1989 (4) TMI 296 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Levy of additional tax on atta, maida, and sujji u/s 6 of the Bihar Finance Act, 1981.
2. Classification of atta, maida, and sujji as cereals u/s 14 of the Central Sales Tax Act, 1956.
3. Jurisdiction and justification of the Deputy Commissioner of Commercial Taxes in imposing additional tax and penalty.

Summary:

Levy of Additional Tax:
The petitioner, a partnership firm owning a flour mill, was called upon by the Deputy Commissioner of Commercial Taxes to deposit additional tax on the sale of atta, maida, and sujji u/s 6 of the Bihar Finance Act, 1981. The petitioner objected, arguing that these items were declared goods u/s 14 of the Central Sales Tax Act, 1956, and were exempt from additional tax by a Bihar Government notification dated 28th October 1981.

Classification as Cereals:
The petitioner contended that atta, maida, and sujji were essentially cereals and fell within the ambit of section 14 of the Central Sales Tax Act. The petitioner supported this with various court decisions and expert opinions stating that these items were wheat in different forms and thus should be exempt from additional tax.

Jurisdiction and Justification:
The respondent countered that atta, maida, and sujji did not fall within the parameters of section 14 of the Central Sales Tax Act, as the article falling under cereals had been specified and identified. The Deputy Commissioner, therefore, had jurisdiction and was justified in demanding additional tax and imposing penalties for non-compliance.

Court's Analysis:
The court examined the relevant statutory provisions and various judicial precedents. It noted that atta, maida, and sujji are derived entirely from wheat by processing the grain into powdered forms of different sizes without any addition of extra ingredients. The court held that these items remain cereals within the dictionary and popular meaning of the term.

Judgment:
The court concluded that atta, maida, and sujji, which are obtained merely by reducing the size of wheat grain into smaller particles and powder, would be included in the item "wheat" u/s 14(i)(iii) of the Central Sales Tax Act, 1956. Thus, they should be treated as declared goods under the said statute. The writ petition was allowed, and the impugned orders passed by the Deputy Commissioner of Commercial Taxes were set aside. The judgment also governed three other writ petitions heard along with this one.

Conclusion:
The court allowed the writ petition, setting aside the orders of the Deputy Commissioner of Commercial Taxes, and ruled that atta, maida, and sujji are to be treated as declared goods under section 14(i)(iii) of the Central Sales Tax Act, 1956, exempting them from additional tax u/s 6 of the Bihar Finance Act, 1981.