ROHTAS INDUSTRIES LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) In this case the Board of Revenue has acted under Section 25(2) of the Bihar Sales Tax Act and has submitted the following questions of law for the opinion of the High Court:- (1) Whether in the circumstances of the case and in view of the enactment of Section 14A of the Bihar Sales Tax Act, the inclusion in the gross turnover of the amount realised as sales tax in the period 1st of October, 1948, to 31st March, 1949, is legal and valid ? (2) Whether the provisions of the Bihar Sales Tax (Amendment) Act, 1948, giving retrospective effect to the enhanced rate of tax with effect from 1st October, 1948, have been validly enacted? (3) Whether the amendment introduced by the Bihar Sales Tax (Amendment) Act, 1948, authorising levy of sales tax on sale of goods manufactured in Bihar, wherever the sale takes place is valid, legal and within the competence of the Bihar Legislature ?

(2.) With regard to the first question, counsel for the assessee made the submission that the Sales Tax Authorities were not legally entitled to include the sales tax in the taxable turnover of the assessee for the two quarters from 1st of October, 1948, to the 31st of March, 1949. In support of this proposition, counsel relied upon a decision of the Division Bench of this Court in Messrs Tata Iron and Steel Co. Ltd. v. State of Bihar A.I.R. 1956 Pat. 92. It was held in that case that after the coming into force of Bihar Act VI of 1949 and after the introduction of the new provision, namely, Section 14A, it was not legally competent for the Sales Tax Authorities to treat the amount of sales tax collected by the registered dealer from his customers as part of the purchase price under Section 2(h) and as constituting part of the taxable turnover of the registered dealer. This legal position was not controverted by Mr. Lachman Saran Sinha, who appears on behalf of the Government Advocate. Applying, therefore, the principle of the decision in Messrs Tata Iron and Steel Co. Ltd. v. State of Bihar A.I.R. 1956 Pat. 92, we hold that the first question should be answered against the State of Bihar and in favour of the assessee. We hold that the inclusion in the gross turnover of the assessee of the amount realised as sales tax in the period 1st of October, 1948, to 31st of March, 1949, is not legal or valid.

(3.) The second question raised in this case is whether the provisions of the Bihar Sales Tax (Amendment) Act, that is Bihar Act VI of 1949, giving retrospective effect to the enhanced rate of tax with effect from 1st of October, 1948, are constitutionally valid. This question has also been dealt with by a Bench of this Court in the same case in Messrs Tata Iron and Steel Co. Ltd. v. State of Bihar A.I.R. 1956 Pat. 92. It was clearly pointed out in that case that the Bihar Legislature was competent to enact fiscal legislation either with prospective or with retrospective effect and that there was nothing in the Government of India Act, 1935, or in the present Constitution, which militates against this view. It was further held that the provisions of the Bihar Sales Tax Act, that is, Bihar Act VI of 1949, were constitutionally valid and that the Bihar Legislature had constitutional authority and power to enact the statutory provision with retrospective effect from the 1st of October, 1948. In view of the principle laid down by this decision, we hold that the provisions of the Bihar Sales Tax (Amendment) Act, namely, Bihar Act VI of 1949, giving retrospective effect to the enhanced rate of tax with effect from the 1st of October, 1948, have been validly enacted. We accordingly answer the second question in favour of the State of Bihar and against the assessee.