BIHAR MINERALS INDUSTRIES Vs. STATE OF BIHAR

JUDGEMENT

(1.) The writ Petitioner is a firm engaged in sale and purchase of Mango Karnels and other commodities at Purani Bazar, Munger. The Petitioner is a registered dealer amongst Ors. in mango karnels and during the period 1977-78 it had sold Mango Karnels to M/s Hanuman Vitamins Food Products Ltd. of Khamgaon, Maharashtra which were in the course of inter-State trade. The purchasing registered dealer has duly furnished Form 'C' under the Central Sales Tax Act and also paid Central Sales Tax thereon at the prescribed rate of 4%. According to the Petitioner, the chargeability of the goods in question to C.S.T. was doubtful and the Petitioner credited the said amount of C.S.T. in its books of accounts styled "Security C.S.T. (Zamanat) Khamgaonwala". Subsequently, the Deputy Commissioner of Commercial Taxes, Bihar, Patna, vide his letter No. 11088 dated 21.8.1978 informed the purchaser in reply to his enquiry that the goods in question were exempted from the levy of Central Sales Tax. The purchaser also claimed exemption in respect of the transactions in question though the Petitioner later paid the said amount under protest as required by the Assessing Officer.

(2.) Finally the assessment order was passed on 25.9.1979 whereby the goods in question were treated as exempted goods and the Petitioner was thus found entitled to the refund of the aforesaid amount of Rs. 27,573/- paid as above under protest.

(3.) The Petitioner has a running account of the said purchaser and a final accounting whereof is yet to be settled between the Petitioner and the said purchaser. The Petitioner also informed the purchaser in reply to his legal notice that the amount due to him will be paid after adjustment of the dues, costs etc. However, the amount in question which had admittedly been credited earlier to an account styled "Security C.S.T. (Zamanat)" (Security Account) by debiting the purchaser, reverse entries were passed by giving credit for the amount to the purchaser and debiting the said account styled "Security C.S.T. (Zamanat)". The Petitioner asserts that the amount paid by the purchaser thus stood refunded to him. The Petitioner was called upon to show cause under Section 26(3) of the Bihar Finance Act, 1981 , Part-I as to why penalty should not be imposed thereunder for alleged contravention of the provisions of Section 9A of the Central Sales Tax Act. In response to the prior notice the Petitioner submitted his show cause on 4.10.1982 in which it was, inter alia, denied that there was any contravention of Section 9A of the Central Sales Tax Act. Further the circumstances under which the amount had been billed and the manner in which it was adjusted in the Petitioner's books of account and subsequently readjusted by contra-entries to the account of the purchaser were also explained. At the time of hearing the partner Shri Purushottam Das Drolia who was conversant with these transactions could not appear to instruct his lawyer due to illness. The show cause of the Petitioner was rejected by the Commercial Taxes Officer, who by the impugned order (Annexure-2) imposed a penalty of Rs. 55,146/-. The penalty was imposed under Section 26(3) of the Bihar Sales Tax Act and Section 9A of the Central Sales Tax Act.