M/S.
Kumar Distributors (P) Ltd. Beltek India Ltd. Vs. State of Bihar & Ors
[1995] INSC 405 (17 August 1995)
Venkataswami
K. (J) Venkataswami K. (J) Verma, Jagdish Saran (J) K.Venkataswami, J.
CITATION:
1995 AIR 2475 1995 SCC (5) 593 1995 SCALE (4)780
ACT:
HEAD NOTE:
Leave
granted.
A
common question of law arises for consideration in these two appeals. That
question of law can be set out in the following words:- Whether an exemption
notification published under Section 7(3) of Bihar Finance Act, 1981 (hereinafter
referred for short as the `Act') will also cover exemption from charge of
additional tax levied under Section 6 of the Act.
Brief
facts are the following:- The appellant in the first case was a dealer in
television sets, watches and mixers. The appellant in the second case is a
manufacturer of television sets in the State of Bihar. The State Government with a view to encourage industries
in the State from time to time announced various schemes granting incentives in
the from of exemption from sales tax or purchases tax as the case may be. One
such notification bearing No.S.O. 92 dated 18.1.88 was issued under the express
provision of Section 7(3) of the Act exempting from the levy of sales tax as
well as purchase tax on the sales of electronic raw materials to the owner of
electronic units approved and registered by the Department of Industries,
Government of Bihar or the competent authority of Government of India for a
period of 5 years w.e.f. 1.9.1986 subject to the conditions imposed therein;
and another notification bearing No.S.O.94 dated 18.1.1988 under the express
provision of section 7(3) of the Act granting exemption from the levy of sales
tax on sales of electronic goods manufactured by electronic industrial unit
approved and registered by the Department of Industries, Government of Bihar or
the competent authority of Government of India for a period 5 years w.e.f.
1.9.1986 subject to the condition mentioned therein was issued.
For
the assessment year in question, namely, 1989-90, the appellants claimed
exemption from the levy of additional tax payable under section 6 of the Act.
The assessing authority (Commercial Taxes Officer) refused to exempt
`additional tax' as claimed by the appellants. Aggrieved by that, the
appellants moved the High Court of Patna under Articles 226/227 of the
constitutions of India for grant of necessary
relief/appropriate relief. A Division Bench of the Patna High Court after
considering the scope and extent of the notifications referred to above with
reference to the substantive provisions viz. Section 6 and 7 of the Act held
that the appellants are liable to pay additional tax and they are not entitled
to claim exemption from payment of additional tax on the basis of exemption
notifications issued under Section 7(3) of the Act. Still aggrieved the present
appeals are filed in this Court.
Learned
counsel appearing for the appellants submitted that a look at the definition of
`tax' in Section 2(x) and taxable turnover in Section 21 will go to show that
the exemption notifications issued under Section 7(3) will come to the aid of
the appellants to claim exemption from payment of additional tax. Learned
counsel placed reliance on two judgments of this Courts reported in Deputy
Commissioner of Brothers (1993 (3) SCC 16) to support his contention that Sales
tax will include additional tax. We can at once dispose of this contention by
stating that there is no dispute that `tax' includes additional tax in as much
as Section 2(x) of the Act is clear and unambiguous on this issue.
But
the question is whether the exemption notifications issued specifically under
Section 7(3) of the Act would extend to exemption from payment of additional
tax charged under Section 6 of the Act when the provision for exemption from
payment of additional tax is made in Section 6(2).
For
considering the issue on hand, it is necessary to set out certain provisions in
the Act. We will now set out Section 2(x), Section 6, Section 7(3) and Section
21:- "Section 2(x): "Tax" includes the sales or purchase tax
levied under section 3 as also additional tax levied under Section 6 of this
part.
Section
6: Charge of additional tax - Notwithstanding anything contained in sub-section
(3) of section 7 or sections 11, 12, (13) and 21 or in any notification issued thereunder
every dealer having a gross turnover exceeding the specified quantum as laid
down in section 3 shall, with effect from a date to be specified by the State
Government by a notification published in Official Gazette, pay an additional
tax at such rate, not exceeding two percentum of his gross turnover (excluding
the sales or purchase of goods which have taken place either in the course of
inter-State trade or commerce, or outside the State, or in the course of import
of goods into, or export of goods out of the territory of India) as the State
Government may, from time to time by notification in the Official Gazette, fix:
Provided
that State Government may fix different rates within the ceiling rate of 2 percentum
on the gross turnover of different goods:
Provided
further that in the case of declared goods, as defined in the Central Sales Tax
Act, 1956 (Act LXXIV of 1956)- (i)Where the tax payable under section 3 or
section 4 equals the maximum amount of tax permissible under section 15 of the
Act, no additional tax shall be payable under this section:
(ii)
Where the additional tax under this section together with the tax payable under
section 3 or section 4 would exceed the maximum amount of tax permissible under
section 15 of that Act, the additional tax shall stand reduced to such amount
as, together with the tax payable as aforesaid, equals the said maximum amount.
(2)
The State Government may by notification and subject to such conditions and
restrictions, as it may impose exempt from the levy of additional tax gross
turnover in respect of any goods or class or description of goods.
Section
7. (1)************* (a)************* (b)************* (c)*************
(2)************* (3) The State Government may, by notification and subject to such
conditions of restrictions as it may impose, exempt from the sales tax or
purchase tax- (a) sales of any goods or class or description of goods;
(b) sales
of any goods or class or description of goods to or by any class of dealers;
(c)
any sale or category or description of sales; and (d) purchase of any goods by
any class of dealers or any purchase or category or description of purchases of
such goods.
(4)
************** Section 21 Taxable turnover - (1) For the purpose of this part
the taxable turnover of a dealer shall be that part of his gross turnover which
remains after deduction therefrom- (a) (i) in case of the work contract the
amount of labour and any other charges in the manner and to the extents
prescribed;
(a)
(ii) sale price on account of sales exempted under Section 7;
(b) amount
of sales tax actually collected as such, if any, along with the sale prices
received or receivable in respect of sales of goods;
(c)
sale prices on account of sales to a registered dealer other than a dealer
liable to pay tax under sub- section (8) of section 3 of goods mentioned in
sub-section (4) of section 11 specified in his registration certificate as
being required for re-sale by him inside Bihar or in course of inter-State
trade or commerce;
Provided
that in the case of such sale a declaration in the prescribed form duly filled
up signed by the registered dealer to whom the goods are sold or by his manager
declared under Section 15 is furnished in the prescribed manner by the selling
dealer;
(d)
sale prices at the subsequent stages of sales such goods as are specified by a
notification issued under sub- section (1) of Section 11 as being subject to
tax at the first point of sale in Bihar, if necessary evidence as required by
sub-section (2) of Section 11 are produced in the prescribed manner before the
prescribed authority.
(1A)
Where any dealer claims that he is not liable to pay tax on any part of his
gross turnover in respect of any goods by reason of transfer of such goods by
him to any other dealer or to his agent or principal, as the case may be, for
sale, the burden of proving this claim shall be on the dealer and for this
purpose along with other evidences he shall furnish before the prescribed
authority a declaration in the forms and in the manner prescribed.
(2)
Where any goods or sales exempted from the levy of tax by a notification issued
by the State Government in this behalf under sub-section (3) of Section 7 are
purchased by a dealer after furnishing a declaration as mentioned in or provided
by the notification or where any goods specified in the certificate of
registration of a dealers are purchased by him after furnishing a declaration
as provided in clause (c) of sub-section (1) but are utilized by him for any
purpose other than those specified in such a notification or specified in
clause (c) of sub-section (1), as the case may be, the sale price of the goods
so purchased shall, without prejudice to any action which is or may be taken
under Section 49, be deducted from the gross turnover of the selling dealer but
shall be included in the taxable turnover of the purchasing dealer." From
a careful reading of Section 6, it would be crystal clear that so far as charge
of additional tax is concerned, this section is self-contained not only for
charging additional tax but also for its exemption.
Therefore,
the exemption notification specifically issued under section 7(3) will not
cover charge of additional tax to enable the appellants to claim exemption from
payment of additional from payment of additional tax. Even though the position
is so clear, the learned counsel for the appellants argued that in the light of
Section 21, the turnover will be nil and, therefore, there is no scope for
charging additional tax. This argument is based on a misconstruction of Section
6 of the Act. We have pointed out that Section 6 is self-contained and there is
an unbuilt provision for exemption from levy of `additional tax' therein, in
addition to Section 7(3) which provides for exemption from levy of `sales tax'
and `purchase tax'. The non obtain clause in Section 6 also overrides Section
7(3) and Section 21 expressly. The position is, therefore, clear in this Act.
For
the foregoing reasons, we find no substance in these appeals and High Court was
right in dismissing the writ petitions. Accordingly these appeals are dismissed
with costs.
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