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PATNA HIGH COURT
K.S.Paripoornan and N.K.Sinha JJ.
Ashirvad Enterprises
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 5197 of 1992 ;
Decided On : MAY 18, 1994
BIHAR FINANCE ACT, 1981 - SECTION 13 - BIHAR SALES TAX RULES, 1983 - RULE 45 - S.O. NO. 123 DATED 5-3-1990 - INTERPRETATION - APPLICABILITY - CONDITIONS - SET-OFF OF SALES TAX - ELIGIBILITY - INDUSTRIAL UNIT REGISTERED UNDER SECTION 13(1)(B) - FACILITY OF PURCHASING RAW MATERIALS AT CONCESSIONAL RATE - AVAILMENT - PROOF - NECESSITY.
Fact of the Case:
The petitioner, a small scale industrial unit, challenged the order of the Deputy Commissioner of Commercial Taxes, Special Circle, Patna, rejecting its application for the issue of Form XXVIII-B under Rule 45 of the Bihar Sales Tax Rules, 1983. The petitioner claimed entitlement to the facility of set-off of sales tax paid on the purchase of raw materials with the sales tax payable on the sale of manufactured goods under S.O. No. 123 dated 5-3-1990, issued by the State Government. The Deputy Commissioner rejected the application on the ground that the petitioner was registered under Section 13(1)(b) of the Bihar Finance Act, 1981, and was entitled to the facility of purchasing raw materials at a concessional rate of tax, which disqualified it from availing the set-off facility under S.O. No. 123.
Finding of the Court:
The court held that the petitioner was entitled to the benefit of S.O. No. 123 dated 5-3-1990, as it had surrendered all the unused Forms No. IX and had not purchased raw materials at the concessional rate from April 1991. The court found that the Deputy Commissioner's interpretation of S.O. No. 123 was incorrect, as it required the petitioner to have availed of the facility of purchasing raw materials at a concessional rate under Section 13 of the Bihar Finance Act, rather than merely having the facility available to it. The court also held that the Deputy Commissioner could not withhold the issue of Forms No. XXVIII-B under Rule 45(b) of the Rules, as the petitioner had not admitted its liability to tax in the return and had not deposited the amount.
Issues: 1. Whether the petitioner was entitled to the facility of set-off of sales tax paid on the purchase of raw materials with the sales tax payable on the sale of manufactured goods under S.O. No. 123 dated 5-3-1990? 2. Whether the Deputy Commissioner could withhold the issue of Forms No. XXVIII-B under Rule 45(b) of the Rules, as the petitioner had not admitted its liability to tax in the return and had not deposited the amount?
Ratio Decidendi: 1. The court interpreted S.O. No. 123 dated 5-3-1990 and held that the petitioner was entitled to the benefit of the set-off facility, as it had not availed of the facility of purchasing raw materials at a concessional rate under Section 13 of the Bihar Finance Act, but merely had the facility available to it. 2. The court held that the Deputy Commissioner could not withhold the issue of Forms No. XXVIII-B under Rule 45(b) of the Rules, as the petitioner had not admitted its liability to tax in the return and had not deposited the amount.
Final Decision: The court quashed the Deputy Commissioner's order and directed him to consider the matter afresh in accordance with law. The court also directed the Deputy Commissioner to supply Form No. XXVIII-B under Rule 45 of the Bihar Sales Tax Rules, 1983 till the final disposal of the matter.
K.S.Paripoornan, J.
1. The petitioner firm is a small scale industrial unit. It is a registered dealer under the Bihar Finance Act, 1981 , and under the Central Sales Tax Act, 1956. In this writ application, the petitioner assails Annexure 5, an order passed by the second respondent-Deputy Commissioner of Commercial Taxes, Special Circle, Patna, dated 9-6-1991. By the said order, the second respondent has declined the prayer of the petitioner for the issue of Form XXVIII-B under Rule 45 of the Bihar Sales Tax Rules, 1983 . The ground of rejection was that the dealer has not deposited the admitted tax on or after 1-9-1991, by wrongly pleading the facility of set-off afforded by S. O. No. 123 dated 5-3-1990.
2. The petitioner-firm is engaged in manufacturing P. V. C. Pipes and fittings, H. D. P. E. Pipes and fittings and L. D. P. E. pipes and fittings. It is stated that the petitioner was availing the benefit of S. O. No. 787, dated 10-9-1986, which was an incentive afforded to the small scale industrial units by the State Government. The notification provided for facility of set-off of the tax paid on the purchase of raw materials used for the manufacture of goods with the sales tax payable by the dealer on sales of such manufactured goods and after such set-off to pay only such amount of sales tax which is in excess of the amount paid by the dealer on the purchase of raw materials. This was in force till 31-8-1991. Even before the expiry of the said notification, the State Government promulgated a fresh Notification No. S.O. 123 dated 5-3-1990, in exercise of the powers vested in it under Sec. 22 of the Bihar Finance Act, 1981 . The said notification dated 5-3-1990 is Annexure T. The benefit of the said notification was afforded to existing and newly established small and/or medium scale industrial units in the State. The units were allowed to set-off the amount of sales tax paid by them on purchase of raw materials directly required for sale of manufactured goads within the State, with the amount of sales tax payable by such dealer on the sale of such manufactured goods, subject to the condition that such dealer did not purchase the raw materials at concessional rate under Sec. 13 of the Act. The petitioner had applied for and was granted a certificate of registration under Sec. 13 of the Act. The certificate is granted by the prescribed authority not only for purchase of raw materials at concessional rate of tax but also for sale to Government department and purchase of plant and machineries and packing materials by a dealer engaged or intended to engage in manufacture of goods for sale. By Notification No. S.O. 125 dated 5-3-1990, the facility of set-off sales tax was extended for goods sold in the course of inter-State trade or commerce. The said notification is Annexure 3. The petitioner was availing the facility of set-off so allowed. It is stated that respondent No. 2 began to create difficulties from March, 1992, and insisted that the petitioner should first deposit the entire amount of sales tax collected by it on sales of manufactured goods and file, details of his claim for set-off in respect of the amount of tax paid on purchases and the set-off will be allowed only in the succeeding months. This direction is illegal. However, the petitioner deposited the entire amount of sales-tax in March, 1992. Subsequently, the second respondent raised objection to the very eligibility of the petitioner to set-off the tax and wanted the petitioner to file a clarification. Under Rule 45 of the rules, the petitioner has to apply for the grant of road permit, "Form XXVIII-B" before the second respondent. It is after verifying the details the Form is issued. When an application was so made, the second respondent, by order dated 9-6-1992, rejected the same (Annexure 5). The main ground, on which the application of the petitioner was rejected, is that the petitioner is registered under Sec. 13 (b) of the Act and is entitled t
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