ASSOCIATED CEMENT COMPANY LIMITED Vs. STATE OF BIHAR

JUDGEMENT

(1.) Petitioner no.1 is a company incorporated and registered under the Indian Companies Act. It is engaged in the manufacture and sale of cement and one of its cement factories is situate in Sindri which after the division of the erstwhile State of Bihar now forms part of Jharkhand. Petitioner no. 2 is one of the share holder in the company, petitioner no.1.

(2.) The petitioners seek to challenge the notices, dated 19.5.2006 (Annexure 8 series) issued under the purported exercise of power u/s. 47 of the Bihar Finance Act, 1981 and the review orders, dated 28.8.2006 (passed under the same provision) and the consequent demands (Annexure 9 series). By the impugned orders assessments made earlier in regard to the sales tax payable by the petitioner company for assessment periods 2000-01 to 2004-05 were reviewed and it was held liable to pay an additional sum of around Rs. 31 crores as sales tax on the sales of its produce. It is significant to note here that the Bihar Finance Act, 1981 was repealed with the introduction of the Bihar Value Added Tax Act, 2005 with effect from 1.4.2005. But by Bihar Finance Act, 2006 an amendment was made in the repealed Bihar Finance Act, 1981 by introducing the definition of 'Bihar' retrospectively with effect from 15.11.2000, the date on which the State was divided for the creation of the new State of Jharkhand. The impugned notices and the orders were passed on the basis of the amendment made in the repealed Bihar Finance Act, 1981 . Naturally, therefore, it was the retrospective amendment introduced in the Bihar Finance Act, 1981 after its repeal (rather than the review assessment orders) that came as the main object of challenge.

(3.) In order to put the controversy in the proper perspective it would be necessary to note some relevant facts. Before the division of the erstwhile State of Bihar under the Bihar Reorganisation Act, 2000, the petitioner company enjoyed exemption from payment of sales tax on sale of its produce/incremental production in terms of the Industrial Policy of the State Govt. that was in force at that time. The exemption certificate granted to it by the revenue authorities was for a period of eight years from 1.4.1998 to 31.3.2006. After the division of the State with effect from 15.11.2000 the Govt. of Bihar denied to the petitioner company the benefit of exemption from payment of sales tax on the sale of its produce from its sale depots in Bihar on the ground that the place where its plant was situate was no longer part of Bihar.