2003 (3) TMI 691 - HC - VAT and Sales Tax

Summary

Issues:
1. Quashing demands for sales tax under Bihar Finance Act.
2. Adjustment of sales tax towards entry tax.
3. Exemption under industrial policy.
4. Charging section of the Act.
5. Reduction of liability under Bihar Finance Act.
6. Liability for additional tax.
7. Import of cement within the State.
8. Clarificatory nature of amendments.
9. Precedents on entry tax and sales tax.

Analysis:
1. The petitioner, a registered company, sought to quash demands for sales tax under the Bihar Finance Act. The demands were issued by the Deputy Commissioner, Commercial Taxes, Patna, directing the petitioner to deposit the unpaid sales tax amount, claiming it should be adjusted towards the entry tax already paid under the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993.

2. The petitioner claimed exemption under an industrial policy for incremental production of cement, leading to a dispute with the State regarding the exemption under the Bihar Finance Act. The petitioner argued for adjustment of sales tax towards entry tax paid, even for cement not subjected to sales tax due to exemptions granted.

3. Section 3 of the Act, a charging section, mandates tax collection on scheduled goods' entry into local areas. The petitioner's liability under the Bihar Finance Act was subject to reduction based on tax paid under the Act, as per a notification. The Amendment Act incorporated this provision, affecting demands predating the amendment.

4. The court rejected the petitioner's claim for adjustment based on the industrial policy's exemption from sales tax. The court emphasized that reduction of tax liability under the Bihar Finance Act is only applicable to goods with a tax liability under the Act, which did not include exempted incremental production.

5. The petitioner argued for a reduction in liability for additional tax under the Bihar Finance Act, citing a provision allowing for such adjustments based on tax paid under the Act. The court acknowledged the petitioner's entitlement to this adjustment, considering additional tax as part of the tax liability.

6. The petitioner contended that the Act's provisions did not apply to the import of cement within the same State pre-bifurcation. However, the court referenced a precedent rejecting a similar argument, emphasizing that subsequent amendments clarified the Act's applicability.

7. Citing a Supreme Court judgment, the petitioner argued against creating an additional tax burden under the Bihar Sales Tax Act after paying entry tax on scheduled goods. The court dismissed this argument, upholding the Act's validity based on the apex court's decision.

8. Ultimately, the court partly allowed the writ application, granting relief to the petitioner concerning the adjustment of liability for additional tax paid under the Bihar Finance Act towards the tax under the Act.