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CASE NO.: Appeal (civil)  2726-2728 of 1999

PETITIONER: State of Punjab & Ors.

RESPONDENT: M/s Punjab Fibres Ltd. & Ors.

DATE OF JUDGMENT: 14/12/2004

BENCH: S. N. Variava, Dr. AR. Lakshmanan & S. H. Kapadia

JUDGMENT: J U D G M E N T

S. N. VARIAVA, J.  

       These Appeals are against the Judgment dated 31st August 1998  of the Punjab and Haryana High Court.         Briefly stated the facts are as follows.         The first Respondent is a Spinning Mill, which claimed benefit of  Notification issued by the Punjab Government on 23rd November 1979.   As the decision in this case depends on the  Notification it is  reproduced herein for the sake of convenience :-

"The 23rd November, 1979. No.S.O.82/P.A.46/48/s.5/Amd./79.  In exercise  of the powers conferred by sub-section (1) of  Section 5 of the Punjab General Sales Tax Act,  1948 (Punjab Act No.46 of 1948) and all other  powers enabling him in this behalf, the Governor  of Punjab is pleased to make the following  further amendment in the Punjab Government  Excise and Taxation Department Notification  No.S.O.26/P.A./46/S.5/72 dated the 10th  August, 1972 namely :-

AMENDMENT

               In the said notification, after the proviso  to item 4, the following further proviso shall be  added, namely;-

               Provided further that the rate of  purchase tax on cotton shall be two paise in a  rupee on the purchases made by the textile mills  established on or after the first December, 1979  for a period of five years to be reckoned from  the aforesaid date subject to the following  conditions:-

(i)     that these mills shall start  production by 31st December 1981; and

(ii)    that these mills shall not despatch  yarn in the course of inter-state  transaction on consignment basis or  through ex-state commission agents."  

       Initially, the Assessing Authority granted to the Respondents  concessional rate of tax as per the said Notification.  However, the

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Joint Excise and Taxation Commissioner invoked his suo motu powers  under Section 21 of the Punjab General Sales Tax Act, 1948 on the  ground that the Mill was not established prior to 1st December 1979  and that the Respondents had been transferring yarn outside the  State.  After considering the reply of the Respondents, the Assessing  Authority held that the Respondents were not entitled to the benefit of  the Notification.  They, therefore, asked the Respondents to pay the  differential rate of duty and penalty.          The Revision Petition filed by the Respondents before the Sales  Tax Tribunal was dismissed on 30th April 1990.  It being held that the  Respondents had not fulfilled the conditions of the Notification and  were thus not entitled to the benefit thereof.         Under the Punjab General Sales Tax Act, there is a provision of  Appeal against the Order passed by the Sales Tax Tribunal.  The  Respondents filed an Appeal. They also filed a Writ Petition in the High  Court.  Under these circumstances, the learned Single Judge of the  High Court should never have entertained the Writ Petition.   Surprisingly, the learned Single Judge of the High Court entertains  the  Writ Petition overruling the objection that the  Writ Petition was not  maintainable.  The learned Single Judge of the High Court held, on  facts, that the Mill had not been established prior to 1st December  1979.   An additional submission, taken on behalf of the Appellants,  that the Respondents were not a Textile Mill, was not accepted.  The  learned Single Judge further held that the despatches outside the  State of Punjab were only to the branches of the Respondents  and  that  second condition of the Notification was not violated as it was not  shown that there was a sale transaction outside the State.  The High  Court held that there was no evidence to show that any sale had taken  place outside the State. The learned Single Judge of the High Court  held that all the conditions of the Notification had been made out and  that the Respondents were entitled to the benefit of the Notification.         The Appeal filed by the Appellants has been dismissed by the  Division Bench of the Punjab and Haryana High Court by the impugned  Judgment. It has been held that the Mill had started after 1st  December 1979.  It has held that even though the Respondent is a  Spinning Mill it could be treated to be a Textile Mill.  It has been  noticed that  the Assessing Authority had initially taxed sales  outside  the State at 4% and had given the benefit of the Notification to the  other sales. It is held that it is a possible view  that the benefit of the  Notification was not to be granted only to the sales which have  taken  place outside the State.    The Division Bench thus dismissed the  Appeal.         It is settled law that to avail of the benefits of a Notification the  party must strictly comply with the conditions of the Notification.  It is  also settled law that the Notification has to be interpreted in terms of  its wording.  Where the language is very clear and unambiguous,  benefit cannot be granted merely on the ground of sympathy.         As can be seen from the Return filed by the Respondents, which   is set out in the assessment order, there was admittedly inter-state  sales in a fairly large amount. This has been noticed by the Division  Bench.  The learned Single Judge of the High Court erred in  considering these to be mere branch transfers when the Respondents  themselves showed them as inter-state sales in their returns.  Thus  the reasoning of the learned Single Judge of the High Court that these  are mere transfers out of State is erroneous.   The reasoning given by  the Division Bench is also not acceptable. The wording of clause (ii)   are very clear. All that is required is despatch out of the State. Once  there is despatch outside the State the benefit of the Notification  cannot be claimed.   This is so because this Notification has been  issued by the Punjab Government under the Punjab General Sales Tax  Act.  The whole purpose of such Notification is to give benefit only to  such Mills as are selling within the State.  If the sale is within the State  then the Government is getting revenue. Thus a concession is given  with a condition that the Mill will not despatch out of the State.      With  the wording being clear and unambiguous it is not possible  to accept

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the view  that the benefit can be given in respect of sales made within  the State whereas sales outside the State can be charged at the higher  rate.   If the interpretation was to give benefit to sales made within  the State, the wording would have been to the effect "on such yarn as  is sold within the State".  In view of the clear wording of sub-clause  (ii), the High Court erred in granting the benefit of the Notification  when the Respondents were clearly not entitled to the benefit thereof.         As we have already held that the Respondents were not entitled  to the benefit of the Notification, we do not go into the question as to  whether or not the Respondent-Mill was established before 1st  December 1979 or the question whether they can be considered to be  a Textile Mill.         In this view, we are unable to sustain the Order of the learned  Single Judge and the impugned Order.  They are, accordingly, set  aside.           Accordingly, the Appeals are allowed.  There will be no order as  to costs.