M/S Jagatjit Cotton Taxtile Mills LTD. vs. State Of Punjab

Original PDF →

GSTR/25/1990HC Punjab and HaryanaGSTCNR PHHC01021451199011 October 2023Bench: MS. JUSTICE RITU BAHRI,MRS. JUSTICE MANISHA BATRA2 pages

AI SummaryAllowed

Facts

The petitioner, M/s Jagatjit Cotton Textile Mills Ltd., challenged an order dated 30.01.1986 passed by the Commissioner-cum-Assessing Authority, Kapurthala. The core of the dispute, as referred to the High Court, concerned the taxability of the purchase value of materials bought within Punjab and used in manufacturing cloth sold in inter-state trade. The Assessing Officer's order had already attained finality regarding synthetic yarn and cotton waste. However, for declared goods, general goods, electric goods, and goods used in consignment sales against 'F' forms and affidavits, the matter was to be re-examined.

Held

The Court referred to the Supreme Court's decision in M/s Jagatjit Sugar Mills Co. Ltd. Vs. State of Punjab and another, 1995(1) PLR 307, which upheld the interpretation of Section 4-B of the Punjab General Sales Tax Act, 1948. This precedent established that purchasers are liable to pay tax on their purchases if the item is used in the manufacture of inter-state goods. Consequently, the reference was answered in line with this interpretation. For declared goods, general goods, electric goods, and goods used in consignment sales against 'F' forms and affidavits, the Court remanded the matter back to the Assessing Authority to re-examine whether these goods fell under Section 4-B and were used in manufacturing. The petitioner was permitted to raise all pleas before the assessing authority. The orders of the Tribunal, appellate authority, and assessing authority were set aside in view of the above.

Key Issues

1. Whether the purchase value of materials bought within the State of Punjab and used in the manufacture of cloth sold in inter-state trade or commerce can be subjected to tax under Section 4-B of the Punjab General Sales Tax Act, 1948? The petitioner argued that the Supreme Court's decision in M/s Jagatjit Sugar Mills Co. Ltd. Vs. State of Punjab and another, 1995(1) PLR 307, which upheld the interpretation of Section 4-B, was relevant. The revenue's contention, as understood from the judgment, was that purchasers are liable to pay tax on their purchases if the item is used in the manufacture of inter-state goods. The judgment also implies a need to re-examine whether specific categories of goods (declared goods, general goods, electric goods, and goods used in consignment sales) fall under Section 4-B and were used in manufacturing.

Sections Cited

Section 4-B

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

Neutral Citation No. 2023:PHHC:136004-DB GSTR-25-1990 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 213 GSTR-25-1990 (O&M) Date of decision:-11.10.2023 M/S JAGATJIT COTTON TAXTILE MILLS LTD., .... Petitioner Vs STATE OF PUNJAB ...Respondents CORAM: HON'BLE MS. JUSTICE RITU BAHRI HON'BLE MRS. JUSTICE MANISHA BATRA Present:: Mr. Surjeet Bhadu, Advocate Mr. Veer Singh, Ms. Sanya Thakur, Advocate for the petitioner. Ritu Bahri, J. (Oral) Challenge in this appeal is to the order dated 30.01.1986 passed by the Commissioner-cum-Assessing Authority, Kapurthala. As per the reference order dated 30.01.1990, question which has been referred was whether in the facts and circumstances of the case the tribunal is correct in holding that the purchase value of materials, purchases from within the State of Punjab and used in the manufacture of cloth sold in the course of inter-state trade or commerce can be subjected to tax under Section 4-B of Punjab General Sales Tax Act, 1948 (for short ‘the Act, 1948’). Learned counsel for the parties states that the provisions of Section 4-B of General Sales Tax Act has been considered by the POOJA SAINI 2023.10.21 16:05 I attest to the accuracy and

integrity of this order/judgment

Neutral Citation No. 2023:PHHC:136004-DB GSTR-25-1990 (O&M) 2 Hon’ble Supreme Court in M/s Jagatjit Sugar Mills Co. Ltd. Vs. State of Punjab and another, 1995(1) PLR 307 while upholding the interpretation of Section 4-B of the Act, 1948 that the purchasers are liable to pay tax on its purchases if the item is used in manufacturing of the interstate goods. Thus, the reference is answered. In the present petition, as per the Assessing Officer’s order dated 30.01.1986, as far as synthetic yarn and cotton waste is concerned, the matter has attained finality and it does not require any interference. With respect to the declared goods, general goods, electric goods and goods used in consignment sales against ‘F’ forms and affidavits of the consignee and consignor, the matter is remanded back to the Assessing Authority to re-examine whether these abovesaid goods, fall under the provisions of Section 4-B of the Act, 1948 and have been used in manufacturing of the product. Petitioner can take all his pleas before the assessing authority. In view of the above, the petition is allowed and orders passed by the Tribunal, appellate authority and assessing authority are set aside. ( RITU BAHRI ) JUDGE 11.10.2023

pooja saini ( MANISHA BATRA ) JUDGE Whether speaking/reasoned : Yes/No Whether reportable : Yes/No POOJA SAINI 2023.10.21 16:05 I attest to the accuracy and integrity of this order/judgment

Reproduced from the public record of the Punjab and Haryana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.