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PETITIONER: HINDUSTAN BROWN BOVERI LTD. ETC.

       Vs.

RESPONDENT: STATE OF GUJARAT

DATE OF JUDGMENT07/04/1981

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) PATHAK, R.S.

CITATION:  1981 AIR 1055            1981 SCR  (3) 435  1981 SCC  (2) 743        1981 SCALE  (1)607

ACT:      Gujarat Sales Tax Act, 1969-Sections 16 and 49(2)-Scope of.

HEADNOTE:      Exercising power  under section  49(2) of  the  Gujarat Sales Tax  Act, 1969,  the  State  Government  exempted  the entire tax  payable on  sale of goods (other than prohibited goods) by  a registered dealer to an electrical undertaking, certified for  the purposes  by  the  Commissioner;  if  the electrical undertaking,  furnished to  the selling  dealer a certificate in  the requisite  form that the goods purchased were  required   for  the   generation  or  distribution  of electricity by  the undertaking. But according to section 16 or the  Act where  a dealer  has purchased any taxable goods under a  certificate given  by him  under section 13 and has used the  goods for  a purpose contrary to such certificate, such dealer  becomes liable to pay tax on the purchase price of the goods.      The appellants  who were  recognised dealers  purchased raw materials  of taxable  goods from  registered dealers by furnishing a  certificate in  Form 19  by reason of which no sales tax  had been  paid by  them. After  manufacturing the goods  with   raw  materials,,   they  sold   part  of   the manufactured goods to an electrical undertaking in the State against ’C’  forms to  claim exemption  from tax  on them by virtue of  a notification  issued under section 49(2) of the Act. No  tax had  been paid  on sales  effected by  them  in favour of the electrical undertaking.      On the ground that the undertaking furnished in form 19 had been violated, the Sales Tax officer levied purchase tax under section  16 on  the  raw-materials  purchased  by  the appellants.      The  appellants  were  unsuccessful  in  their  appeals before the  Assistant Commissioner  as well  as  before  the Sales Tax  Tribunal. The  High Court answered the references against the assessees and in favour of the Revenue.      It was  contended on  behalf of the appellants (1) that the goods  manufactured by  them not  having been  goods the sale or  purchase of  which had  been exempted  from tax  by inclusion in  Schedule I they could not be treated as having infringed the  terms of Form No. 19 notwithstanding the fact

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that  particular  sales  made  by  them  to  the  electrical undertaking were  exempted  from  payment  of  tax  (2)  the condition in form 19 became satisfied immediately on the 436 goods being  manufactured by the appellants as at that stage the goods were really taxable and that a subsequent event of sale to  the electrical  undertaking could not be considered as  a   violation  of  the  said  condition  and  (3)  in  a transaction of  sale if  the sale  was exempted  from tax it could not be said that the purchase was also exempted.      Dismissing the appeal, ^      HELD: (1)  The expression  "taxable goods’.  defined in section 2(33) of the Act means goods other than those on the sales or purchase of which no tax is payable under section 5 and section  49 or a notification issued thereunder. By this definition  the  dichotomy  that  existed  between  "taxable goods" and  "taxable events"  in the  now repealed  Act (The Bombay Sales  Tax Act,  1959 which was in force in the State before the  present Act)  had been  given a go by. It may be that section  5 and  Schedule I  refer  to  goods  only  but section 49  deals with  only taxable  events which result in the exemption  from payment  of tax  on the happening of the conditions mentioned  therein or  in the  notification  even though the  good in  question do  not come under Schedule 1. [446 F-H]      (2) To  find out whether the goods are taxable goods or not one  has to  wait till  the disposal of the goods by the dealer in  view of  the definition  of the  said  expression which takes  away goods  sold under circumstances attracting section 49 from the scope of the meaning of that expression. [447 A]      (3) If the sale is exempt from tax under section 49 the goods sold would not be taxable good. [447 B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1185 of 1979,      Appeal by  Special Leave  from the  Judgment and  order dated 15.12.1978  of the  Gujarat High  Court in  Sales  Tax Reference No. 24 of 1978.                             AND      Civil Appeal No. 1187 of 1979.      Appeal by  Special Leave  from the  Judgment and  order dated 27.11.1978  of the  Gujarat High  Court in  Sales  Tax Reference No. 11 of 1977.      K H.  Kaji, T.  Sridharan,  R.D.  Pathak,  Miss  C.  K. Sucharita and Mrs. S. Bhandare for the Appellant in both the Appeals.      S.T. Desai  and M.N.  Shroff for the Respondent in both the Appeals. 437      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  Since a  common question  of law  is involved in  these two  appeals by  special leave,  they are disposed of by this common judgment.      The appellant  in Civil Appeal No. 1185 of 1979 is M/s. Hindustan Brown  Boveri  Ltd.,  a  company  engaged  in  the business of  manufacturing certain  goods which  are used in electrical undertakings  for the  purpose of  generating and distributing electrical  energy. It  is registered as dealer under the  provisions of  the Gujarat  Sales Tax  Act,  1969 (Gujarat Act No. I of 1970) (hereinafter referred to as ’the

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Act’). For  the purpose  of  manufacturing  the  goods,  the appellant which  was also  a recognised dealer under the Act purchased raw  materials during  the period  between May  6, 1970 and  March 31,  1971 after  furnishing a certificate in Form No.  19 as  provided under  section 13(1)(B) of the Act read with  Rule 24(4)  of the  Gujarat Sales Tax Rules, 1970 (hereinafter referred  to as  ’the Rules’)  framed under the Act stating  that the raw materials purchased by it would be used in  manufacturing taxable  goods which would be sold by it  in  the  State  of  Gujarat.  Some  part  of  the  goods manufactured  by  the  appellant  were  sold  to  a  certain electrical undertaking  in the  State of Gujarat against ’C’ forms in order to claim exemption from payment of tax on the said sales  under the Act by virtue of a notification issued under section  49(2) of  the Act exempting the goods sold to electrical undertakings  for being  used in  generation  and distribution of  electrical energy. On coming to know of the said sales,  the Sales  Tax officer.,  who was the assessing authority under the Act levied purchase tax under section 16 of the  Act on  the raw materials purchased be the appellant on the  ground that the undertaking given in Form No. 19 had been violated. The appeals filed by the appellant before the Assistant Commissioner  of Sales  Tax and  the Gujarat Sales Tax  Tribunal  against  the  said  levy  were  unsuccessful. Thereafter at  the instance  of the  appellant the  Tribunal referred the  following question of law to the High Court of Gujarat under section 69 of the Act:-           "Whether on  the facts and in the circumstances of      the case,  and on  a  correct  interpretation  of  sub-      section (33) of section 2 of the Gujarat Sales Tax Act,      1969 the  Tribunal  was  right  in  deciding  that  the      applicant was  liable to pay purchase tax under section      16 of  the Gujarat  Sales Tax  Act, 1969  on the ground      that certain electric goods manufactured 438      out of raw materials etc. purchased against declaration      in Form 19 were sold to Gujarat State Electricity Board      against declarations  in Form  prescribed in Entry 5 of      the Government  Notification issued under section 49 of      the Gujarat Sales Tax Act, 1969 ?"      The appellant  in Civil Appeal No. 1187 of 1979 is M/s. Hindustan  Engineering   Co.  Ltd.   which  is   engaged  in manufacturing heavy machinery and gear conveyers. It is also a recognised  dealer under  the Act.  Like the  appellant in Civil Appeal 1185 of ]979, this appellant also purchased raw materials by  furnishing certificates  in Form  No.  19  and later on  sold a  part of  the goods manufactured by it to a certain electrical  undertaking against  Form  No.  ’C’  and claimed  exemption   under  the  notification  issued  under section 49(2)  of the  Act. In  this case also the Sales Tax officer levied  purchase tax under section 16 of the Act for violation of  the undertaking  given in  Form  No.  19.  The appeals to  the Assistant  Commissioner of Sales Tax and the Gujarat  Sales   Tax  Tribunal  failed.  Thereafter  at  the instance of  the appellant,  the Gujarat  Sales Tax Tribunal referred the  following question for the opinion of the High Court of Gujarat:-           Whether on  the facts  and in the circumstances of      the case, the Tribunal is justified in holding that the      sales of  machineries and conveyers manufactured by the      applicant to an electrical undertaking against Form ’C’      under Entry  5 of  the Government  Notification  issued      under section  49 of  the Gujarat  Sales Tax  Act, 1969      resulted in  the breach  of the declarations in Form 19      as the goods so manufactured and sold did not amount to

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    manufacture of taxable goods ?"      It is  seen from  the two  questions referred  to above that  they  are  substantially  the  same.  The  High  Court answered the  said questions  in favour  of the  Revenue and against the  assessees by  two separate orders following its earlier decision  in M/s. Nawroji N. Vakil & Co. v. State of Gujarat. The appellants have filed these appeals against the decision of  the High  Court by  special leave under Article 136 of the Constitution.      We shall  now briefly  refer to the relevant provisions of the  Act. Section  2(10) of the Act defines a ’dealer’ as any person who 439 buys or sells goods in connection with his business and when he obtains  a  certificate  of  registration  he  becomes  a registered dealer.  Section 32  of the  Act provides for the recognition of  a registered  dealer.  It  says  that  where during the  previous or  current  year,  the  value  of  all taxable goods  manufactured for  sale by a dealer registered under section 29 or by a dealer registered under section 30, whose turnover  of  sales  or  purchases  has  subsequently, exceeded the  limits specified in sub-section (4) of section 3, exceeds Rs. 3,000/- such dealer on application by him may be granted  recognition by  the  Commissioner  and  on  such recognition being  granted, he  becomes a recognised dealer. Section S  of the Act says that subject to the conditions or exceptions (if  any) set  out  against  each  of  the  goods specified in  column 3  of the Schedule I to the Act, no tax shall be  payable on  the sales  or purchases  of any  goods specified in  that Schedule.  Section 6  of the Act provides that subject  to the  provisions of the Act and to any rules made thereunder  there shall  be paid by every dealer who is liable to  pay tax  under the Act, the tax or taxes leviable in accordance  with the provisions of Chapter II of the Act. Tn order  to ensure that as far as possible the incidence of tax under  the Act is not felt at more than one point in the series of transactions of sales and purchases of goods other than declared  good in  the State  of Gujarat, sections 7, 8 and 10 of the Act are enacted as follows:           "7. Levy  of sales  tax on  goods in  Schedule II,      Part A.-There  shall be  levied  a  sales  tax  on  the      turnover of  sales of  goods specified  in  Part  A  of      Schedule II at the rate set out against each of them in      column  3   thereof,  but  after  deducting  from  such      turnover,-           (i)  resale of  goods on the purchase of which the                dealer is  liable to  pay purchase  tax under                sec. 16.           (ii) resales  of goods  purchased by  him  from  a                Registered dealer           (iii) sales of goods, of resales of goods to which                clauses (i)  and (ii)  do  not  apply,  to  a                Recognised dealer  or to  a Commission  agent                holding a permit who purchases on behalf of a                principal who  is a  Recognised dealer,  upon                such dealer  or Commission agent, as the case                may be,  furnishing in  the circumstances and                subject to  the conditions  specified in sub-                clause (B) and item (ii) of sub-clause (C) of 440                sub-see. (1)  of sec.  13, a  certificate  as                provided therein, and           (iv) sales  of goods  or resales of goods to which                clauses (i)  and (ii)  do  not  apply,  to  a                Licensed dealer  or  to  a  Commission  agent

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              holding a permit who purchases on behalf of a                principal who is a Licensed dealer, upon such                dealer or  Commission agent,  as the ease may                be;  furnishing   in  the  circumstances  and                subject to  the conditions  specified in item                (i) of  sub-clause (A)  and item  (i) (a)  of                sub-clause (C)  of sub-sec. (I) of sec. 13, a                certificate as provided therein.           "8. Levy of general sales tax on goods in Schedule      II Part  B-There shall be levied a general sales tax on      the turnover  of sales  of goods  specified in  Part of      Schedule II at the rate set out against each of them in      column  3   thereof,  but  after  deducting  from  such      turnover,-           (i)  resales of goods on the purchase of which the                dealer is  liable to  pay purchase  tax under                see. 16;           (ii) resales  of goods purchased from a Registered                dealer by  a dealer  who is  not  a  Licensed                dealer at the time of such purchase, and           (iii) sales of goods, or resales of goods to which                clauses (i)  and (ii)  do  not  apply,  to  a                Licensed dealer,  Recognised dealer  or to  a                Commission  agent   holding  a   permit,  who                purchases on  behalf of  a principal who is a                Licensed dealer  or a Recognised dealer, upon                such dealer  or Commission  agent as the ease                may be  furnishing, in  the circumstances and                subject to  the conditions  specified in see.                13, a certificate as provided therein."           " 10.  Levy of  sales tax and general sales tax on      goods specified  in Schedule  III.-(I) There  shall  be      levied a  sales tax  on the  turnover of sales of goods      specified in  Schedule III  at the rate set out against      each of  such goods  in column  3  thereof,  but  after      deducting from such turnover,-           (i)  resales of goods on the purchase of which the                dealer is  liable to  pay purchase  tax under                see. 16, 441           (ii) resales of  goods purchased  by  him  from  a                Registered dealer,           (iii)sales of  goods. Or resales of goods to which                clauses (i)  and (ii)  do  not  apply,  to  a                Recognised dealer  or to  a Commission  agent                holding a permit who purchases on behalf of a                principal who  is a  Recognised dealer,  upon                such dealer  or Commission agent, as the case                may be,  furnishing in  the circumstances and                subject to  the conditions  specified in sub-                clause (B) and item (ii) of sub-clause (C) of                sub-sec. (1)  of sec  13,  a  certificate  as                provided therein, and C           (iv) sales of  goods or  resales of goods to which                clauses (i)  and (ii)  do  not  apply,  to  a                Licensed dealer  or  to  a  Commission  agent                holdings permit  who purchases on behalf of a                principal who is a Licensed dealer, upon such                dealer or  Commission agent  as the  case may                be,  furnishing   in  the  circumstances  and                subject to  the conditions  specified in item                (i) of  sub-clause (A)  and item  (i) (a)  of                sub-clause (C)  of sub-sec. (1) of sec. 13, a                certificate as provided therein.           (2)  There shall  be levied a general sales tax on

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              the turnover  of sales  of goods specified in                Schedule III at the rate set out against each                of such  goods in column 4 thereof, but after                deducting from such turnover-           (i)  resales of  goods purchased from a Registered                dealer, by  a dealer  who is  not a  Licensed                dealer at the time of such purchase; and           (ii) sales of  goods, or  resales of  goods  which                clause (i)  does  not  apply  to  a  Licensed                dealer, or  Recognised dealer or a Commission                agent  holding  a  Permit  who  purchases  on                behalf of  a  principal  who  is  a  Licensed                dealer  or  a  Recognised  dealer  upon  such                dealer or  Commission agent,  as the case may                be,  furnishing   in  the  circumstances  and                subject to  the conditions  specified in sec.                13 a certificate as provided therein." 442      It may  be noted that in the above provisions that from the turnover  of sales  of  goods  of  a  dealer  which  are otherwise  taxable,   the  turnover   of  goods  sold  to  a Recognised dealer, upon such Recognised dealer furnishing in the circumstances and subject to the conditions specified in sub-clause (B) of sub-section (1) of section 13 of the Act a certificate as  provided therein  becomes deductible  and no tax is  payable on  such sales  in favour  of the Recognised dealer. The  relevant part  of section  13 of  the Act reads thus:-           "13.  No  deduction  from  turnover  except  on  a      certificate.-(1) There  shall not  be deducted from the      turnover of sales, sales of goods to a Licensed dealer,      Recognised dealer  or to  a Commission  agent holding a      permit  purchasing  on  behalf  of  his  principal,  as      provided in sections 7, 8 and 10 unless-           (A)......           (B)  The   Recognised  dealer   certifies  in  the      prescribed form,  that the  goods other than prohibited      goods sold to him are goods purchased by him for use by      him as  raw or  processing materials  or as  consumable      stores in  the manufacture of taxable goods for sale by      him; or      Rule 24(4) of the Rules prescribes that the certificate issued by  a Recognised  dealer shall be in Form No. 19. The relevant part of Form No. 19 reads:-           ".... and  that the goods purchased by me/the said      .......... and  specified in  bill/cash memo/invoice No      .... dated.....  of M/s.....  address........ .... will      be used  by  me/the  said......  as  raw/or  processing      materials or  consumable stores  in the  manufacture of      taxable  goods   viz.  ........   for  sale  by  me/the      said..... and  that such  sale  shall  not  take  place      outside the State of Gujarat.           (Emphasis supplied)"      The expression  ’taxable goods’  is defined  by section 3(33) of the Act thus:-           "2(33). "taxable  goods" means  goods  other  than      those on  the sale  or purchase  of  which  no  tax  is      payable under  sec. 5  or sec.  49  or  a  notification      issued thereunder." 443      Sub-section (1)  of section 49 provides that subject to the conditions  or exemptions. if any, specified in relation to them,  the classes  of sales  or  purchases  referred  in clauses (i)  to (vii)  of section 49(1) shall be exempt from the payment of the whole of tax payable under the provisions

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of  the  Act.  Sub-section  2  of  section  49  of  the  Act authorises  the   State  Government   to  exempt  any  other specified class  of sales by a notification published in the Official Gazette. Section 49(2) reads:-           "49. Exemptions (1)           (2) Subject  to such  conditions as it may impose,      the State  Government may, if it considers it necessary      so to do in the public interest, by notification in the      Official Gazette,  exempt any  specified class of sales      or purchases  from payment  of the  whole  or  any  tax      payable under the provisions of this Act.’      By a  notification dated  April 29,  1970 issued  under section 49(2)  of the  Act the State Government exempted the entire tax  payable on sales of goods (other than prohibited goods) by  a registered dealer to an electrical undertaking, certified for  the  purpose  by  the  Commissioner,  if  the electrical undertaking  furnished to  the selling  dealer  a certificate in  Form appended  to the  notification  stating inter alia  that the  goods purchased  were required for the use of  the generation  or distribution of electrical energy by the  undertaking. In  view of  the above notification the sales made  to the electrical undertaking become exempt from payment of  sales tax  under  the  Act  on  the  undertaking furnishing the  required certificate  and no tax was paid by the appellants  in these  two  appeals  on  sales  of  goods effected by them in favour of the electrical undertaking. It is now  necessary to  refer to  section 16  of the  Act, the relevant part of which reads :-           "16. Liability  to purchase  tax for contravention      of terms  of certificate  etc.-(1) Where  any dealer or      Commission agent  has purchased any taxable goods under      a certificate given by him under section 12 or 13, and      (a)  contrary to  such certificate,  the goods are used           for  another   purpose,  or   are  not  resold  or           despatched in  the manner  and within  the  period           certified, or 444      (b)  on the  resales in the course of inter-State trade           or commerce,  of the  goods so  purchased, no  tax           under the  Central Sales  Tax Act  1956 (LXXIV  of           1956), is  actually payable  by him  on account of           any  deduction   admissible  under   any  of   the           Provisions of the said Act.      then such dealer or Commission agent shall be liable to      pay tax  on the  purchase price  of the goods purchased      under  such  certificate;  and  accordingly,  he  shall      include the  purchase price  thereof in his turnover of      purchases in his declaration or return under section 40      which he is to furnish next thereafter.           (2) .......           (3) the  purchase tax  leviable under this section      in respect of any goods specified in Schedule II or III      shall be  the aggregate  of all  taxes which would have      been leviable  thereon but  for the  certificate  given      under section 12 or 13.           (4) If  any question  arises whether  the purchase      price of  goods purchased  under  a  certificate  given      under section  12 or 13 is not liable to be included in      the turnover  of purchases  of a  dealer or  Commission      agent under  this section,  the burden  of  so  proving      shall be  upon such  dealer, or as the case may be, the      Commission agent."      Section 16  of the Act provides that where a dealer has purchased any taxable goods under a certificate given by him under section  13 and  has used  the goods  for a  different

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purpose contrary to such certificate, then such dealer shall be liable  to pay  tax on  the purchase  price of  the goods purchased under such certificate and his liability has to be computed in  the manner  stated in  that section. It is this liability of  the appellants  that is  in dispute  in  these appeals.      It is  not disputed  that the appellants are recognised dealers; that  they had  purchased raw  materials which were taxable goods  (other than prohibited goods) from registered dealers against  certificates issued by them in Form No. 19; that no  sales tax  had been  paid on sales in their favour; that they  had manufactured  goods by  using  the  said  raw materials that  they had  sold a  part of  the goods  to  an electrical undertaking  notified under  section 49(2) of the Act and  that no tax had been paid on sales effected by them in 445 favour  of  the  electrical  undertaking.  It  is  also  not disputed that  in Form No. 19 the appellants had stated that the raw  materials  purchased  by  them  would  be  used  to manufacture taxable  goods which  would be  sold inside  the State of  Gujarat. The question for consideration is whether the appellants  had  used  the  raw  materials  for  another purpose contrary to the terms of Form No. 19. The contention of the  Department is  that the  appellants had  contravened Form No.  19 by  manufacturing goods which were not ’taxable goods’ and  hence were  liable to  pay purchase  tax on  the purchase of  raw materials  under section  16 of the Act and the  contention   of  the   appellants  is  that  the  goods manufactured and sold by them to the electrical undertakings were ’taxable goods’ and merely because they were sold to an electrical  undertaking   under  transactions   exempted  by section 49(2)  of the  Act, the  goods did  not cease  to be taxable goods. The solution to the question, therefore, lies on the true meaning of the expression ’taxable goods’.      Relying upon the decision of this Court in the Stale of Tamil Nadu v. M.K. Kandaswami and Ors. it is urged on behalf of the  appellants that  the expressions  ’taxable persons’, ’taxable goods’  and ’taxable events’ are entirely different concepts in  sales tax  law; that the goods in question were taxable goods  as any  sale of  those goods  not covered  by section 49(1)  and (2) would make such sale taxable and that section 49(1)  and (2)  of the  Act referred  to only events which resulted  in the  exemption from payment of sales tax. It is  further argued that all goods the sale or purchase of which is  liable to  tax under the Act are taxable goods and that goods  would not be taxable goods only when their sales are exempted  generally from  payment of  tax as provided in section 5  of the  Act. It is, therefore, contended that the goods manufactured  by the appellants not having been goods, the sale  or purchase of which had been exempted from tax by inclusion in Schedule I to the Act, the appellants could not be treated  as having  infringed the  terms of  Form No. 19, notwithstanding the  existence of  the circumstance that the particular sales made by them to the electrical undertakings were exempt  from payment of tax. The second ground urged on behalf of  the appellants  is that  the condition under Form No. 19  became satisfied  immediately  on  the  goods  being manufactured by  the appellants  as at  that stage the goods were really  taxable and  that a subsequent event of sale to the electrical  undertaking cannot  be considered  as having violated the  said condition.  The third ground urged by the appel- 446 lants is  that a  transaction of  sale involved two facets-a

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sale and  a purchase  and if a sale is exempted from tax, it cannot be  said the  purchase is also exempted. On the above footing it  is contended that since under section 49(2) only the tax  on sale  is exempted  and nothing is said about the liability of  the purchaser  to tax,  it cannot be said that the goods  which were  otherwise  taxable  had  become  non- taxable on  being sold  under a  transaction which attracted section 49(2) of the Act.      We find  no substance in any of the three grounds urged on behalf  of the appellants for the reason that the present case  is  governed  by  the  definition  of  the  expression ’taxable  goods’   in  section  2(33)  of  the  Act.  It  is interesting to  note that  the Bombay  Sales Tax  Act,  1959 (Bombay Act  No. 1  of 1959) which was in force in the State of Gujarat  before the  Act came  into force  and which  was repealed by  section 88  of the Act contained the definition of the  expression ’taxable goods’ in section 2(33) thereof. The expression ’taxable goods’ was defined in the Bombay Act as ’goods  other than those on the sale or purchase of which no tax  is payable under section 5’. In the Bombay Act there was also  a provision corresponding to section 49 of the Act in section  41 thereof  which empowered the State Government subject to  such conditions  as it may impose to exempt by a notification published in the Official Gazette any specified class of sales or purchases from payment of the whole or any part of  any tax  payable thereunder if the State Government was satisfied  that it  was necessary so to do in the public interest. Still  the definition  of ’taxable  goods’ in that Act did  not  refer  to  sales  exempted  under  section  41 thereof. But  in the  Act which  repealed and  replaced  the Bombay Act the meaning of the expression ’taxable goods’ has been narrowed  down as  section  2(33)  of  the  Act  reads- ’taxable goods’  means goods other than those on the sale or purchase of  which no  tax is payable under section 5 (which corresponds to  section 5  of the Bombay Act) and section 49 of the  Act (which  corresponds to  section 41 of the Bombay Act)  or   a  notification   issued  thereunder.   By   this definition, the  dichotomy that  is stated  to exist between ’taxable goods’ and ’taxable events’ has been given a go by. It may  be that section 5 and Schedule I refer to goods only but section  49 deals  with only taxable events which result in the  exemption from  payment of  tax  on  the  conditions mentioned therein  or in  the notification issued thereunder being satisfied  even though  the goods  in question  do not come under  Schedule I.  Secondly one  has to  wait till the disposal of  the goods by the dealer to find out whether the goods are taxable goods or not in view of the 447 definition of  the said  expression which  takes away  goods sold under  circumstances attracting  section  49  from  the scope of  the meaning of that expression. Nor does the third ground survive  for the  very same  reason. If  the sale  is exempt from  tax under section 49 of the Act, the goods sold would not be taxable goods. We need not go into the question whether the  purchaser in a sale under section 49 of the Act has to  pay tax in these cases. This reason also disposes of an allied argument of the appellants that the possibility of any liability  arising under  section 50  of the  Act on the breach of  any  condition  imposed  by  section  49  or  the notification issued  thereunder would absolve the appellants of their  liability to  pay the  tax under section 16 of the Act. Any  such levy made under section 50 has not been shown to have any effect in law on the liability of the appellants under section 16.      The scheme  of the  Act appears  to be  that sales  tax

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should be levied on goods which are not included in Schedule I at  least once inside the State in the series of sales and purchases even  though they  may have  been  converted  into manufactured goods  and that is why Form No. 19 requires the purchaser to state that the goods will be used by him as raw or processing  materials or  as  consumable  stores  in  the manufacture of  taxable goods  for sale  by him  inside  the State and  section 16  of the  Act provides  that where  any dealer has  purchased any  taxable goods under a certificate given by  him under  section 12 or section 13 of the Act and contrary to  such certificate the goods are used for another purpose or  are not  resold or  despatched in the manner and within the  period certified or on the resales in the course of inter-State  trade or commerce, of the goods so purchased no tax  under the  Central Sales Tax Act is actually payable by him  on account of any deductions admissible under any of the provisions of that Act, then such dealer shall be liable to pay  tax on  the purchase  price of  the goods  purchased under such  certificate. The  deliberate alteration  of  the definition  of   ’taxable  goods’   in  the   Act  also   is attributable to the said intention of the State legislature.      The appellants  also cannot  derive any assistance from the decision  of this  Court in  Polestar Electronic  (Pvt.) Ltd. v. Additional Commissioner, Sales Tax and Anr. as these cases are governed by 448 the provisions  of the  Act and  as there  appears to  be no similarity between  the facts of these appeals and the facts involved in that case.      For the  foregoing reasons, we do not find any merit in these appeals. The appeals are dismissed with costs. Hearing fee one set. P.B.R.    Appeals dismissed 449