1993 (10) TMI 343 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability to pay special sales tax on the sale of fertilizers due to non-production of declaration in form IXC.
2. Incidence of sales tax on the amount recovered through fair price shop for the supply of rice under the Bihar Essential Foodgrains Procurement Order, 1968.

Detailed Analysis:

Issue 1: Liability to Pay Special Sales Tax on Fertilizers

Facts and Tribunal Findings:
The assessee, the Food Corporation of India, purchased fertilizers worth Rs. 34,19,997.92 and sold them for Rs. 36,59,570.92. The assessing officer allowed a deduction for the purchase amount except for Rs. 2,39,573.00 due to non-production of form IXC declarations. The Deputy Commissioner reversed this, requiring the form IXC for deductions. The Tribunal affirmed this view.

Legal Arguments:
- Petitioner's Argument: The requirement of form IXC is merely a mode of proof to ascertain that the goods have been subjected to special tax. Non-production of the form should not lead to double taxation if other documents (like cash memoranda or bills) prove tax payment.
- State's Argument: The claim is one of exemption, not non-taxability, making the production of form IXC mandatory.

Relevant Provisions:
- Section 2(s), 3, 4, 5, 6, 7 of the Bihar Sales Tax Act: Define the tax liability, exemptions, and the point of levy for special sales tax.
- Rule 8(2) of the Bihar Sales Tax Rules, 1959: Requires production of form IXC for claiming deductions.
- Notification No. STGL-RT-9/65-12919-F.T., dated 11th November 1966: Specifies conditions for exemption at subsequent stages.

Court's Analysis:
- The court emphasized the legislative intent of single-point taxation under Section 5 of the Act.
- Conditions for exemption at subsequent stages (like form IXC) should be construed as directory, not mandatory, to avoid multi-point taxation.
- The court held that the conditions laid down in the notification and Rule 8(2) should be seen as providing documentary evidence rather than being absolute requirements.

Precedents:
- State of Orissa v. M.A. Tulloch and Co. Ltd. [1964] 15 STC 641: Rule 27(2) of the Orissa Sales Tax Rules was held to be directory.
- Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer [1965] 16 STC 607: Declaration forms were mandatory for claiming exemptions under the Bengal Finance (Sales Tax) Act.

Judgment:
The court answered the first question in the negative, holding that the requirement of form IXC is directory. The assessee should be allowed deductions if it can substantiate tax payment through other reliable evidence.

Issue 2: Incidence of Sales Tax on Rice Supplied to Fair Price Shops

Facts and Tribunal Findings:
Under the Bihar Essential Foodgrains Procurement Order, 1968, the assessee was appointed as the procurement agent to supply rice to fair price shop dealers. The fair price shop dealers deposited Rs. 3.33 per quintal as sales tax. The assessing officer granted exemption, but the Deputy Commissioner reversed this, making the assessee liable. The Tribunal suggested verifying if the State Government had already been assessed for these transactions.

Court's Analysis:
- The court noted that the Tribunal refrained from determining the liability of the petitioner and directed verification of the State Government's tax assessment.
- The court found it unnecessary to delve into the legal aspects of strict liability since the fair price shop dealers had already deposited the sales tax amount.

Judgment:
The court refrained from answering the second question, considering it a futile exercise given the facts and circumstances.

Conclusion:
- Question 1: The requirement of form IXC is directory, not mandatory, for claiming deductions on the sale of fertilizers.
- Question 2: Not answered due to the factual determination that the sales tax amount had already been deposited by the fair price shop dealers.