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1990 Supreme(Cal) 190
B.C. Chakrabarti, L.N. Ray, P.C. Banerjee, JJ.
KEJRIWAL ELECTRONICS PRIVATE LIMITED & CO.
Versus
COMMERCIAL TAX OFFICER, MANICKTALA CHARGE AND OTHERS.
Case No. RN-147(T) with RN-369(T) of 1989,
Decided On :26-04-1990
Bhaskar Gupta, Senior Advocate and Sumit Kr. Chakraborty, Advocate, for the applicants.
D. Majumdar, State Representative, for the respondents.
A notification issued under section 4AA of the West Bengal Sales Tax Act, 1954, which exempts certain newly set up small-scale industrial units from payment of tax, does not exempt such units from payment of turnover tax and purchase tax.
Headnote:
WEST BENGAL SALES TAX ACT, 1954 - Turnover tax and Purchase tax - Exemption - Notification No. 1177-F.T. dated March 31, 1983 - Interpretation - Whether a newly set up small-scale industrial unit is entitled to exemption from turnover tax and purchase tax on the strength of the notification issued under section 4AA of the Act - Held, no.
Fact of the Case:
The applicant, a newly set up small-scale industrial unit, claimed exemption from turnover tax and purchase tax during the period of validity of the eligibility certificate granted to it under Notification No. 1177-F.T. dated March 31, 1983, issued under section 4AA of the West Bengal Sales Tax Act, 1954 (the 1954 Act). The respondents, however, demanded and collected the said taxes from the applicant. The applicant filed a writ petition in the High Court challenging the demand and collection of taxes.
Finding of the Court:
The High Court held that the applicant was not liable to pay turnover tax and purchase tax during the period of validity of the eligibility certificate. The court held that the notification issued under section 4AA of the 1954 Act did not contemplate turnover tax or purchase tax. The court further held that section 4AAA of the 1954 Act, which deals with turnover tax, is a self-contained provision and the notification issued under section 4AA cannot be read as a prescription contemplated by clause (d) of sub-section (2) of section 4AAA.
Issues: Whether a newly set up small-scale industrial unit is entitled to exemption from turnover tax and purchase tax on the strength of the notification issued under section 4AA of the West Bengal Sales Tax Act, 1954.
Ratio Decidendi: The court held that the notification issued under section 4AA of the 1954 Act did not contemplate turnover tax or purchase tax. The court further held that section 4AAA of the 1954 Act, which deals with turnover tax, is a self-contained provision and the notification issued under section 4AA cannot be read as a prescription contemplated by clause (d) of sub-section (2) of section 4AAA.
Final Decision: The court dismissed the writ petition filed by the applicant.
B. C. CHAKRABARTI (Chairman). - Both the cases arise out of the same application initially filed in the High Court as a writ application under article 226 of the Constitution - one for extension of the interim order in terms of the provisions of the West Bengal Taxation Tribunal Act, 1987 and the other relating to the main application. The prayer for extension of the interim order was allowed vide order dated May 17, 1989. In regard to the main application, the case of the applicant is as follows :
The applicant No. 1 is a private company within the meaning of the Companies Act, 1956 and the applicant No. 2 is a shareholder of the said company. The company carries on the business of manufacturing television receiver sets at its factory situated at Raghunathpur, Jaynagar, in the district of 24 Parganas. It is a newly set up small-scale industrial unit duly registered with the Cottage and Small-scale Industries Department of the Government of West Bengal. The goods manufactured by the company have been notified under the West Bengal Sales Tax Act, 1954 (hereinafter referred to as "the 1954 Act"). The company is duly registered as a dealer under the 1954 Act and also under the Central Sales Tax Act, 1956. A notification being Notification No. 1177-F.T. dated March 31, 1983, provided that no tax shall be payable by a dealer under the Act on sales by a newly set up small-scale industry of notified commodities other than those included in Schedule X manufactured by it during the period of three years if the industry is situated within the area of the Calcutta Metropolitan District or for five years if it is situated elsewhere in West Bengal from the date of its first sale of such manufactured notified commodity. A dealer claiming the benefit of the notification was required to obtain a certificate of eligibility. The first sale of the applicant was made on March 8, 1984. The applicant No. 1 applied to respondent No. 3 for issuance of the eligibility certificate pursuant to which respondent No. 3 issued a certificate of eligibility dated December 21, 1984, certifying that the company was eligible to claim exemption from tax during the period of validity of the certificate. The certificate was initially valid for the period from March 8, 1984 to December 31, 1984 and was, thereafter, renewed and extended from time to time up to March 7, 1987. In terms of the Notification No. 1177-F.T. dated March 31, 1983, the applicant was granted exemption for the period of three years. Section 4AAA provides that every dealer whose aggregate of the gross turnover under the 1954 Act and the Bengal Finance (Sales Tax) Act, 1941, exceeds Rs. 50 lakhs, shall in addition to the tax payable by him under section 4 of the Act, be liable to pay turnover tax on his turnover as is specified in sub-section (2). Under sub-section (2) of section 4 of the 1954 Act, a dealer liable to pay tax under sub-section (1) of the said section and availing himself of the benefit under section 23A of the Act by furnishing a declaration referred to in the proviso thereto, shall, in addition to the tax payable under sub-section (1), be liable to pay tax on all purchases from an unregistered dealer of goods taxable under the Bengal Finance (Sales Tax) Act, 1941, required by him for use directly in the manufacture of the notified commodity. In respect of the period from January 1, 1985 to March 7, 1987, a total sum of Rs. 19,04,042.05 was paid by and/or realised from the applicants by way of turnover tax under section 4AAA of the Act. Further a sum of Rs. 2,33,854.70 was paid by and/or realised from the company on the purchases made by them from unregistered dealers by way of purchase tax under sub-section (2) of section 4 of the Act. The respondents also purported to realise interest amounting to Rs. 1,92,408 for alleged delay in payment of the said amounts. The applicants were later advised that they were not liable to pay turnover tax or purchase tax under the Act dur
