An agreement between the State Government and an assessee for assessment of sales tax on a certain percentage of gross turnover is not legally binding unless it is reviewed and acted upon as per the terms of the agreement.

Judgement

KAPUR, J. : This appeal by Special Leave against the order of the Board of Revenue, Bihar, relates to the assessment for the year 1950-51 of Sales tax of the appellant under the Bihar Sales Tax Act, 1947 (Act 19 of 1947), hereinafter called the Act .

2. The appellant was a railway caterer, who had Refreshment Rooms and Tea Stalls at various Railway Stations. He sold various kinds of eatables, cigarettes, betels, milk fruits and tea at railway stations. He was registered as a dealer under the Act and had been carrying on business for a fairly long time. His case was that as it was difficult for him to maintain accounts in regard to eatables, some of which were taxable and others were not, he made representation in 1944 to the Bihar Government for some arrangement so that the difficulty in keeping different sets of accounts would be obviated. As a result of his representation the Bihar Government by a letter dated June 5, 1945, agreed that the appellant s taxable turnover in Bihar would be taken to he 66 2/3% of the gross turnover during the quarter ending December 31, 1944, and that this percentage might be revised after December 31, 1945. As a result of this letter, the appellant did not keep separate accounts for taxable and non-taxable items and for some of the quarters subsequent to those mentioned in the letter above referred to were also taxed according to the arrangement contained in that letter. For the period April 1, 1950, to March 31, 1951, the gross turnover was Rs. 11,16,270-11-0 and the appellant claimed that he be assessed at 66 2/3% of that amount; but the Sales Tax Officer taxed him on the total gross turnover except for the usual rebate of 4% allowed in such cases. He submitted that in this turnover there were included tax-free articles such as fresh milk, meat, fish, green vegetables etc., which were exempt from Sales tax under S. 6 of the Act. His submission was that the excess amount assessed was Rs. 11,416-15-0 Against this order he took the usual appeals to the Sales tax Authorities and after the appeals were rejected he took a revision under S. 24 of the Act before the Board of Revenue, Bihar, where also he was unsuccessful. Under s. 25 of the Act he applied for referring 6 questions of law to the High Court and those questions were also follows:-

(i) Whether upon the true construction of the agreement of 1945 between the State Government and the assessee which had been acted upon and not reviewed, the Department was legally entitled to tax petitioner on his gross turnover instead of 66 2/3% of the same?

(ii) Whether the Member, Board of Revenue, having held that in the circumstances the petitioner had prima facie bona fide grounds for his belief that the arrangement which the Department had entered into, would continue could legally hold that the petitioner was not entitled to be assessed in terms of the said arrangement?

(iii) Whether in the facts and circumstances of the case, it is open to the Department to challenge the continuance of the arrangement arrived at between the State Government and the petitioners especially so when the State Government by its own acts or omissions misled the petitioner into maintaining his accounts in a manner prejudicial to the petitioner s claim for deductions on account of sale of tax-free goods during the period?

(iv) Whether in the facts and circumstances of the case, the petitioner was entitled to the entire deduction on account of sale of meat and fish in terms of Notification No. 5564 Ft., dated 30-3-49 under Section 6 of the Bihar Sales Tax Act, 1947?

(v) Whether the Member, Board of Revenue having held that meat and fish mentioned in Notification No. 5564 Ft. dated 30-3-49 under Section 6 of the Bihar Sales Tax Act, 1947, included boiled meat and fish and cold meat and fish, could legally hold that meat and fish cooked otherwise were not covered in the terms of said notification?

(vi) Whether in terms of the Notification No. 5564 Ft. dated 30-3-49 cold