TMI Blog2004 (9) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant. -------------------------------------------------- ORDER The judgment of the Court was delivered by ARIJIT PASAYAT, J.- Challenge in this appeal is to the legality of judgment rendered by a division Bench of the Patna High Court Reported in [2004] 136 STC 412 [Associated Cement Company Limited v. State of Bihar]. 2.. Appellant questioned legality of the notices issued on May 30, 2002 and June 24, 2002 by the Deputy Commissioner, Commercial Taxes, Patna Special Circle, Patna (respondent No. 3) proposing to levy tax for the assessment years 1998-99, 1999-2000 and April 1, 2000 to November 14, 2000 under the Bihar Finance Act, 1981 (in short "the Act") before the High Court. Notices were issued on the purported basis that the appellant was not entitled to adjustment of tax paid under the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 (hereinafter referred to as "the Entry Tax Act"). The High Court upheld the validity of the notice and action taken by concerned respondents. 3.. Factual position in a nutshell is as follows: 4.. The appellant is a public limited company registered under the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the entry tax. It was further held that as additional tax is also a part of tax as stipulated in clause (2) of the Act, the appellant is entitled to benefit under the notification and its liability for payment of additional tax has to be adjusted against payment of tax under the Entry Tax Act. 8.. Learned counsel for the appellant submitted that the High Court has failed to notice the clear language used in the Act and the Entry Tax Act. Bifurcation sought to be introduced as regards each goods which have suffered tax and those which were exempted from payment of tax is not legally permissible. According to the respondents it is only that part of the turnover which has suffered tax and it is the tax levied in respect of such turnover which is available to be adjusted in terms of the exemption notification and not otherwise. This was stated to be an erroneous reading of the relevant provision. 9.. Learned counsel for the respondent submitted that the exemption notification has to be construed strictly. There cannot be any exemption by implication. When there is no liability to tax because of the exemption granted, the question of any adjustment of tax in respect of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be subject to tax provided the subsequent importing dealer produces before the assessing officer the original copy of the cash memo, invoice, bill or challan issued to him by the dealer from whom he purchased or received the said scheduled goods, and files a true and complete declaration in the form and manner prescribed." 12.. Section 2(e) of the Act defines "dealer". Section 2(h) defines "goods" and section 2(j) defines "gross turnover". Section 3 of the Act is the charging section which reads as follows: "3. Charge of tax.-(1) Subject to the provisions of this Part, the sales tax or the purchase tax as the case may be, shall be paid by every dealer- (a) with effect from the date of commencement of the Bihar Finance Act, 1981, if his gross turnover during a period not exceeding twelve months immediately preceding the said date exceeded the specified quantum; (b) to whom clause (a) does not apply with effect from the date immediately following the day on which his gross turnover during a period not exceeding twelve months immediately preceding such date first exceeded the specified quantum. Explanation .-In this section, the expression, 'specified quantum' means- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. Section 6 deals with charge of additional tax and section 7 deals with exemption. Section 7 is a pivotal provision so far as present dispute is concerned. It reads as under: "7. Exemption.-(1) No tax shall be payable under this Part on sales or purchases of goods which have taken place- (a) in the course of inter-State trade or commerce; (b) outside the State; (c) in the course of import of goods into, or export of the goods out of the territory of India. (2) The provisions of the Central Sales Tax Act, 1956 (LXXIV of 1956) shall apply for determining when a sale or purchase of goods shall be deemed to have taken place in any of the ways mentioned in clause (a), (b) or (c) of sub-section (1). (3) The State Government may, by notification and subject to such conditions or 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) . (d) purchase of any goods by any class of dealers or any purchase or category or description of purchases of such goods. (4) Where exemption from the levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers conferred by sub-section (1) of section 3 of the Entry Tax Act and proviso to sub-section (1) of section 12 of the Act. 17.. A bare reading of clause (2) of the notification makes the position clear that liability of importer of cement under the Act shall be reduced to the extent of tax paid under the Entry Tax Act where such importer becomes liable to pay tax under the Act by virtue of sale of the scheduled goods. 18.. The stand of the respondents appears to be that since there was no liability in respect of a portion of sales because of notification of the State Government S.O. No. 479 dated December 12, 1995 as part of the Industrial Policy, 1995 granting exemption from payment of sales tax on production of extended industrial unit which undertakes expansion of their capacity, no question of adjustment arises. To put differently stand of the respondent is that when there was no tax liability on such sales, there was no liability to pay any tax and, therefore, the benefit of adjustment available under clause (2) of the Notification S.O. No. 37, dated February 25, 1993 does not arise. The interpretation put forward by the respondent found acceptance by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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