1968 (1) TMI 42 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of including the turnover of Rs. 51,137.50 representing the sale of bran on consignment basis out of Bihar in the taxable turnover.
2. Legality of the rejection of the claim of rebate for the quarter ending 30th June, 1961.

Issue-wise Detailed Analysis:

1. Validity of Including the Turnover of Rs. 51,137.50 Representing the Sale of Bran on Consignment Basis Out of Bihar in the Taxable Turnover:

The Tribunal included the turnover of Rs. 51,137.50 from the sale of bran outside Bihar in the taxable turnover of the petitioner, relying on the second proviso to clause (b) of sub-section (2) of section 7 of the Bihar Sales Tax Act, 1959. The dealer purchased raw wheat tax-free for manufacturing atta, maida, and suji, but also produced bran, which was sold outside Bihar. The Tribunal argued that bran, a byproduct, was implicitly included in the exemption notification's Schedule II and thus subject to the proviso.

The Court clarified that section 4 of the Act allows the State Government to exempt certain sales from tax. The notification under section 4(3)(b) exempted sales of raw materials for manufacturing specified goods. The Court noted that even if bran was included in the notification, the second proviso to section 7(2)(b) did not apply to sales of raw materials for manufacturing. The proviso applies only to sales where the purchased goods are used for purposes other than those declared. The Court emphasized that the proviso pertains to clause (b) of section 7(2), not clause (a), which covers sales of raw materials for manufacturing.

The Court concluded that the Tribunal erred in applying the second proviso to the sale of bran. The proviso's language "sale price of the goods so purchased" refers to the original raw materials, not the manufactured products. Thus, the sale price of bran should not be added to the taxable turnover. The Tribunal's decision to include the sale price of bran was legally invalid.

2. Legality of the Rejection of the Claim of Rebate for the Quarter Ending 30th June, 1961:

The petitioner claimed a rebate under section 15 of the Act for the quarter ending 30th June, 1961, having paid the tax due before 31st July, 1961, but filed the return on 1st August, 1961. The taxing authority rejected the rebate, stating that both the tax payment and return submission must occur by the end of the succeeding month.

The Court examined section 14(1) and Rule 10(2) of the Bihar Sales Tax Rules, 1959, which require returns to be filed within one month of the quarter's end. Section 14(3) allows the taxing authority to extend the return submission period for reasonable cause. The Court inferred that the assessment based on the late return implied an extension under section 14(3), even without an express order.

Section 15 provides a rebate for tax paid within the prescribed or extended period. The Court interpreted that the eligibility for rebate depends on tax payment under section 20(2), not the timely return filing. The return is necessary to determine the tax due, but not a condition for rebate eligibility. The Court emphasized that delays beyond the dealer's control, like treasury processing, should not disqualify the rebate.

The Court held that the Tribunal wrongly rejected the rebate claim. The petitioner met the conditions for rebate by paying the tax on time and filing the return within an impliedly extended period. Thus, the Tribunal's decision was not in accordance with law.

Conclusion:

The Court answered both questions in the negative, ruling that the Tribunal was not justified in including the sale price of bran in the taxable turnover and rejecting the rebate claim. The petitioner was entitled to costs, with a hearing fee of Rs. 200.