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2004(8) Supreme 893
SUPREME COURT OF INDIA
(From Patna High Court)
N. Santosh Hegde & B.P. Singh, JJ.
The Commissioner of Commercial Tax, Ranchi & Anr. -Appellants
versus
M/s. Swarn Rekha Cokes and Coals Pvt. Ltd. & Ors. -Respondents
Civil Appeal No. 7798 of 2002
With
Civil Appeal No. 2450/2003
With
Civil Appeal No. 3765/2003
With
Civil Appeal No. 3035/2004 @ SLP (C) No. 13401/2003
Decided on 7-5-2004
Counsel for the Parties :
For the Appearing Parties : Mukul Rohtagi, Additional Solicitor General, M.L. Verma, R.F. Nariman, Dr. G.C. Bharuka, Dr. A.M. Singhvi, K. Parasaran, Rakesh Dwivedi, Mahendra R. Anand, M.N. Krishnamani, Sr. Advocates, Ashok Mathur, Arup Banerjee, Rajiv Shakdhar, U.A. Rana, Arvind Kumar, S.D. Sanjay, Devashish Bharuka, Prakash Srivastava, R.C. Kohli, Saket Singh, B.B. Singh, Aditya Kumar Choudhary, Neeraj Kumar Jain, Sanjay Singh, U.S. Prasad, Ajit K. Sinha and Satya Mitra, Advocates.
Held : A conjoint reading of both these provisions makes it abundantly clear that the territorial references in any law in force immediately before the appointed day must be construed as meaning the territories within the existing State of Bihar before the appointed day. To facilitate their application in respect of the State of Bihar or Jharkhand, the appropriate Government may, before the expiration of two years from that day, by order, make such adaptations and modifications of the law as it may consider necessary or expedient by way of repeal or amendment. Till such law is so repealed or amended in accordance with law, it shall have effect. After their amendment or alteration, they shall have effect subject to the adaptations and modifications made. When, therefore, find no difficulty in holding that the notification of the Government of Bihar issued under Section 7(3)(b) of the Bihar Finance Act 1981 and published in the gazette on 22.12.1995 being S.O. No. 478 is law as defined by section 2(f) of the Act. The said notification holds the field and applies to all the territories which comprised the undivided State of Bihar. The States of Bihar and Jharkhand have been vested with power to make such adaptations and modifications of the law as they may consider necessary or expedient. This they can do by issuance of order before the expiration of two years from the appointed day. After the adaptations and modifications of the law, the law shall have effect as so modified or adapted till such time as a competent Legislature or other competent authority further alters, repeals or amends such law. (Para 26)
The statutory notification relied upon, therefore, continues to operate throughout the territories which earlier constituted the State of Bihar. Under Section 85, they shall continue to operate until repealed or amended in the manner provided. As a natural consequence, the entrepreneurs are entitled to the benefits and incentives provided in the said notification. Having regard to the overriding provisions of this Act, as envisaged under Section 91, the statutory notifications must prevail and the benefits flowing therefrom must accrue to the beneficiaries. We must not permit our mind to boggle by imagining that what was one State earlier has now become two and consequently what were intra-State sale transactions earlier are now inter-State sale transactions. If any law in force before the appointed day must have effect in the absence of its modification or repeal, the benefit under that law must flow notwithstanding the fact that in reality intra-State sale transactions may have become inter-State sale transactions. Law gives authority to the concerned State to bring about a change in the state of affairs, if it so considers necessary or expedient by modifying, or amending the law or by altering, repealing or amending it by legislation. We have, therefore, no doubt that the High Court of Jharkhand at Ranchi was wrong in dismissing the writ petition on the ground that the notification of 22.12.1995 could not apply to inter-State sale transactions. (Para 28)
When the State of Bihar announced its Industrial Policy in the year 1995, it could not foresee that the State will be divided five years later. But when the division of the state became a reality, the Parliament had to make appropriate provisions to carry on the administration in the two States. If the laws in force were to lapse on the day the division was effected, a chaotic situation would have emerged inasmuch as the newly created State would be rendered a State without laws. It is, therefore, that provisions like Sections 84 and 85 of the Act are enacted to maintain continuity, and at the same time authorize the States to make such modifications and adaptations as are considered necessary by mere issuance of orders within two years, and thereafter by Legislation or exercise of power by the competent authority. Such provisions have necessarily to be incorporated in legislations relating to reorganization of States. It is, therefore, appropriate that such legislations must be construed in the light of the unusual situation created by the creation of a new State and the object sought to be achieved. (Para 29)
We hold that the benefit of exemption from payment of sales tax on purchase of raw materials in respect of new units or the benefit envisaged for units which have undertaken diversification or expansion are available to those units, if eligible under S.O. 478 dated 22.12.1995 notwithstanding the fact that the erstwhile State of Bihar has been divided into two States by creation of the new State of Jharkhand. We are also satisfied that the said S.O. 478 has not been either modified, amended or altered by the State of Jharkhand and, therefore, it must continue to operate in the State of Jharkhand till such time as it is modified, repealed or altered in the manner prescribed by Section 85 of the Act. (Para 30)
JUDGMENT
B.P. Singh, J.-Leave granted in S.L.P. (C) No. 13401 of 2003.
2. In this batch of appeals by special leave, common questions of law arise for determination which for their answer depend on the interpretation of sections 2(f), 84 and 85 of the Bihar Re-Organization Act 2000 (Act 30 of 2000) enacted by the Parliament (hereinafter referred to as the "said Act") which on and from the appointed day created the new State of Jharkhand comprising the districts specified in section 3 thereof which formed part of the erstwhile State of Bihar. It is undisputed that the Central Government by Notification published in the Official Gazette appointed the 15th of November 2000 as the appointed day.
3. The core question which arises in these appeals is - whether on bifurcation of the existing State of Bihar, and creation of the State of Jharkhand comprising territories which before the appointed day comprised the territories of the State of Bihar, the benefits flowing from the Industrial Policy 1995 of the then State of Bihar crystallized in the Notification of the Government of Bihar issued under section 7(3)(b) of the Bihar Finance Act 1981 published in the Official Gazette on 22.12.1995, enures to the benefit of the beneficiaries under the Policy and under the Notification after the appointed day. In the cases in hand, we are primarily concerned with the benefit of exemption from payment of sales tax on purchase of raw materials extended to new units, and similar benefits to units, undertaking expansion/diversification for their expanded/diversified capacity and incremental production.
4. Civil Appeal No. 7798/2002 arises out of the judgment of a Division Bench of the High Court in a writ petition filed by the respondents, namely, M/s Swarn Rekha Cokes and Coals Pvt. Ltd. and others. The respondent claimed that it was entitled to the incentive promised in the Industrial Policy 1995 and the Notification issued pursuant thereto granting exemption from payment of sales tax on purchase of raw materials. It had fulfilled all the necessary requirements regarding registration and certification whereafter under S.O. 478 dated 22nd December 1995 and pursuant to the exemption certificate, it was entitled to purchase coal from the Bharat Coking Coal Ltd. ( BCCL for short) up to 22nd December 2006 with the benefit of exemption from payment of sales tax. However, since their claim of exemption from payment of sales tax was being disputed, it was compelled to file a writ petition before the High Court of Judicature at Patna. The aforesaid writ petition was allowed by a learned Single Judge of the High Court. The Commissioner, Commercial Taxes, Ranchi, however impugned the judgment of the learned Single Judge by filing Letters Patent Appeal No. 204 of 2002. According to him after bifurcation of the erstwhile State of Bihar, the benefit of exemption from payment of sales tax on the purchase of raw materials (coal in this case) was not permissible since BCCL which supplied coal was located at Dhanbad within the Jharkhand State. The exemption granted to the respondent was limited to its application to the State of Bihar and, therefore, could not be enforced in the State of Jharkhand. According to the appellant unless and until, the State of Jharkhand granted a similar exemption, the respondent was bound to pay tax and remit the same to the State of Jharkhand. The Letters Patent Appeal was dismissed by the High Court by its judgment and order of April 2, 2002 upholding the contention of the respondent and finding them entitled to the said benefit.
5. In the appeal arising out of S.L.P. (C) No. 13401 of 2003, the facts are similar and a learned Single Judge of the Patna High Court following the aforementioned judgment of the High Court in Swarn Rekha Cokes and Coals Pvt. Ltd., allowed the batch of writ petitions by his judgment and order of July 18, 2002. The said judgment of the learned Single Judge was challenged in a Letters Patent Appeal preferred by
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