MODI STEELS LIMITED Vs. STATE OF BIHAR

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution, the petitioners, a public limited company and engaged in manufacture of cable tapes, metal box, strappings, etc., seek a writ/order/direction to the respondents to act in pursuance of the notification No. S.O. No. 639 dated April 16, 1982 read with Notification No.S.O.1145 dated December 31, 1980 issued by the respondents. The petitioners seek quashing of the Circular dated August 10, 1983 issued by the Commissioner of Commercial Taxes disallowing the petitioners from claiming any adjustment to which the petitioners were entitled to in terms of the Notification aforesaid.

(2.) THE petitioner -company is a registered dealer under the provisions of the Bihar Finance Act, 1981 (for short 'the Act') and the Central Sales Tax Act, 1956 (for short 'the C.S.T. Act'). It is stated that the State Government in order to give incentive to the industrial unit, formulated a scheme to give incentive by way of claim of set -off of the tax paid on the purchase of raw material within the State against the sales tax payable on the sale of finished products. In pursuance of the scheme, the State Govt. issued Notification No.1145 dated December 31, 1980, permitting every registered dealer, who is a manufacturer and is running an industrial unit to adjust the amount of sales tax paid on the purchase of raw materials used in the manufacture of goods for sale against the tax payable on the sale of finished products in the State of Bihar. This Notification was directed to come into force with effect from October 1, 1979 and remaining in force till March 31, 1984. It is stated that tile petitioner -company became entitled to incentive on issue of a certificate by the Director of Industries, Government of Bihar, addressed to the Deputy Commissioner of Commercial Taxes, Patna certifying that the petitioner -company was entitled to claim of set -off and directing to grant such claim of the petitioner -company. The State Government issued another Notification No. S.O.639 dated April 16, 1982 under Section 23(1) of the Act, permitting an industrial unit, like the Petitioner, to adjust the amount of tax paid on the purchase of raw materials in the State and used in the manufactures of goods for sale in course of inter -State trade and commerce against the tax payable in the said part as per procedure prescribed. The procedure was the same as applicable as per the Notification No.1145 dated December 31, 1980. Another Notification no. 128 dated January 27, 1983 was issued under subsection(1) of Section 23 of the Act whereby the State Government, directed that the Notification No.S.O.639 dated April 16, 1982 would be deemed to have come into force with effect from October 1, 1979. Since the controversy in the present case evolves on the interpretation of Notification No.S.O.639 dated April 16, 1982, it would be appropriate to set out the same herein: - "ORDER" The 16th April, 1982 S.O.639. - In exercise of the powers conferred under sub -section(1) of Section 23 of Part 1 of the Bihar Finance Act, 1981 (Bihar Act no.5, 1981) the Governor of Bihar, on being satisfied that it is necessary to do so in the interest of the Industrial growth, is pleased to permit an industrial unit established as per procedures and conditions laid down in Finance (Commercial Taxes) Department Order no. S.O.1145, dated 31st December, 1980 and registered under the aforesaid Part, to adjust the amount of tax paid on the purchase of raw materials in the State and used in the manufacture of goods for sale in course of inter -State trade and commerce against the tax payable under the said part, in the manner so prescribed. 2. The procedure laid down in Finance (Commercial Taxes) Department Order no. S.O.1145, dated 31st December, 1980 for adjustment of tax shall also be applicable in the same manner for adjustment under this Order.

(3.) THIS order shall be deemed to have come into force with effect from 1st April, 1982. By order of the Governor of Bihar B. P. Verma, Commissioner of Commercial Taxes & Special Secretary to Government, Finance Department, Bihar, Patna." 3. The petitioner -company then goes on to say that for the two years, 1982 -83 and 1983 -84, it paid purchase tax of Rs. 9, 26, 299.78 and Rs. 4,38,787.55 respectively and as such, it claims to be entitled to set -off to the extent of the purchase tax paid against its liability under the Act and the C.S.T. Act. The petitioners say that for the year 1982. -83 an amount of Rs. 87,006.95 became payable as sales tax under the Bihar Sales -tax Act and with respect to Central Sales -tax the amount was Rs. 1,92,419.56 paise. Though the Assessing Officer allowed adjustment of the amount of sales -tax under the Bihar Sales -tax Act and declined the claim of the petitioner -company for set -off under the Central Sales -tax Act, a liability of Rs. 1,92,419.56 paise was created against the petitioner -company as Central sales -tax. Similarly for the year 1983 -84, while set -off of the amount of Rs. 3,15,531.66 paise was allowed as sales -tax under the Bihar Sales -tax Act against the purchase tax paid by the petitioner, an amount of Rs. 2,08,570.12 paise as Central sales -tax was disallowed to be set -off against the purchase tax paid by the petitioner -company.