IN THE HIGH COURT OF JUDICATURE AT PATNA CIVIL WRIT JURISDICTION CASE No.19512 OF 2010 ====================================================== M/s Shree Shanker Ice & Cold Storage, a partnership firm carrying on business at Radha Krishna Niwas, P.O. and P.S.-Sikandarpur in the town of Muzaffarpur through its partner Sri Alok Kedia, S/o Raj Kumar Kedia. …….. Petitioner Versus 1. The State of Bihar 2. Commissioner of Commercial Taxes, Bihar, Patna (CCT) 3. Deputy Commissioner of Commercial Taxes, West Circle, Muzaffarpur. ………Respondents ====================================================== APPEARANCE : For the Petitioner: Mr. K.N.Jain, Sr. Advocate and Mrs. Dr.R.Usha, Advocate. For the Respondent: Mr. Lalit Kishore, A.A.G. 1 and Mr. Piyush Lal, Advocate. ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE AND HONOURABLE MR. JUSTICE JYOTI SARAN ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) 07.03.2011 This petition under Article 226 of the Constitution is filed by M/s Shree Shanker Ice and Cold Storage, a dealer within the meaning of the Bihar Tax on Entry of Goods into Local Areas for Consumption, use or Sale Therein Act, 1993 (hereinafter referred to as „The Act of 1993‟) to challenge the orders dated 29th July 2010 made by the Deputy Commissioner of Commercial Taxes, West Circle, Muzaffarpur, under Section 8 of the Act of 1993 read with Section 39(4) of the Bihar Value Added Tax Act, 2005 (hereinafter referred to as „the Act of 2005‟). Under the impugned orders an entry tax and the 2 interest thereon is sought to be recovered for the financial years 2007-08 to 2010-11 for the HDPE/Plastic Containers imported by the dealer for packaging its product (Lichi Pulp). Learned counsel Mr. K.N.Jain has appeared for the petitioner. The challenge is three fold. Mr. Jain has submitted that after issuing notice for production of documents under section 56(1) of the Act of 2005, order of recovery has been made under section 39(4) of the Act of 2005. The petitioner was not noticed before making assessment as envisaged under Section 25 of the Act of 2005. Next he has submitted that the empty containers imported by the petitioner are HDPE containers and not the plastic containers. The petitioner did not have an opportunity to establish before the assessing authority that the containers imported were not the plastic containers and thus were not exigible to the entry tax. He has next contended that the goods namely HDPE containers were not consumed or used or sold in the State of Bihar. The finished product (lichi pulp) is packed in the said containers and is exported out of the State of Bihar. The HDPE containers brought in by the petitioner are goods in transit and are not exigible to entry tax in the State of Bihar. At the last he has submitted that for levy of entry tax and penalty etc. under the Act of 1993 the legislature has adopted the procedure under the Bihar Finance Act, 1981 (hereinafter referred to as „The Act of 1981‟). He has submitted that the Act of 1981 does not envisage recovery of interest on the amount of tax assessed. Hence the 3 petitioner is not liable to pay interest on the entry tax assessed by the assessing authority. The interest imposed by the assessing authority is without the authority of law. Section 3 of the Act of 1993 is the charging section. It provides for levy and collection of tax on entry of scheduled goods into a local area for consumption, use or sale therein. Section 7 of the Act of 1993, inter alia, provides for imposition of penalty in case a dealer fraudulently evades payment of tax under that Act or wilfully acts in contravention of any of the provisions made in that Act or the rules made thereunder. Section 8 of the Act of 1993 provides that the authority empowered to make assessment, collect or enforce payment of tax and penalty payable by dealer under the Bihar Finance Act, 1981, is empowered to assess, collect and enforce payment of tax and penalty payable under the Act of 1993. Such authority is also empowered to exercise all other powers mutatis mutandis. The Act of 1981 came to be repealed with effect from 1st April 2005 under Section 94(1) of the Act of 2005. Sub-section (2) of Section 94 of the Act of 2005 provides, inter alia, for saving of the legal proceedings or remedy availed of; any right, privilege, obligation or liability accrued or incurred under the Act of 1981. Sub- section (3) thereof provides, inter alia, for saving of notifications published, certificates granted, powers conferred and other things done under the Act of 1981 insofar as they are not inconsistent with or until they are modified, superseded or cancelled under the Act of 2005. 4 In other words, power of levy of tax and imposition of penalty under the Act of 1993 conferred upon the authorities appointed under the Act of 1981 continue to be operative as if such power or authority were conferred under the Act of 2005. In view of the aforesaid provisions, for the case on hand, the authority concerned is empowered to levy and collect tax and impose penalty under the Act of 1993 as was done under the Act of 1981 even after the repeal of the Act of 1981 and enactment of the Act of 2005. It is not in dispute that the disputed articles i.e. HDPE containers are imported by the petitioner within the local area. Item 7 of the Schedule to the Act of 1993 specifically refers to the articles made of plastic sheets or fabrics, PVC, HDPE. Thus, whether the containers imported by the petitioner are plastic containers or HDPE containers as emphasized by Mr. Jain, they are liable to levy of entry tax at the rate of 4%. The question whether they are plastic containers or HDPE containers is totally irrelevant and has no significance as far as the petitioner‟s liability to pay entry tax is concerned. The next question is whether the articles were imported for consumption, use or sale in the State of Bihar. According to the petitioner, the finished product (lichi pulp) was packaged in the HDPE containers and were exported out of the State of Bihar. In the submission of Mr. Jain the imported articles were not consumed, used or sold in the State of Bihar. The said articles were, therefore, not 5 exigible to entry tax under the Act of 1993. Undoubtedly, the containers are brought for the purpose of packaging the finished product. It is not in dispute that the action of packing is done in the State of Bihar. Hence, in our opinion, the plastic/HDPE containers imported by the petitioner, used for packaging within the State of Bihar, were consumed or used in the State of Bihar and were liable to levy of entry tax as envisaged by Section 3 of the Act of 1993. As we have held that whether plastic or HDPE containers both were liable to levy of entry tax at the same rate of 4%; as the petitioner does not challenge the quantum of the articles “Plastic/HDPE containers” imported by him or the value thereof, a notice under section 25(1) of the Act of 2005 or hearing on the point is academic. That leaves us with the third question whether the petitioner is liable to pay interest imposed by the assessing authority. Section 8 of the Act of 1993 empowers the assessing authority to collect or enforce payment of tax and penalty and for that purpose they may exercise all or any of the powers assigned to them under the Bihar Finance Act, 1981. Section 8 of the Act of 1993 refers to recovery of tax and penalty alone. The Act of 1993 does not envisage recovery of interest on the amount of entry tax levied. In our opinion, learned counsel Mr. Jain has rightly contended that assessing authority has no right to recover interest on the amount of entry tax levied under the 6 orders of recovery made under section 39(4) of the Act of 2005. For the aforesaid reasons, we partially allow this petition. We uphold the assessment of entry tax made by the Deputy Commissioner of Commercial Taxes, West Circle, Muzaffarpur. We hold that the petitioner is not liable to pay interest over the amount of entry tax levied by the assessing officer. The impugned orders of recovery made under section 39(4) of the Act of 2005 are quashed and set aside insofar as the interest is sought to be recovered on the amount of entry tax assessed. The Deputy Commissioner of Commercial Taxes will, within two months from today, modify the impugned orders and issue orders of recovery of entry tax in accordance with law and in consonance with the above discussion. The writ petition stands allowed to the aforesaid extent. The parties will bear their own cost. Patna High Court Dated 7th March 2011 NAFR/Sujit (R.M. Doshit, CJ.) (Jyoti Saran, J.)