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2015 (9) TMI 1274 - PATNA HIGH COURT

2015 (9) TMI 1274 - PATNA HIGH COURT - [2015] 86 VST 121 (Pat) - Levy of VAT on MRP - deduction of discount - Levy of VAT on supply of medicines free of costs - manufacture and sale of medicines - validity of the provisions contained in Section 15(5) of the Bihar Value Added Tax Act, 2005 - Held that:- providing for measure of tax on the subject of tax by substituting any notional value like the MRP or otherwise, is beyond the legislative competence of the State legislature. - Decision in the ca .....

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frame any such enactment and if it is not competent to enact such a measure then it is equally not competent to do the same by way of providing option for levy of tax upon the dealer in such matter.

Thus, in the light of the aforesaid discussion Sub-section (5) of Section 15 of the Bihar Value Added Tax, 2005 is declared ultra vires. Consequently, the impugned orders passed by the Commissioner in the revision application as also by the Assessing authority in accordance with the same .....

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No. 5626 of 2015 Civil Writ Jurisdiction Case No. 6482 of 2015 Civil Writ Jurisdiction Case No. 6483 of 2015 Civil Writ Jurisdiction Case No. 6484 of 2015 Civil Writ Jurisdiction Case No. 4055 of 2015 Civil Writ Jurisdiction Case No. 4060 of 2015 Civil Writ Jurisdiction Case No. 4057 of 2015 Civil Writ Jurisdiction Case No. 4056 of 2015 Civil Writ Jurisdiction Case No. 2531 of 2015 Civil Writ Jurisdiction Case No. 19624 of 2014 Civil Writ Jurisdiction Case No. 19785 of 2014 Civil Writ Jurisdict .....

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Mr Manish Rastogi, Adv., Mr Prijat Saurav, Adv For the Respondent : Mr Sandip Kumar, G.A.-8, Mr Rajesh Ranjan, Adv., and Mr A Kumar, Adv JUDGMENT ( Per: Honourable Mr. Justice Ramesh Kumar Datta ) Heard learned counsel for the petitioners and learned Government Advocate No. 8 for the State. All the writ applications raise common issues and they have, accordingly, been heard together and are being disposed of by this common judgment. The challenge in all the writ petitions, in nine of them after .....

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Added Tax, 2005 to pay in lieu of the tax payable by them, tax at the rate specified in Section 14 on the maximum retail price of such goods in the manner as may be prescribed, the tax has to be levied on the maximum retail price (M.R.P.) of the entire goods whether shown as sold or as bonus goods given to their dealers. The facts of the concerned case may be taken from C.W.J.C. No. 9709 of 2014. The petitioner in the said writ petition is engaged in the business of manufacture and sale of medic .....

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es was that there being no valuable consideration for supply of such extra quantity of medicines, the said transactions would not amount to sale and thus, be not chargeable under the provisions of the Act. In the earlier years, the respondents were accepting the return filed by the petitioners. On the basis of an audit objection made by the Accountant General, Bihar an application for revision was filed by the Joint Commissioner of Commercial Taxes (Administration), Central Division Patna before .....

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ner of Commercial Taxes in many of the matters covered by the other writ petitions and in some of the other petitions, the said order has been followed by the Assessing Authorities of the Commercial Tax Department. Under the scheme of the Bihar Value Added Tax Act, 2005, Section 3 is the charging section which provides that every dealer whether registered under the erstwhile Bihar Finance Act, 1981 (since repealed) or under the present enactment would be liable to pay tax on the sale and purchas .....

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on and subject to such conditions and restrictions and in respect of such goods as may be specified in the notification, permit any class of registered dealers, being an importer or a manufacturer, to pay, in lieu of the tax payable by him, tax at the rate specified in section 14 on the maximum retail price of such goods in the manner prescribed. (b) where a dealer has purchased any goods- (i) from an importer or a manufacturer upon payment of tax on the maximum retail price of such goods; or (i .....

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l for the petitioners taking us to the scheme of the Act and the various definitions of sale, gross turnover sale price, etc. under the Act, as also provisions of Entry 54, List-2, Seventh Schedule of the Constitution of India and Section 366 (29-A) thereof to show that both under the constitutional scheme as also under the Bihar Act, the taxable event is the sale of goods, one of the principal criteria of which is money consideration for the sale. It is also sought to be pointed out by learned .....

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itioners and their wholesalers, as in the present matter. To cut short the matter, learned counsel for the petitioners has placed reliance upon a decision of the Supreme Court in the case of State of Rajasthan & Anr. Vs. Rajasthan Chemist Association: [2006] 147 STC 542 (SC) in which similar provision for levy of tax on the first point of sale of drugs, medicines or any formulation or for that matter any other commodity of manufacturer / wholesalers / distributor/retailers was to be charged .....

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ation:- "44. The pivotal question, therefore, which needs to be considered is whether the measure to which rate of tax is to be applied on single point transaction of sale of any formulation by the wholesaler to the retailer can be something notional which is not related to subject of tax or to say in other words, whether MRP to be chargeable subsequent to taxing event by a retailer when he sells the same goods to consumer can provide a basis which has nexus with taxable event to provide a .....

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ce. 55. By devising a methodology in the matter of levy of tax on sale of goods, law prohibits taxing of a transaction which is not a completed sale and also confine sale of goods to mean sale as defined under the Act. This cannot be overridden by devising a measure of tax which relates an event which has not come into existence when tax is ex hypothesis determined, much less which can be said a completed sale and which cannot be subject of legislation providing tax on "sale of goods" .....

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e done the legislation can provide for any measure the purpose of applying the rate of tax, whether it is founded on MRP or any other fixed value which Legislature may provide will make little difference. It is not contended by the appellant that even the measure is not relatable to MRP, it can be substitute any value as a measure of tax. Subject of tax is not the goods or goods sold, but a transaction of "sale of goods" as defined under the Sales Act. 60. If section 4A is designed to .....

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preme Court judgment which is quoted above, the submission of learned counsel for the State is that there is a difference between the provisions of Rajasthan Sales Tax involved in the aforesaid decision and the provisions in the present matter in the sense that under the Rajasthan Act the provision of levy of Sales Tax on the MRP was mandatory where as under the Bihar Act it is only an option which has to be exercised by the concerned dealer and the petitioners having exercised such option, it i .....

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notification to the extent it intends to levy tax on first point sale with reference to price which could be charged in respect of a subsequent sale which has not come into existence at the time liability of tax arises and is determined ex hypothesi is unsustainable on that basis. It was further clearly held by the Apex Court that the subject of tax in such legislation is not the goods or goods sold but a transaction of "sale of goods" as defined under the Sales of Goods Act and thus p .....

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