TMI Blog1951 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... n a total tax- able turnover of Rs. 17,34,800-10-0 for the period from 1st October, 1944, to 31st March, 1945. A copy of the assessment order dated the 23rd December, 1946, is enclosed (Exhibit A). The case originated with an intimation received from the office of the Deputy Commissioner of Commercial Taxes, Bihar, that Messrs. Md. Amin Bros. Ltd. of Meat Dehydration Factory at Dighaghat who had recently applied for registration under Section 7 of the Act, had a gross turnover of over Rs. 5,000 in the year 1943-44 and were, therefore, liable to registration and payment of sales tax with effect from 1st October, 1944. A case was accordingly instituted by the Sales Tax Officer and a formal notice was issued to file necessary returns. The assessee company however submitted returns on the 7th September, 1946, claiming exemption on three grounds, viz., (a) they had no place of business in Bihar prior to the 17th April, 1944, (b) the entire factory building including the land was the property of Govern- ment and they were given only contract to run the factory on cost plus profit basis and (c) the meat production was neither used in Bihar nor sold for consumption in this Province. Afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for. The assessee was accordingly assessed to a tax of Rs. 27,106-14-0 and a penalty of Rs. 13,000 total Rs. 40,106-14-0. The assessee then filed on the 9th February, 1948, an appeal before the Commissioner of Sales Tax, Patna Division, who agreeing with the findings of the lower Court rejected the petition but reduced the penalty to Rs. 6,500. Copies of the petitions dated 6th February, 1948, (filed on 9th February, 1948) and of the Commissioner's order dated the 3rd September, 1947, are enclosed (Exhibits B, B(1) and C). The assessee then moved the Board of Revenue, Bihar, in revision on the 15th October, 1947, by a petition dated the 14th October, 1947 (copy enclosed Exhibit D). Four main points were argued, viz., (i) that the petitioners are not dealers, the actual production of dehydrated meat having been done by a separate concern created by a deed of partnership, dated the 23rd March, 1944, and are not, therefore, liable to pay sales tax; (ii) as the new firm started work after the year 1944, no tax for the last quarter of 1944-45 can be levied under Section 4(2); (iii) that no tax could be levied as the producer was essentially a labour contractor and not a dealer; (iv) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Sales Tax Act, 1944, (b) was liable to pay sales tax in respect of the quarters ending the 31st December, 1944, and the 31st March, 1945, and (c) was liable to pay any penalty." S.N. Dutt and S.C. Sinha, for the assessee. Government Advocate, for the Province of Bihar. JUDGMENT RAMASWAMI, J.-In pursuance of an order of the High Court this reference is made by the petitioner under Section 25(3) of the Bihar Sales Tax Act, 1947. The questions formulated for the determination of the High Court are: "(1) Whether in the circumstances of the case the assessee was a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act, 1944, (2) Whether the assessee was liable to pay sales tax in respect of the quarters ending the 31st December, 1944, and the 31st March, 1945, and (3) Whether the assessee was liable to pay the penalty." As regards the first question it was contended by Mr. S.N. Dutt on behalf of the assessee that according to the agreement dated 23rd March, 1944, the actual work of production of dehydrated meat in the Digha Factory was entrusted to a separate concern. In support of his argument learned counsel referred us to paragraphs 7 and 9 of the deed of part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s argued on behalf of the assessee that he was not liable to pay sales tax for the quarters ending the 31st December, 1944, and the 31st March, 1945, since Section 4(2) of the Act enacts that the dealer shall be liable to pay tax "with effect from three months after the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000". In the present case it was pointed out that the assessee started the business of manufacturing dehydrated meat at Digha Ghat on 17th April, 1944. The Bihar Sales Tax Act received assent of the Governor-General on the 29th May, 1944, and was published in the Bihar Gazette of the 16th June, 1944, from which date it came into force. It was argued that under Sec- tion 4(2) of the Act, the assessee was not liable to pay tax in 1944-45 but that he was liable to pay tax only from April, 1945, since the gross turnover exceeded Rs. 5,000 in 1944-45 and indeed the business com- menced in that year. In my opinion the argument of the learned counsel is untenable for the liability upon the assessee is imposed in this case not under Section 4(2) but under Section 4(1) of the Act which states: "Subject to the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt- ed from the sales tax on the ground that the factory was a Central Government property and was producing dehydrated meat exclusively for the defence service. The correspondence was continued for some time but on 24th October, 1945, the Government of India intimated to the assessee that the Bihar Government had expressed their inability to exempt sales to the Food Department from Bihar Sales Tax Act. After this intimation was received the assessee applied to get himself registered to the Sales Tax Authorities, It was urged by the learned counsel that the assessee bona fide believed that the sale of the dehydrated meat being made to the department of the Government was not liable to be charged with sales tax. After he was informed of the decision of the Government of Bihar he promptly applied for registration to the appropriate authorities. Learned counsel also referred to a letter dated 22nd December, 1944, addressed by the Sales Tax Officer to the assessee, to the effect that meat was exempt from sales tax and the business need not be registered under the Bihar Sales Tax Act (vide Annexure A, printed at page 5 of the paper-book). Upon these facts it is clear that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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