1995 (8) TMI 275 - SC - VAT and Sales Tax

Whether an exemption notification published under section 7(3) of the Bihar Finance Act 1981 will also cover exemption from charge of additional tax levied under section 6 of the Act? Held that - Appeal dismissed. From a careful reading of section 6 it would be crystal clear that so far as charge of additional tax is concerned this section is self-contained not only for charging additional tax but also for its exemption. Therefore the exemption notifications specifically issued under section 7(3) will not cover charge of additional tax to enable the appellants to claim exemption from payment of additional tax. The non obstante clause in section 6 also overrides section 7(3) and section 21 expressly. The position is therefore clear in this Act.

Summary

Issues:
Interpretation of exemption notification under Bihar Finance Act, 1981 regarding additional tax levy under section 6.

Analysis:
The Supreme Court considered two appeals involving a common question of law regarding whether an exemption notification under section 7(3) of the Bihar Finance Act, 1981, would cover exemption from the charge of additional tax levied under section 6 of the Act. The appellants, a dealer in television sets and a manufacturer of television sets in Bihar, claimed exemption from the levy of additional tax for the assessment year 1989-90 based on exemption notifications issued by the State Government. However, the assessing authority denied the exemption, leading the appellants to approach the High Court of Patna under articles 226/227 of the Constitution of India. The Patna High Court ruled against the appellants, stating that the exemption notifications did not cover the additional tax liability.

The appellants argued that the exemption notifications under section 7(3) should extend to exemption from payment of additional tax based on the definition of "tax" in section 2(x) and taxable turnover in section 21. They relied on previous judgments to support their contention that sales tax includes additional tax. However, the Supreme Court clarified that there was no dispute that "tax" includes additional tax as per section 2(x) of the Act. The crucial question was whether the exemption notifications under section 7(3) would apply to the additional tax charged under section 6, which provides for exemption from additional tax under certain conditions.

The Court analyzed sections 2(x), 6, 7(3), and 21 of the Act to determine the scope of exemption and liability for additional tax. It emphasized that section 6 is self-contained regarding the charge and exemption of additional tax, and the exemption notifications under section 7(3) do not cover the additional tax liability. The Court highlighted that the non obstante clause in section 6 overrides section 7(3) and section 21 explicitly, making it clear that the Act provides for exemption from sales tax, purchase tax, and additional tax separately.

Ultimately, the Supreme Court found no merit in the appeals and upheld the High Court's decision to dismiss the writ petitions. The Court concluded that the exemption notifications specifically issued under section 7(3) of the Act do not extend to exemption from the payment of additional tax under section 6. Therefore, the appeals were dismissed with costs, affirming the High Court's ruling.