1960 (7) TMI 49 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of a notification exempting sales tax on hand-made biris under the Bihar Sales Tax Act.

Detailed Analysis:
The case involved a firm, petitioner No. 2, engaged in the business of manufacturing hand-made biris from tobacco. The Assistant Superintendent of Sales Tax called upon the petitioner to submit a turnover return for the purpose of imposing sales tax under the Bihar Sales Tax Act. The petitioner objected to the tax imposition, citing an exemption notification issued by the Government of Bihar on December 14, 1957.

The notification exempted certain classes of dealers from paying sales tax on specific goods, including tobacco. The petitioner argued that the definition of "tobacco" under the Additional Duties of Excise Act covered all forms of tobacco, manufactured or not, and thus, hand-made biris should be exempt from taxation. The court agreed with this interpretation, emphasizing the broad definition of tobacco under the Central Excise and Salt Act of 1944.

The court noted that while an amendment to the Central Excise Act imposed excise duty on biris manufactured with machines, it did not impact the interpretation of "tobacco" for the purpose of the Bihar government's notification. The court rejected the argument that the exemption was limited to certain classes of tobacco subject to excise duty, emphasizing the wide definition of tobacco under the Central Excise Act.

Ultimately, the court held that petitioner No. 2 was exempt from paying sales tax on hand-made biris for the relevant period based on the notification's language and the expansive definition of tobacco. The court granted a writ of mandamus under Article 226 of the Constitution, directing the respondents not to proceed with sales tax collection from the petitioner for the specified period. The application was allowed, and no costs were awarded in the case.