SPIRITCO Vs. STATE OF BIHAR

JUDGEMENT

(1.) THE petitioner seeks a declaration that hand loom bandage cloth is a sales tax free commodity and no tax thereon can be levied under the Bihar Finance Act, 1981. It further seeks quashing of assessment orders for the periods 1989 -90, 1990 -91, 1991 -92 and 1992 -93 to the extent sales tax has been levied on hand loom bandage cloth and the claim for exemption has been rejected. Quashing of the consequential demand notice pursuant to the impugned assessment orders is also sought.

(2.) THE petitioner is a partnership firm engaged in the business of medicines and surgical goods at Dhanbad. In course of business it buys and sells handloom cloth for surgical purpose. The petitioner claims to be carrying on the business since the year 1975. According to it, the goods in question was always treated as tax free goods and no tax was levied on its sale.

(3.) IT may be mentioned here that for the assessment period 1983 -84 the petitioner was initially allowed exemption on sale of hand loom bandage cloth by the assessing officer, viz., Deputy Commissioner of Commercial Taxes, Urban Circle, Dhanbad, on 3.8.85. However, a fresh assessment order was passed on 17.5.93 in which the sale of the handloom bandage cloth was included as part of taxable turn -over. The petitioner preferred appeal before the Joint Commissioner of Commercial Taxes (Appeals) Dhanbad, which was rejected on 31.5.95. The petitioner has challenged the said two orders seeking similar declaration that hand loom bandage cloth is tax -free commodity in C.W.J.C. No. 8044 of 1995(R). We tentatively decided to deliver a common judgment. After considering the matter, we later decided to decide the two cases by separate judgments as the other case could be decided on a rather short point without going into the larger question as to whether handloom bandage cloth is sales tax free commodity under the Bihar Finance Act or not while in the present case that is the only point for consideration.