lever Ltd v. State of Maharashtra, 79 S.T.C. 255 where, the petitioners say, construing a similar provision in the Bombay Sales Tax Act it was held that the levy created by the said provision is in the nature of an excise duty. Disagreeing with the Bombay judgment, the High Court dismissed the writ petitions.
Counsel for the appellant/assessee urged that Section 15B (as substituted in 1990) is no different from the earlier provision. The basic scheme of the earlier provision is now split into two provisions namely, substituted Section 15B and Rule 42E, which Rule was inserted into the Rules simultaneously. This is a clear instance of colourable legislation and ought not to be countenanced by this court.
The High Court was in error in justifying the same on the theory that just as it is open to an assesses to reduce the tax burden by resorting to legitimate tax planning, similarly it is open to a legislature to make an appropriate enactment to remain outside the mischief pointed out by the court. It is submitted that as rightly held by the Bombay High Court construing a similar provision, the levy created by the substituted Section 15B is really upon the manufacture of goods and, therefore, not a tax referable to Entry 54 of List II of the Seventh Schedule to the Constitution. On the other hand, it is argued by F Sri B.K.
Mehta, learned counsel appearing for the State of Gujarat that the Legislative competence of the Gujarat Legislature to enact Section 15B ought to be determined on its own language and not with reference to a Rule made by the Government of Gujarat as the delegate of the legislature. He submitted that on its own language, Section 15B levies a pure and simple purchase tax on raw material purchased by a manufacturer. It is unconcerned with what happens to the manufactured goods. For the purpose of Section 15B, it is immaterial whether the manufactured goods are sold inside the State or despatched to a place outside the State of Gujarat or are dealt with or disposed of otherwise. The principle of Goodyear has absolutely no application to this provision. Counsel also submitted that when the tax is upon the purchase price of the raw material and is relatable to the act of purchase, it cannot he held to be an excise duty which is levied on the act of manufacture and is levied with reference to the value of such manufactured goods.
For a proper appreciation of the contentions arising herein it would be appropriate to notice a few relevant provisions of the Act. Clause (16) in Section 2 defines the expression 'manufacture' in the following words:
"manufacture" with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing or otherwise processing, treating, or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." Clauses 35 and 36 define the expressions "turn-over of purchases" and "turn-over of sales". It would be enough to notice the definition of the expression "turn-over of purchases". It reads:
"turn over of purchases' means the aggregate of the amounts of purchase price paid and payable by a dealer in respect of any purchase of goods made by him during a given period, after deducting the amount of purchase price, if any, refunded to the dealer by the seller in respect of any goods purchased from the seller and returned to him within the prescribed period." Section 3 is a charging section. Section 15 which levied purchase tax on purchase of certain goods from a person who is not a registered dealer read as follows at the relevant time:
15 Purchase tax payable on certain purchases of goods.
Where a dealer who is liable to pay tax under this Act purchases any goods specified in Schedule II or III from a person who is not a Registered dealer, then, unless the goods so purchased are resold by the dealer. there shall be levied, subject to the provisions of section 9.
(i) in the case of goods specified in Schedule 11. a purchase tax on the turnover of such purchase at the rate set out against them in that Schedule, and (ii) in the case of goods specified in Schedule III, a purchase tax on the turnover of such purchase at a rate equivalent to the rate of sales tax act out against them in that Schedule." The said Section has, however, been substituted by Gujarat Amendment Act 9 of 1992 with effect from 1.4.1992, but since the Amendment is not a retrospective one, it is unnecessary to notice the amended provision.
Section 15A provides for a concessional rate of tax in the case of purchases of raw material by a recognised dealer provided the goods purchased are those specified in Schedule II or III (other than the prohibited goods) and he issues a certificate contemplated by Section 13(1)(B). Prior to the Amendment Act 9 of 1992, Section 15(A) read as follows:
"15A. Purchase tax payable on purchases of goods by certain dealers where - (i) a recognised dealer purchases any goods specified in Schedule II or III other than prohibited goods, under a certificate given by him under clause (B) of sub-section (I) of section 13, or (ii) a commission agent holding permit purchases any goods specified in Schedule II or III other than prohibited goods on behalf of his principal who is recognised under a certificate given by him under clause (C) of sub-section (1) of section 13,- there shall be levied a purchase tax on the turnover of such purchase at the rate of two paise in the rupee." 8 Since the Amendment of this provision in 1992 is also not retrospective, it is unnecessary to notice the same.
We may now set out Section 15B both as it obtained prior to Amendment Act 6 of 1990 and as substituted thereby.
Prior to Amendment it read thus:
"Where any dealer liable to pay tax under this Act uses any goods other than declared goods purchased by him or through commission agent as raw or processing materials or consumable stores (irrespective of whether such goods are prohibited goods or not) in the manufacture of taxable goods and despatches any of the goods so manufactured
