NATIONAL INDUSTRIES Vs. STATE OF BIHAR

JUDGEMENT

(1.) The petitioner is a partnership firm. It has filed this application under Article 226 of the Constitution of India with a prayer to quash annexures 2, 3 and 4 to the writ application. Annexure 2 is an order dated 8th July, 1974, passed by the Assistant Commissioner of Sales Tax, Patna City, holding that the petitioner is not entitled to the exemption from the levy of "general sales tax and special sales tax" in relation to the raw materials purchased for the manufacture of M.S. rods for the period from 6th January, 1974, to 11th September, 1975. Annexure 3 is an order dated 31st October, 1974, passed by the Deputy Commissioner of Commercial Taxes dismissing the revisional application filed by the petitioner against the order dated 8th July, 1974. The petitioner thereafter filed another revision application under Section 31(3)(c) of the Bihar Sales Tax Act, 1959, before the Commissioner of Commercial Taxes, Bihar. The Commissioner dismissed the revisional application by his order dated 7th April, 1976, and that order has been marked as annexure 4 to this writ application.

(2.) The facts, shortly stated, are that a partnership firm under the name and style of M/s. National Industries came into existence on and from 10th June, 1968, under a deed of partnership dated 9th August, 1968. The firm had two partners, namely, Ishwar Prasad Goenka and Nagarmal Goenka, sons of Bholaram Goenka. The partnership was constituted, according to the petitioner, for manufacture of buckets and agricultural implements and was registered under the small-scale industries being registration No. I/DI/Bihar/1968-2322 (proposal). The State Government with a view to give encouragement to the establishment and for the growth of small-scale industries, issued a notification dated 19th September, 1969. The notification was issued in exercise of powers under Clause (b) of Sub-section (3) of Section 4 of the Bihar Sales Tax Act, 1959. By this notification, newly set up small-scale industries approved and registered by the industries department of the Government of Bihar were exempted from payment of general sales tax and special sales tax for a period of five years from the day the industry started its production. The petitioner-firm, which had already been set up before the notification was issued, filed an application for exemption from payment of general sales tax and special sales tax in form A, as required in the aforesaid notification. The sales tax department granted an exemption certificate in form B exempting the petitioner-firm from payment of sales tax in respect of its purchase of raw materials for the purpose of manufacturing buckets and agricultural implements. Under the exemption granted in form B, the period of exemption was five years beginning from 6th January, 1969, the day the firm had gone into production. According to the petitioner, a new firm of four partners, namely, Bholaram Goenka with his three sons Ram Nivas Goenka, Ishwar Prasad Goenka and Nagarmal Goenka, was constituted under a registered deed of partnership dated 2nd March, 1970, for the purpose of starting a new industrial unit for the manufacture of M.S. rods, production of which was started on and from 11th September, 1970.

(3.) It is said that the new firm also made an application to the industries department to recognise this unit as a new industry which was also accepted by the industries department. But as the name and style of the old firm and that of the new firm were the same, the industries department amended the earlier registration by inserting therein the item M.S. rods. On the basis of the amendment made by the industries department, similar amendment was made by the sales tax department by amending the exemption certificate in form B and including therein the item of M.S. rods also with effect from 11th September, 1970, the date when the new firm went into production. On the basis of the amendment in the exemption certificate in form B, the petitioner-firm was allowed the benefit of the. notification in purchasing the raw materials relating to manufacture of M.S. rods for a period of five years beginning from 6th January, 1969, i.e., up to 5th January, 1974, vide annexure 2. As has been noticed earlier, the Deputy Commissioner and the Commissioner of Commercial Taxes by annexures 3 and 4 respectively also upheld the order of the Assistant Commissioner and rejected the plea advanced on behalf of the petitioner that the period of five years in respect of the raw materials purchased for the manufacture of M.S. rods should be counted from 11th September, 1970, the date when the new firm went into production. The grievance of the petitioner is that the firm which came into existence in the year 1970 and went into production on 11th September, 1970, was a distinct industrial unit and, as such, was entitled to the benefit under the notification in its own right for a period of five years from the date it went into production. It is further said that the machineries for the production of M.S. rods were different from the one which was used by the old firm for producing buckets and agricultural implements. Reliance was also placed on the insertion of M.S. rods which was made by way of an amendment in the exemption certificate granted by the sales tax department which shows that the production of M.S. rods started with effect from 11th September, 1970.