CIVIL WRIT JURISDICTION CASE No.5749 of 1995 In the matter of an application under Articles 226 and 227of the Constitution of India. I.T.C. LTD. having its Registered Office at Virginia House, 37 Chowringhee, Calcutta – 700071, and one of its factories at Basdeopur, Munger, Bihar ………… Petitioner Versus 1. STATE OF BIHAR 2. The Commissioner of Commercial Taxes, New Secretariat, Bailey Road, Patna – 800 001 3. The Commercial Taxes Tribunal, Bihar, Old Secretariat Complex, Patna – 800 001…………………….Respondents ********* For the Petitioner : Mr. K N Jain, Senior Advocate Mr. Rohitabh Das, Advocate For the Respondents : Mr. Lalit Kishore, AAG III Mr. Piyush Lal, Assistant Counsel to AAG III *********** P R E S E N T THE HON'BLE MR. JUSTICE SUDHIR KUMAR .KATRIAR THE HON'BLE MR. JUSTICE BIRENDRA PRASAD VERMA S K Katriar, J. This writ petition is directed against the judgment dated 18.7.89 (Annexure 10), passed by the Commercial Taxes Tribunal, Bihar, Patna, in Revision Case no.TBH 151 to 157 of 1988 (ITC Limited vs. State of Bihar), whereby the revision applications preferred by the present petitioner under the provisions of Section 31 of the Bihar Sales Tax Act 1951 (hereinafter referred to as `the Act’), read with the Bihar Sales Tax Rules 1959 (hereinafter referred to as `the Rules’), have been dismissed. It is further directed against the judgment dated 5.5.95 (Annexure 1), passed by the Tribunal in exercise of its review jurisdiction. 2. A brief statement of facts essential for the disposal of the writ petition may be indicated. The petitioner is a public limited company incorporated under the Companies Act, having its 2 registered office at Calcutta. It is, inter alia, engaged in the manufacture and marketing of tobacco products including cigarette. One of its manufacturing units is situate at Basdeopur, in the township of Munger, in this State. The present proceedings are with respect to the assessment years 1966-67 to 1972-73. The petitioner’s factory at Munger manufactures cigarettes and packs the same in multi-layer packings and paper board. The main packing immediately protecting the cigarettes are known as `shell’. It had during the periods in question purchased these packing materials from Rohtas Industries Limited, a public limited company with its factories at Dalmianagar, in the then district of Shahabad. In exercise of the powers conferred on the State Government by the proviso to section 5 of the Act, it had issued notification no. STG L.J.24/66 - 1411, F.T., dated the 12th February 1966, published in the official gazette, whereby the point of payment and collection of special sales tax within the meaning of section 5 of the Act was altered. 2.1) The petitioner had submitted its returns for the periods in question and was assessed to tax by order dated 28.5.1975 (Annexure 8), passed by the learned Superintendent of Commercial Taxes, Munger. Aggrieved by the order, the petitioner preferred appeal which was substantially dismissed by the learned Deputy Commissioner of Commercial Taxes (Appeals), Bhagalpur, particularly in so far as the issue in question is concerned, and the matter was remitted to the learned assessing officer for a fresh order of assessment in accordance with law and the observations made 3 therein. Aggrieved by the order of the learned appellate authority, the petitioner preferred revision applications before the Tribunal, which has been rejected by the impugned order and in substance the order of the learned assessing officer has been restored. The review applications preferred by the petitioner have also been rejected. 3. While assailing the validity of the impugned order, learned counsel for the petitioner submits that none of the three orders adverted to hereinabove, have noticed the aforesaid notification dated 12.2.1966, which has had brought about sea- change in the law governing the issue in hand. He submits on instructions that the notification was brought to the notice of the three authorities notwithstanding which the same has not been noticed and it is, therefore, a case of misdirection. He next submits that the authorities have relied upon the Division Bench judgment of this Court in I T C Limited v. Superintendent of Commercial Taxes [(1986) 62 STC 149], which on the face of it is inapplicable to the facts and circumstances of the present case because those dealt with periods prior to the issuance of the notification. He has also made elaborate submissions with respect to the scope, content, and the sweep of section 7(2)(b) of the Act, read with rule 8 as well as form nos. 9 and 9C which, in his submission, are inapplicable to the facts and circumstances of this case. 4. The learned Additional Advocate General no. III has supported the impugned order. In his submission, the judgment of the Division Bench of this Court in ITC vs. SCT (supra), applies on 4 all fours to the facts and circumstances of the present case, and was indeed inter-parties. He submits in the same vein that the judgment of this Court has been set aside by the Supreme Court in ITC vs. Superintendent of Commercial Taxes [(2000) 119 STC 530], on the ground of limitation. He has also made elaborate submissions on the scope of section 7(2)(b) of the Act, read with rule 8 and form nos. 9 and 9C which, in his submission, govern the present case. He wraps up his elaborate submissions by submitting that the petitioner has violated the conditions for applicability of the notification dated 12.2.1966. 5. We have perused the materials on record and considered the submissions of learned counsel for the parties. We will do well to reproduce hereinbelow section 5 of the Act:- “5. Point in the series of sales at which the special sales tax shall be levied – The special sales tax shall be levied only at that point in the series of sales at which the goods are sold to a person other than a registered dealer in whose registration certificate such goods or class or description of goods are specified as being required for re-sale by him or for use by him in the packing of goods which he sells: Provided that the State Government may, in respect of any goods or class or description of goods or any class of dealers notified in this behalf direct that the sales tax shall, subject to such conditions and restrictions as may be specified in the notification, be paid at any other point.” It is evident on a plain reading of the same that section 5 governs the issue with respect to payment and realization of special sales tax, and is different and distinct from the main assessment proceeding. The scope and the content of the proviso to section 5 is the main question for determination in the present case. This has to be read with the 5 Gazette notification dated 12.2.1966, issued by the State of Bihar by virtue of the powers conferred on it by the proviso to section 5 of the Act. The relevant portions of the notification are reproduced hereinbelow:- “Notification no.STG L.J.24/65 -1611 F.T., dated the 12th February 1966. In exercise of the powers conferred by the proviso to section 5 of the Bihar Sales Tax Act, 1959 (Bihar Act XIX of 1959), and in suspersession of all the previous notification on the subject the Governor of Bihar is pleased to direct that the “special sales tax” leviable under the said Act on the sale of the goods specified in the second column of the Schedule hereto annexed shall be levied at the stage specified in the third column of the Schedule, subject to the conditions and restrictions set out in the fourth column thereof.” SCHEDULE ………. ………….. …………… ………….. ………. ……………. ……………….. …………… Sl. no. Description of goods Stage at which special sales tax shall be levied Conditions and restrictions subject to which exemption shall be allowed at subsequent stages 2 Paper including all kinds of paste-board, mill-board, straw-board card-board, blotting paper, newsprint, cartridge paper, packing paper, paper-bags, cartons, cards and blank registers, note-books, exercise books, envelopes, labels, letter pads, writing tablets and flat files made out of paper. (a) If the goods are imported from a place outside Bihar, at the point of sale by the importer; and (b) if the goods are manufactured in Bihar, at the point of sale by the manufacturer. If the selling dealer at the subsequent stage produces before the assessing authority purchase orders, if any, the original copy of the cash memoranda or bills issued to him by the dealer from whom he purchased the goods and a true declaration in writing in Form IX- C appended to the Bihar Sales Tax Rules, 1959 from such dealer or his manager declared under section 10 of the Bihar Sales Tax Act, 1959. (Emphasis added) It is evident on a plain reading of the main portion of section 5 of the Act that the special sales tax had to be paid by, and realized from, the registered dealer. The expression `series of sales’ and `sale to a person other than a registered dealer’ occurring in the main portion of section 5 of the Act, need particular attention. This was the position in law prior to the issuance of the notification dated 12.2.1966. 6 6. We now proceed to examine the content of the notification. In so far as the heading in column no.2 is concerned, the admitted position is that the petitioner had purchased the kind of product mentioned therein for packaging purpose from Rohtas Industries Limited. It is equally the admitted position that Rohtas Industries Limited manufactured the same at its factory within the State of Bihar and sale had admittedly taken place within the State. It is evident on a perusal of clause (b) in column no.3 of the notification that the State Government shifted the point of realization of special sales tax from the last point to the first point. In other words, in the facts and circumstances of the present case, the special sales tax had to be paid by, and realized from, Rohtas Industrial Limited. 6.1) Learned AAG III has laid considerable emphasis on column no.4 which too, in our mind, is inapplicable to the facts and circumstances of the present case. The same applies in a situation where there is a series of sales and, in that case, the special sales tax shall be realized if ITC had sold the packing materials purchased from Rohtas Industries to a registered dealer. We are quite convinced in the present case that there is no evidence at all to show that the petitioner had sold the packaging materials purchased from Rohtas Industries to registered dealer. It was entirely used by ITC in its own factories in Bihar or outside Bihar. We are equally convinced that use of these packing materials by ITC in its factories in Bihar or outside Bihar would make no difference with respect to the applicability of column no.3. 7 6.2) Once the position is clear that the petitioner’s case is covered by clause (b) of column no.3 of the notification, all the remaining provisions become inapplicable by force of the proviso to section 5 of the Act read with the notification dated 12.2.1966. 6.3) We must also notice section 7(2)(b) of the Act which reads as follows:- “7. Taxable Turnover:- For the purpose of this Act, `the Taxable turnover’ of a dealer shall be – …………. ………… (2) in respect of special sales tax, that part of the gross turnover which remains after deducting therefrom – ……….. ……… (b) subject to the provisions of section 5 sale- prices on account of sales to a registered dealer other than a dealer liable to pay tax under subject- section (8) of section 3, of goods specified in his registration certificate as being required – “ It is evident on the face of it that clause (b) starts with the non-obstante clause that the same is subject to the provisions of section 5 of the Act. Therefore, the question of applicability of section 7(2)(b) of the Act read with Form no. IX does not arise in the present case. 7. We must also notice the judgment of a Division Bench of this Court in ITC vs. Superintendent of Commercial Taxes (supra). The same was taken in appeal to the Supreme Court and is reported in (2000) 119 STC 530 (supra). That litigation was inter-parties, and related to identical transactions between the petitioner and the Rohtas Industries Limited. That case was with respect to the periods 1964-65 and 1965-66, which was prior to issuance of the notification dt. 12.2.1966. Therefore, the Division Bench did not have the occasion to 8 consider the effect of the notification. The judgment is, therefore, inapplicable to the facts and circumstances of the present case. 8. It may also be stated that the Act has been replaced by the Bihar Finance Act 1981 (Act V of 1981) which, in its turn, has been repealed by Bihar Value Added Tax Act 2005 (Bihar Act 27 of 2005). 9. Before we part with the records, we must record our extreme sense of displeasure at the manner in which all the three orders in the present case were passed in complete ignorance of the notification dated 12.2.1966. Had the same been noticed, perhaps the matter may not have been travelled beyond the Assessing Officer. 10. In the result, the writ petition is allowed. The impugned judgment and order dated 18.7.1989, passed by the Commercial Taxes Tribunal, is set aside. The petitioner shall be entitled to refund of the entire special sales tax already deposited by it along with interest @ 11% from the date of deposits till the date of refund. ( S K Katriar, J. ) Birendra Prasad Verma, J. I agree. ( Birendra Prasad Verma,J.) Patna High Court, Patna The 8th of September 2010 AFR/ mrl