2003 (1) TMI 666 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of exemption from sales tax on inter-State sale of raw material under S.O. No. 478 issued by the Government of Bihar.
Applicability of exemption under S.O. No. 478 after the formation of the State of Jharkhand.
Enforceability of policy resolution of 1995 as "law" for exemption on inter-State sale transactions.

Analysis:
The petitioners, a group of entrepreneurs from Bihar, sought relief regarding the exemption from sales tax on the purchase of raw material, previously allowed under S.O. No. 478 issued by the Government of Bihar. The issue arose after the formation of Jharkhand on November 15, 2000, which changed the nature of the transactions from intra-State to inter-State sales due to purchases being made in Jharkhand for use in Bihar. The exemption under S.O. No. 478, applicable to intra-State sales, could not be extended to inter-State sales governed by the Central Sales Tax Act, 1956. The Court held that the petitioners were not entitled to the exemption for inter-State sales post the reorganization of states.

Regarding the enforceability of the 1995 policy resolution as "law," the Court rejected the argument that it should be binding on the Government of Jharkhand under promissory estoppel. The resolution aimed at granting incentives for intra-State sales and did not cover inter-State transactions. The Court emphasized that the statutory notification, S.O. No. 478, resulting from the policy resolution, was enforceable, not the resolution itself. As the exemption was limited to intra-State sales, the petitioners could not claim relief for inter-State transactions. The Court dismissed the petition, emphasizing that the exemption did not apply to inter-State sales, and declined to grant any relief to the petitioners.