PRADEEP RUBBER INDUSTRIES Vs. STATE OF BIHAR

JUDGEMENT

(1.) The question involved in this application under Article 226 of the Constitution of India is prima facie a minor one but with far-reaching effect to any new entrepreneur. The petitioner claims relief granted under Section 8(2A) of the Central Sales Tax Act, 1956, claiming non-application of the explanation of that sub-section.

(2.) The petitioner is a proprietorship concern, having small-scale industrial unit manufacturing cycle tubes and other rubber goods. It started its production from 10th October, 1974, and got itself registered as small-scale industry under the Industries Department of the State Government. The State Government issued a notification dated 9th September, 1969, exempting newly established small-scale industries from payment of sales tax for a period of five years from the date of their production. This benefit was extended again up to 31st March, 1979, by another notification dated 14th March, 1974. The Government has further granted exemption from the levy of both general sales tax and special sales tax on the finished products by the newly set up industries at the first stage of sale. The case of the petitioner further is that in view of the provisions of Section 8(2A) of the Central Sales Tax. Act it was exempt from paying the Central sales tax in view of the exemption granted from payment of State sales and purchase tax till 10th October, 1979, that is, for a period of five years from the date of commencement of production, i.e., 10th October, 1974. This claim was based on the aforesaid Government circular. The petitioner took the job-work of M/s. Mining and Allied Machinery Corporation Ltd., Durgapur, West Bengal, for logging rubber on the conveyor drums supplied by the said corporation for use in the conveyor belt during the period 1976-77 and supplied the same but the assessing officer imposed Central sales tax on the amount received by the petitioner from the said corporation. The petitioner went in revision before the Commissioner of Commercial Taxes where too it lost, leading to the filing of the present application.

(3.) The moot question involved is whether the petitioner is entitled to the exemption of Central sales tax as claimed by it. The relevant section of the Central Sales Tax Act is Section 8(2A), which may usefully be quoted below : (2A) Notwithstanding anything contained in Sub-section (1A) of Section 6 or in Sub-section (1) or Clause (b) of Sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name) shall be nil, or, as the case may be, shall be calculated at the lower rate. Explanation -For the purposes of this sub-section a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods.