KHAGARIA REFINERY Vs. STATE OF BIHAR

JUDGEMENT

(1.) Petitioner, a small scale industry, has moved this court challenging a notice issued to it by the Assistant Commissioner, Commercial Taxes, Khagaria Circle, Khagaria, in purported exercise of powers under section 19 (1) of the Act, to show cause against the proposed re-assessment of tax for the period 1987-88.

(2.) The facts of the case are that petitioner, which is a registered dealer under the provisions of the Bihar Finance Act, 1981, as well as under the Central Sales Tax Act, set up its unit for production and sale of paraphin wax as the main finished product and residual oil as byproduct from the raw material i.e. slack wax. Petitioner went into operation from 07.10.1987. For supply of raw material i.e. slack wax, it totally depended on the unit of the Indian Oil Corporation at Barauni. After it came into operation, petitioner filed its return for assessment under the Bihar Sales Tax Act, 1981, for the year 1987-88. It had sold its finished products outside the State also. Therefore, it filed its return for the said assessment year under the Central Sales Tax Act also. Accordingly, respondent-Assistant Commissioner, Commercial Taxes, assessed the petitioner for its liability of the Bihar Sales Tax as well as Central Sales Tax, and separate assessment orders were issued on 15.11.1991, in respect of liabilities of the petitioner annexed as Annexure-1 and 1/A, respectively. As per assessment order, total sale of the finished product of the petitioner in the financial year was to the tune of Rs.7,33,225/-. The Assessing Officer found that, out of the same, inter-State sale was to the tune Rs.6,13,225/-, whereas intra-State sale was to the tune of Rs.1,20,2000/-. He held that on the raw materials, the dealer had paid the purchase tax to the tune of Rs.16,206.05/-. The Assessing Officer found that on the sale of finished product within the State, petitioner was liable to pay 10% sale tax which came to the tune Rs.1,200/- The Assessing Officer also found that in terms of notification S.O. No.787, dated 10.09.1987, the petitioner was entitled for remission of the purchase tax paid by him on the raw materials from the sales tax paid by him on the finished product. Thus, he deducted Rs.1,200/- of sales tax payable on the finished product from the purchased tax paid by the dealer to the tune of Rs.16,206.05 paise and further held that the remaining amount of sales tax to the tune of Rs.15,006. 05 paise shall be adjusted from the Central Sales Tax paid by the petitioner on the inter-State sale. By the next order, the Assessing Officer held the petitioner entitled for adjustment of its remaining purchased tax to the tune of Rs.15,006.05 paise from the central sales tax paid by the petitioner on the inter-State sale in terms of notification S.O. No.789, dated 10th September, 1987. In the order, on inter-State sale to the tune of Rs.6,13,225/-, the Assessing Officer found that the petitioner was liable to pay central sale tax at the rate of 4% which came to the tune of Rs.24,529/-. Therefore, the remaining amount of purchase tax of Rs.15,006.05 paid was adjusted from the said amount and Rs.9,522.05 paise was held payable by the petitioner in the form of central sales tax. Besides, in the two orders, a little penalty was also imposed against the petitioner for late filing of the return. The remaining amount, as assessed in the order, was promptly deposited with the respondents.

(3.) However, after more than a year, petitioner received notice issued under the signature of the Assessing Officer, vide Memo No.664 dated 04.03.1993, Annexure-2 to the writ application. Notice mentions that the purchase tax paid by the petitioner on the purchase of raw materials in the financial year 1987-88 had wrongly been adjusted against the central sale tax which was not in accordance with notification S.O. No.789 dated 10.09.1987. Therefore, petitioner was asked to appear for hearing on the date fixed under Section 19(1) of the Act with all accounts ledger etc. This notice is under challenge in this writ petition.