1998 (8) TMI 573 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the benefit of concessional rates of purchase under section 13(1)(b) of the Bihar Finance Act, 1981, requires the manufacturing site to be located within the State of Bihar.
2. Whether the Assistant Commissioner had jurisdiction to cancel the certificate under section 13(1)(b) of the Act.
3. Interpretation of section 13(1)(b) of the Bihar Finance Act, 1981, in the context of geographical limitations on the situs of manufacture.

Detailed Analysis:

1. Concessional Rates of Purchase and Location of Manufacturing Site:
The primary issue was whether the benefit of concessional rates of purchase under section 13(1)(b) of the Bihar Finance Act, 1981, necessitates that the manufacturing site where the purchased goods are used must be within Bihar. The petitioner, a company engaged in the manufacture of aluminium and allied products, argued that it was entitled to purchase bauxite at concessional rates even though its manufacturing unit was located outside Bihar, in Renukoot, U.P. The Assistant Commissioner had revoked the certificate on the grounds that the petitioner did not have a manufacturing unit within Bihar and was only engaged in mining operations within the State.

2. Jurisdiction of the Assistant Commissioner:
The petitioner contended that the Assistant Commissioner did not have the jurisdiction to cancel the certificate under section 13(1)(b) of the Act, as the provision of review under section 47 did not empower the Assistant Commissioner to cancel or recall a certificate already issued. However, the court decided to focus on the merits of the case concerning the requirements of section 13(1)(b) rather than the jurisdictional issue.

3. Interpretation of Section 13(1)(b):
The court examined whether section 13(1)(b) implied a geographical limitation that the manufacturing of goods must occur within Bihar. The petitioner argued that the plain language of the section did not impose such a condition. The court referred to the Supreme Court decision in Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax, where it was held that statutory provisions must be construed according to their plain language without adding any further conditions unless necessary to prevent absurdity. The court noted that section 13(1)(b) of the Bihar Act was similar to section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941, which did not restrict the situs of manufacture to a specific geographical location.

The court also considered legislative changes to section 13(1)(b). Initially, the section included restrictive words "for sale in Bihar or in course of inter-State trade or commerce," but these were deleted by an amendment effective from April 1, 1985. This indicated the legislative intent to remove any geographical limitation on the situs of manufacture or sale of manufactured goods.

Conclusion:
The court concluded that section 13(1)(b) of the Bihar Finance Act, 1981, does not impose a geographical limitation on the situs of manufacture or sale of manufactured goods within Bihar. It is sufficient that the purchased goods are directly used in the manufacture of goods, even if the manufacturing occurs outside the State. Consequently, the court set aside the impugned order dated September 29, 1995, and directed the respondent authorities to restore the certificate issued in the petitioner's favor under section 13(1)(b) of the Act. The writ petition was allowed with no order as to costs.