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2022 (9) TMI 1209 - HC - VAT and Sales TaxAdditional levy of tax on supply of cement to the contractor by the Assessee - Sale of Cement - point of sale - HELD THAT - It is an admitted fact that Tata Steel Ltd. purchased cement after paying tax, which was leviable at first point of tax and supplied the same to its contractor for executing works in its behalf and has, admittedly, deducted the amount towards supply of cement from the bills of the Contractor - Thus, in view of the ratio of the Judgments laid down by the Hon ble Apex Court in the cases of NM GOEL AND COMPANY VERSUS SALES TAX OFFICER, RAJNANDGAON 1988 (10) TMI 106 - SUPREME COURT , and RASHTRIYA ISPAT NIGAM LTD. VERSUS STATE OF ANDHRA PRADESH 1998 (2) TMI 480 - SUPREME COURT , there is no dispute on the proposition that transaction of supply of cement by the Assessee to its contractor and recovery of the amount from bills of the contractor would amount to second sale of cement by the Assessee to its contractor. In fact, Respondent-Tata Steel Ltd. has not joined issues on said proposition of law and has accepted said proposition of law. In the entire writ application, no dispute is raised that cement is leviable at first point of sale and tax has already been paid on such cement - on examination of provisions of Section 11 of the Bihar Finance Act, 1981 and the relevant Notification dated 26th December, 1977. Section 11 of the Bihar Finance Act, 1981 enables the State Government to prescribe point or points in the series of sales at which the sales tax shall be levied. Admittedly, in exercise of the said power, sales tax was levied on cement only on the first point of sale, and, any subsequent sale of cement was not leviable to tax. It is declared that although transaction of supply of cement by Assesse-Tata Steel Ltd. to its contractor and recovering the amount from bills of the contractor would amount to second sale of cement, the same would still not be subjected to levy of tax on the second sale, as, admittedly, cement was levied to tax only at the first point of sale and, admittedly, tax on such cement has duly been discharged by the assesse-Tata Steel Ltd. There are no merit in the writ application and the same is dismissed.
Issues:
Challenge to order setting aside additional levy of tax on supply of cement to contractor. Analysis: - The dispute involves the challenge to an order setting aside the additional levy of tax on the supply of cement to a contractor by the Assessee, Tata Steel Ltd., during the period 1989-90 under the Bihar Finance Act, 1981. - The Assessing Officer had levied tax on the supply of cement to the contractor by the Assessee, considering it as a second sale, despite tax being paid on the initial purchase of cement by the Assessee. - The Appellate Authority rejected the Assessee's appeal, stating that the transaction amounted to a second sale as the Assessee deducted the price of cement from the contractor's bills. - The Commercial Taxes Tribunal, in a revision application, allowed the appeal and held that the additional levy of tax on the supply of cement to the contractor was illegal. - The State of Jharkhand challenged this decision in a writ petition before the High Court. Arguments by State of Jharkhand: - The State contended that the supply of cement by Tata Steel Ltd. to its contractor should be deemed a sale as the Assessee deducted the value of cement from the contractor's bill, making it a second sale. - The State argued that even though tax was paid on the first point of sale, the Assessee was required to produce Form IX-C at the subsequent sale stage, which was not done, justifying the levy of tax by the Assessing Officer. Arguments by Assessee: - The Assessee argued that since cement was already taxed at the first point of sale, no tax should be levied on the subsequent sale to the contractor, even if it amounted to a second sale due to the deduction of the value from the bills. - The Assessee contended that the production of Form IX-C was not mandatory, especially when tax had already been paid on the first sale of cement. Court's Decision: - The High Court acknowledged that the transaction of supplying cement to the contractor and deducting the amount from bills constituted a second sale. - However, the Court emphasized that as cement was taxed only at the first point of sale and tax was already paid by the Assessee, no additional tax could be levied on the subsequent sale. - The Court held that the failure to produce Form IX-C at the time of the subsequent sale did not justify a tax levy, as the cement had already been taxed at the first point of sale. - Consequently, the Court dismissed the writ application filed by the State of Jharkhand, ruling in favor of the Assessee, Tata Steel Ltd., and declined to order any costs in the case.
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