9911796707
TMI Blog1981 (3) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... for exploitation of bamboos from the forests with the State of Bihar through the Divisional Forest Officer, Hazaribagh (respondent No. 4). The agreement was for grant of lease of the right of exploiting bamboos on the terms and conditions mentioned therein for twelve years, i.e., from the year 1968-69 to 1979-80. For silvicultural purposes a year is deemed to begin from the 16th October and end on the 13th June. The petitioner agreed to pay a minimum royalty of Rs. 1,05,000 a year under clause 2(a) of the agreement, but as provided under clause 2(c) thereof, a revision was made on the 1st July, 1975, and the minimum royalty payable by the petitioner was raised to Rs. 3,03,000 a year instead of Rs. 1,05,000 as fixed originally. The annual minimum royalty was payable by the petitioner irrespective of the fact whether, for its own default or due to any other cause, the petitioner-company is unable to exploit bamboos from the leased out forest coupes. It is provided under clause 6(a) of the agreement that if the petitioner-company fails to start work of exploitation of bamboos from the forest coupe even after the lapse of two months reckoning from the 15th October each year, the Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided under certain clauses of the agreement. 3.. In view of the above provisions in the lease, the petitioner asserts that the agreement is for carrying out forestry (silviculture) operation by the State through the lessee and the mode and manner of exercising the rights to exploit, which terms includes felling, conversion, collection, extraction, removal and transport, have been subjected to various restrictions and obligations under the agreement and the acts of the lessee in violation of such restrictions and obligations have been subjected to penalties and damages, as provided in clauses 6(a), 8(e), 13, 18, etc. 4.. Under schedule D of the agreement, the petitioner cannot object to the free removal of bamboos from the annual coupe by the right-holders for their own domestic and agricultural use, as specified in the permit issued by the Range Officer nor shall the petitioner neglect or object to the sale of bamboos to the Turies at the rates fixed by the Divisional Forest Officer. Similarly, under clause 5 of schedule D of the agreement, it has been provided that the demand of the local non-right-holders for purchase of bamboos on the rates fixed by the Divisional Forest Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (annexure 4). Thereafter, on the 18th June, 1979, respondent No. 4 issued another notice (annexure 5) to the petitioner to the effect that if the petitioner failed to pay the sales tax demanded under annexure 3 within fifteen days that amount would be adjusted out of the amount of security deposited by the petitioner and the petitioner's operation under the agreement (annexure 1) would be stopped. 8.. It is further stated in the petition that the Bihar Sales Tax Act, 1959 (hereinafter referred to as the 1959 Act), which made provisions for levy of sales tax on various commodities and provided the machinery for assessment and collection thereof, stood repealed by section 54 of the Bihar Sales Tax Ordinance, 1976 (Bihar Ordinance No. 209 of 1976), promulgated by the Governor of Bihar and published in the official Gazette on the 23rd August, 1976. According to section 1(3) of that Ordinance, it was to come into force on such date as the State Government might by notification in the official Gazette appoint, and might fix different dates for different provisions of the Ordinance. The relevant notification was issued on the 29th November, 1976, by which the State Government brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w in operation till the filing of the writ application. 10.. The State has filed a counter-affidavit asserting that sales tax was payable by the petitioner in respect of the transactions made by virtue of the agreement (annexure 1) and that the opinion given by the Commissioner of Commercial Taxes is of no help to the petitioner, inasmuch as it was liable to pay sales tax under the law imposing sales tax and there was no estoppel against the statute. It is further asserted that it is not correct to say that the State of Bihar (forest department) is not a dealer under the Sales Tax Act as respondent No. 4 is a dealer within the meaning of the Sales Tax Act and has obtained a registration certificate as provided under section 9 of the said Act. Copies of the registration certificates have been filed as annexures A and A/1 to the counter-affidavit. 11.. Mr. Shrinath Singh, the learned counsel appearing on behalf of the petitioner, has urged the following points in support of his contention that the petitioner is not liable to pay sales tax in respect of the transactions in question. (1) In the transaction embodied in the agreement (annexure 1) and the acts of the parties pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner has been permitted to go over the land, cut and remove bamboos and to appropriate the same and the right to go on the land was ancillary to the real purpose of the contract, what the agreement envisaged is a minimum price for extraction of bamboos by whatever name the price may be called. I have referred above, in some detail, to the terms of the agreement on which the petitioner relied to show that the agreement was a lease of immovable property and the right to exploit the trees was circumscribed by various restrictive provisions contained in the lease even exposing the petitioner to prosecution for any breach thereof. It is not necessary to refer in any greater detail to the terms of the agreement, inasmuch as the question as to whether the agreement is a lease of immovable property or a licence to exploit trees stands concluded by an unreported decision of a Bench of this Court in the case of Titaghur Paper Mills Co. Ltd. v. State of Bihar (C.W.J.C. No. 619 of 1978 disposed of on the 15th May, 1979) (reported in [1980] 45 STC 130) wherein a similar agreement has been interpreted and held to be a licence, to go on the land to cut and remove bamboos and to appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "goods" includes all growing crops, grass, trees, plants and things attached to or forming part of the land, which are agreed to be severed before sale or under the contract of sale. 14.. As regards point No. (7), that the State is estopped from demanding sales tax in respect of the period before the first demand notice dated the 2nd December, 1978, the plea is one of promissory estoppel, based on averments made in paragraphs Nos. 14 and 15 of the writ application. It is stated therein that the Commissioner of Commercial Taxes, after obtaining the opinion of the law department, has decided that no sales tax was payable in respect of auction of forest area, and, on the basis of that the Divisional Forest Officer (respondent No. 4) informed the petitioner that the petitioner was not liable to pay any sales tax with regard to the agreement in question which was entered into in 1968. The petitioner, acting on the faith and belief of the aforesaid intimation that the petitioner was not liable to pay any sales tax in respect of the exploitation of bamboos, did not take into account any amount as sales tax in computing the cost of production and ultimate sale price of its products. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 1976, dated the 12th June, 1978, for dealing in sales of biri leaves, timber and bamboos. 16.. The ninth and the last contention of Mr. Shrinath Singh is that no sales tax law being in force in the State of Bihar during the relevant period, no sales tax can be levied. I have already mentioned that the demand is in respect of the years 1975-76, 1976-77 and 1977-78. His attack is two-pronged. The argument, firstly, proceeds on the footing that at the point of time when the demands were made by three letters dated 2nd December, 1978, 16th February, 1979, and 18th June, 1979 (impugned annexures 2, 3 and 5), there was no sales tax law in existence, and therefore, no valid demand of sales tax could be made by the impugned annexures. The demand of sales tax has been made in respect of the transactions of sale during the years 1975-76, 1976-77 and 1977-78. The liability to pay tax is incurred under law levying sales tax and if it is so properly incurred the liability is not washed away if the taxing statute ceases to be in existence in a subsequent period, when the liability is kept alive under the repealing statute. It is another matter as to what will be the machinery for its quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered by the Act and the liability during the second part is covered by Ordinance No. 209 of 1976. Block II comprises of the period from the 13th January, 1977, to the 25th December, 1977. After the expiry of Ordinance No. 209 of 1976 on the 12th January, 1977, under article 213(1)(a) of the Constitution, Mr. Singh's contention is that there was no tax law in force creating any liability for payment of sales tax. The basis of the argument is that although during this period there were five Ordinances promulgated and published, namely, Ordinances Nos. 38, 101, 163, 208 and 221 of 1977, their provisions were not made applicable which was required to be so made by a notification in the official Gazette by the State Government under section 1(3) of each of those Ordinances. Block III is in relation to the period from the 26th December, 1977, to the 26th April, 1978. It is admitted by Mr. Singh that Ordinance No. 257 of 1977 was in operation authorising imposition of sales tax, but when it expired on the 26th April. 1978, by virtue of article 213(1)(a) of the Constitution, the liability has not been kept alive for the reason that although four Ordinances, being Ordinances Nos. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislature being to keep the sales tax law alive. In the alternative, he submitted that even if the old Act does not survive, the Ordinance has an enduring effect and its effect is still in force. Under the saving clause of the Ordinance, the liability is still saved and the demand can be recovered. The effect of the saving clause did not die on account of the natural death or expiry of the period of the Ordinance. 20.. It will be relevant in this regard to refer to the history of the sales tax law in the State of Bihar. It was first imposed in the State of Bihar in the year 1944 by Bihar Act 6 of 1944, and the preamble of the Act shows that 'it was intended to augment the revenue of the State. It was replaced by the 1947 Act (Bihar Act 19 of 1947). The preamble of the 1959 Act is of wider importance, inasmuch as it was enacted to consolidate and amend the law relating to the levy of tax on the sales and, in certain cases, purchases of goods in Bihar. In spite of the repeal of the 1944 Act the 1947 Act kept alive the liabilities which accrued under the 1944 Act under the repeal and saving provisions. Similar provisions had been made in the 1959 Act keeping alive the liabilities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re", "Joint Commissioner", "month", etc., necessitated by the changes made in the main provision of the Act, have been included. These additions enlarged the field of operations of the sales tax law and they surely intended to keep the sales tax law alive. A close scrutiny of the charging section 3 will also indicate that the same result was intended. Section 3 does not allow grace period of thirty days before a dealer can be made liable to pay sales tax as existed in the Act. The dealer becomes liable on the following day when the said dealer exceeds the specified quantum. The specified quantum has been indicated in the section itself, which was not in the earlier Act. The other provisions of the Ordinance also incorporate the provisions of the Act with slight changes here and there. Section 54 of the Ordinance, dealing with repeal and saving, is rather important and may usefully be reproduced: "54. Repeal and savings.-(1) The Bihar Sales Tax Act, 1959 (Bihar Act XIX of 1959) (hereinafter referred to as the said Act) is hereby repealed: Provided that nothing in this repeal shall affect or be deemed to affect- (i) any right, title, obligation or liability already acquired, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 Act which was a permanent statute, was intended to be repealed temporarily only so long as the Ordinance in question was alive. Otherwise, it was not necessary in all the eight subsequent Ordinances to say that the Act of 1959 was repealed and the liability incurred under the said Act was kept alive, as also the Act for the purpose, under the deeming provisions. 21.. The provisions of the first four Ordinances Nos. 38, 101, 163 and 208 of 1977, which were duly promulgated on the expiry of the first Ordinance No. 209 of 1976 after it lapsed under article 213(2)(a) of the Constitution, were not made applicable by necessary notification, as required under section 1(3) of each of the Ordinances. However, it is significant that in the fifth Ordinance that followed, namely, Ordinance No. 257 of 1977, which was published and promulgated on the 26th December, 1977, and the provisions of which have been made effective by necessary notification under section 1(3) of the said Ordinance, the saving and repeal provision incorporated in section 54 is in similar terms as in the first Ordinance No. 209 of 1976, which repeals the 1959 Act and keeps the liability incurred under the Act alive, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not exist on the statute book. Section 9 of the Bihar and Orissa General Clauses Act reads as follows: "In any Bihar and Orissa Act or Bihar Act it shall be necessary, for the purpose of reviving, either wholly or partially, any enactment wholly or partially, repealed expressly to state that purpose." The learned counsel has further submitted that by virtue of section 34 of the Bihar and Orissa General Clauses Act, section 9 of the said Act will apply in case of Ordinance also. Relevant portion of section 34 of the said Act may usefully be quoted: "The provisions of this Act shall apply,- (a) ................................................ (b) in relation to any Ordinance promulgated by the Governor under article 213 of the Constitution or any Regulation made by the Governor under paragraph 5 of the Fifth Schedule to the Constitution, as they apply in relation to Bihar Acts made by the State Legislature: ..............................................." 24.. It is true that section 34 says that the General Clauses Act will apply to an Ordinance also, but it will apply to such of the provisions which admit of application in relation to an Ordinance. There is a clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a temporary statute is that in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires. That is why the legislature can, and often does, avoid such an anomalous consequence by enacting in the temporary statute a saving provision, the effect of which is in some respects similar to that of section 6 of the General Clauses Act." In that case, the question was as to whether the validation of the Cuttack Municipal election by a temporary Act, after it was declared to be invalid, would survive after the lapse of the Ordinance and it was held that it survived. Their Lordships observed as follows: "In our opinion, having regard to the object of the Ordinance and to the rights created by the validating provisions, it would be difficult to accept the contention that as soon as the Ordinance expired, the validity of the elections came to an end and their invalidity was revived. The rights created by this Ordinance are, in our opinion, very similar to the rights with which the court was dealing in the case of Steavenson 151 ER 1024 and they must be held to endure and last even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en promulgated curing the lacuna, if any, in some of the earlier Ordinances and requested that the judgment may not be delivered on that day. As a matter of fact, at the close of the argument, it was submitted on behalf of the State that an Ordinance was in the offing and as the instruction of the President under article 213(1) of the Constitution had to be obtained it may take some time and the judgment may be deferred for some time to avoid any fresh writ being filed in relation to the Ordinance on the same question. The case again appeared in the list under the hearing "To be mentioned" on the 20th January, 1981, when counsel for the State put in the Ordinance in question. The learned counsel for the petitioner prayed for time for making submission with regard to the impugned Ordinance. After another adjournment on the ground of absence of Mr. Shrinath Singh, the case was placed on 30th January, 1981, under the hearing "To be mentioned" when both sides were heard on the Ordinance in question. Mr. Chunni Lal has submitted that this Ordinance has been promulgated on the 7th January, 1981, and published in the Bihar Gazette on the next day, that is, 8th January, 1981, and its Eng ..... X X X X Extracts X X X X X X X X Extracts X X X X
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