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TMI Blog2003 (9) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... uccessor State of Madhya Pradesh or in Chhatisgarh only. 2.. Petitioner submits that petitioner is entitled to claim the benefit of the Deferment of Tax Rules in the successor State of Madhya Pradesh also under the M.P. Deferment of Tax Rules, after reorganisation of erstwhile State of Madhya Pradesh as per M.P. State Reorganisation Act, 2000 (hereinafter referred to as "the Reorganisation Act") State of Chhattisgarh has issued Adaptation of Law Orders of 2000 on 30th November, 2000 under section 79 of Reorganisation Act. M.P. Commercial Tax Act was adopted by substituting "Chhattisgarh" for "Madhya Pradesh". Petitioner submits that by this adaptation the old Act does not lose its validity in Chhattisgarh. As per section 79, there is no power to introduce new law into any portion of the old State. The petitioner, thus, claims that the import of cement from Chhattisgarh to Madhya Pradesh will not be inter-State sale and remains intra-State sale in view of provisions of the Reorganisation Act. 3.. Notification (P-2) dated February 19, 1991 was issued under section 12 of the State Act and section 8(5) of the Central Sales Tax Act and certain class of dealers were exempted from S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinue to be binding on the new State of M.P. even though the manufacturing place of the dealers fall in the area of the successor State of Chhattisgarh. 6.. Petitioner further submits that respondents have failed to consider the objects of the provisions of the Reorganisation Act to maintain and continue the existing laws in force in the divided States even after bifurcation because of Municipal considerations and for welfare of the general public. Petitioner further submits that section 85 of the Reorganisation Act has overriding effect notwithstanding anything inconsistent therewith contained in any other law. Thus, it prevails over any State or Central Act. Though under the Central Sales Tax Act, the sale from the State of Chhattisgarh to the State of Madhya Pradesh will be inter-State sale and liable to Central sales tax, but under section 85 of the Reorganisation Act and in view of provisions of sections 78 and 79, such sale will not be inter-State sale but will be deemed to be intra-State sale for the purpose of said benefit conferring notification. By application of section 85 of the Reorganisation Act, inter-State sale shall be deemed to be intra-State sale. 7.. Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Chhattisgarh but in any case such claim cannot be raised against the State of Madhya Pradesh. The notice contained in P-6 has been rightly issued. The recovery of tax is well within its competence and within ken of power of the authority of the State of Madhya Pradesh. Sales in question are not liable to be treated as intra-State sales after Re-organisation of the States. Petitioner is liable to pay the taxes as exigible under section 9 of the Madhya Pradesh Commercial Tax Act, 1994. 9.. A return has also been filed by the respondent No. 3, State of Chhattisgarh, contending that petitioner is having cement factory at village Hirmi, Tahsil Simga, District Raipur, and he wants to avail the benefits of deferment notification dated December 30, 1986 in the State of Chhattisgarh for the sales made in State of Madhya Pradesh. Thus, the jurisdiction lie with the High Court of Chhattisgarh for redressal of the grievances, not before this Court. By Adaptation of Laws Order, 2000, in the Commercial tax laws, the word "Chhattisgarh" has been substituted in place of words "Madhya Pradesh". Now it has become "Chhattisgarh Vanijyik Kar Adhiniyam". "Chhattisgarh Sthaniya Kshetra Me M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of erstwhile State shall be continued into force and binding on successor States until and unless they are changed or modified by the Government of successor States. Learned counsel has further submitted that section 78 enables a law to remain in force to whole territory of Madhya Pradesh while section 79 gives power to appropriate Government to make such a law by an executive order within two years from the appointed day. 11.. Shri R.S. Jha, learned Deputy Advocate-General, appearing for respondents Nos. 1 and 2 submits that it is a case of reorganisation of the States and petitioner can avail the benefits only in State of Chhattisgarh where unit is located. The law which was prevailing has been adopted. The deferment cannot be claimed in the successor State of Madhya Pradesh, it can be claimed only in State of Chhattisgarh under the Chhattisgarh Commercial Tax Act and other Acts. In his submission, after formation of two successor States, it is territory which limits the operation of law though the similar law applies but in relation to territory of concerned States. 12.. Shri S.K. Rao, learned counsel appearing for the State of Chhattisgarh, submits that writ petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the law whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority. Section 79 runs as under: "79. Power to adapt laws.-For the purpose of facilitating the application in relation to the State of Madhya Pradesh or Chhatisgarh of any law made before the appointed day, the appropriate Government may, before the expiration of two years from that day, by order, make such adaptations and modifications of the law, whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority." Section 85 gives overriding effect to the Re-organisation Act to the extent of inconsistency contained in other law. Section 85 is quoted below: "85. Effect of provisions of the Act inconsistent with other laws.-The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary or proper in regard to the matter before the court, Tribunal or authority. Section 81 deals with the power to name authorities for exercising statutory functions. The State of Chhattisgarh as respect the transferred territory may, by notification in the Official Gazette, specify the authority, officer or person who, on or after appointed day shall be competent to exercise such functions exercisable under any law in force on that day as may be mentioned in that notification and such law shall have effect accordingly. Section 83 deals with the transfer of pending proceedings before a court including High Court, Tribunal or authority or Officer in any area. Section 85 quoted above gives the overriding effect to the Act to the extent of inconsistency with any other law. 14.. Section 2(f) of the Re-organisation Act defines the law to include any enactment, Ordinance, regulation, etc. The definition is quoted below: "2(f). 'law' includes any enactment, Ordinance, regulation, order, bye-law, rule, scheme, notification or other instrument having, immediately before the appointed day, the force of law in the whole or in any part of the existing State of Madhya Pradesh." A reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Reorganisation Act and in my opinion, the import of goods from Chhattisgarh to Madhya Pradesh has to be treated as inter-State sale, not intra-State sale. 16.. The submission of the learned counsel for the petitioner is that adaptation order does not abrogate old Act, the old Act has been continued by section 78 and its adaptation under section 79 did not affect its validity. Hence, existing M.P. Commercial Tax Act and notification dated December 30, 1986 and February 19, 1991 shall continue to operate in Madhya Pradesh and Chhattisgarh. Reliance has been placed on decision of the Punjab High Court in Sada Singh v. State of Punjab AIR 1980 Punjab 222. In Sada Singh AIR 1980 Punjab 222, there was dispute about raising the constructions in the controlled area without obtaining permission of the Deputy Commissioner under the Punjab New Capital (Periphery) Act, 1952. It was held that the adaptation of Punjab Act No. 1 of 1953 under section 89 of the Punjab Reorganisation Act, 1966, did not abrogate the old Act. It was held that the Punjab New Capital (Periphery) Control Act, 1952, did not cease to be a good Act after re-organisation of State of Punjab w.e.f. November, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avoid any change in the life pattern of the people, may have been disturbing and made reorganisation somewhat a difficult task. Similarly, section 78 of the M.P. Reorganisation Act, 2000, has limited scope and cannot be stretched beyond it. 18.. Learned counsel for the petitioner has further submitted that section 85 of the Reorganisation Act provides that the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law. Thus, import of cement from Chhattisgarh to Madhya Pradesh will not be an inter-State sale but intra-State sale. Submission has no basis as section 85 of the Re-organisation Act gives overriding effect in the case of inconsistency. In my opinion, even though the law of M.P. has been adopted in Chhattisgarh, it cannot be held that the M.P. Commercial Tax Act continues in operation in both the States instead in Chhattisgarh, Chhattisgarh Commercial Tax Act applies with similar provision by virtue of adaptation. No inconsistency has been shown with the M.P. Reorganisation Act, 2000, to give it overriding effect over the Central Sales Tax Act or other Acts. Reliance has been placed by Shri Mathur on R.S. Mahmood v. Syed Ahmed AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r State and relied on a decision of the apex Court in State of Punjab v. Balbir Singh AIR 1977 SC 629. The apex Court held that: "13. .............In our judgment even there is no change of sovereignty and it is merely an adjustment of territories by the reorganisation of a particular State, the administrative orders made by the Government of the erstwhile State continue to be in force and effective and binding on the successor States until and unless they are modified, changed or repudiated by the Governments of the successor States........... 14. ................We are, therefore, of the opinion that the impugned orders passed by the Government of the erstwhile State of Punjab continued to be the orders of the Governments of the concerned successor States until and unless they were modified, changed or repudiated by them." No doubt that even administrative order apply in the successor State until and unless they are modified/changed by the Government of successor State which is also statutorily provided by virtue of definition of law in section 2(f) and provision contained in sections 78 and 79 of the Reorganisation Act. But question is when the operation of the Act or or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perate in area consisted in existing State. In other words all the laws which were in force in the territories of Madhya Bharat continued to operate in those territories notwithstanding the alteration of the territories or the formation of the new State and notwithstanding that the then existing State of Madhya Bharat does not today exist on the map of India. 22.. Next submission raised by the learned counsel is that section 79 of the State Reorganisation Act was enacted to give legal force to adaptation, which had become necessary under changed circumstances, and shall continue to operate in both the successor States of M.P. and Chhattisgarh. Reliance has been placed on Ramdas v. State of M.P. AIR 1959 MP 353 in which it was held that provision of section 120 was for a limited purpose of giving force to the adaptation, which had become necessary under the changed circumstances. Enactments which have been adapted or which have not been adapted continued to have legal force after the reorganisation of States. The M.P. Commercial Tax Act applies in State of Madhya Pradesh and Chhattisgarh Commercial Tax Act applies in State of Chhattisgarh. Thus, it cannot be said that on the stren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8; AIR 1958 SC 468, wherein it was held that: "(60)(VI) Another contention urged by the petitioners is that the levy of tax proposed to be made by the Andhra State on the sale of yarn by them to dealers in the State of Andhra is illegal, because under the Madras Act and the Rules made thereunder, where there are successive sales of yarn the tax can be imposed at only one point, and as the Government of Madras had already imposed a tax on the sale within that State, a second levy on the selfsame goods by the State of Andhra is unauthorised, and that therefore the threatened proceedings for assessment are incompetent. This contention is clearly untenable. When the Madras Act provides for a single levy on successive sales of yarn, it can have only application to sales in the State of Madras, as it would be incompetent to the Legislature of Madras to enact a law to operate in another State. But it is argued that section 53 of the Andhra State Act, 1953, on its true interpretation enacts that though for political purposes Andhra is to be regarded as a separate State, for the enforcement of laws as they stood on that date it should be deemed to be a part of the State of Madras. We do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t inter-State sales. 26.. A similar situation arose in Sri Peera Mohammad Mahamood Saheb v. State of Andhra Pradesh [1960] 11 STC 456 (AP). Petitioner Sri Peera Mohammad Mahamood Saheb was a dealer in Vijayawada. His main business during the year of assessment 1953-54 consisted in purchasing raw skins and hides at Vijayawada and exporting them to tanners at Madras. The fact that after the formation of the Andhra State, by virtue of section 53 of the Andhra State Act, 1953, the same set of laws continued to be operative both in the State of Madras and Andhra does not support the contention that a dealer in hides and skins holding a licence for 1953-54 is entitled to the benefit of single point taxation even in regard to sales to dealers in Madras State after 1st October, 1953. After the emergence of the State of Andhra the privileges attached to the licence issued to a dealer are confined to the territory of Andhra. Thus, in the instant case the benefit of deferment has to be considered in the context of territory of State of Chhattisgarh. 27.. In my opinion, the fact that same set of laws continues to be operative in both the States of Chhattisgarh and Madhya Pradesh, does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for respondent No. 3. ORDER The facts and law being common in both the appeals preferred under clause 10 of the Letters Patent, they were heard analogously and are disposed of by this common order. 2.. The centripetal issue that arises for consideration in both the appeals wherein the order of the learned single Judge are under assail is whether the appellants are entitled to claim the benefit of deferment of tax provided to them under the M.P. Commercial Tax Act, 1994 (in short "the 1994 Act") after coming into force of M.P. State Re-organisation Act, 2000 (for brevity "the Reorganisation Act"). 3.. The facts which are essential to be stated are that the writ petitioners were granted benefit of deferment of tax by notification issued on February 19, 1991 under section 12 of the M.P. General Sales Tax Act, 1958 and section 8(5) of the Central Sales Tax Act, 1956, on fulfilment of certain conditions. The State Government had framed a set of Rules called the M.P. Deferment of Tax Rules, 1986 (hereinafter referred to as "the Rules") and under the Rules the petitioners were conferred the benefit as they became eligible on November 19, 1996 as per the eligibility criteria fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the sales effected in the State of Madhya Pradesh have become inter-State sales and therefore, the tax is leviable if the sale is effected in other States including the State of M.P. as an inter-State sale. 6.. The learned single Judge scanned the provisions of the Reorganisation Act and came to hold that the petitioners are not entitled for deferment of tax as there has been statutory intervention. The learned single Judge did not accept the submission of the petitioners that the Re-organisation Act did not abrogate the benefit granted under the prevalent Rules. He further opined that though the law of State of M.P. has been adapted in the State of Chhattisgarh it cannot be held that the benefits granted under the M.P. Commercial Tax Act continues, is in operation in both the States. It is appropriate to state here that before the learned single Judge a submission was canvassed that even the administrative order passed by the erstwhile State would continue in the successor State on the basis of law laid by the apex Court in the case of State of Punjab v. Balbir Singh AIR 1977 SC 629. But the said submission did not weigh with the learned single Judge and he declined to acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Theatre v. Government of Tamil Nadu [1993] 89 STC 201 (SC); (1992) 2 SCC 643, Kasinka Trading v. Union of India (1995) 1 SCC 274, Dr. Ashok Kumar Maheshwari v. State of U.P. (1998) 2 SCC 502. 8.. As we have indicated earlier that the primal issue relates to the extension of the benefit in the State of Madhya Pradesh. It is not disputed before us that the premises of the petitioners are situated within the territory of State of Chhattisgarh, after bifurcation of the State. There is no dispute that the benefit of deferment of payment of tax was extended by the erstwhile State of M.P. There is no controversy with regard the factum that after coming into force of the Reorganisation Act the State of Chhattisgarh has adapted the law in this regard which was in vogue in the State of M.P. and extended the benefit to the petitioner. The spinal issue that has spiraled to this Court is whether the petitioners are entitled to the said benefit as per existing legal provisions and further whether the State of M.P., after November 1, 2000 is also estopped to deny the benefit to the petitioners on the foundation or base of promissory estoppel. 9.. To appreciate the real core issues it is pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uccessor States for certain period subject to adaptation and modification so made until altered, repealed by the competent Legislature or other competent authority. Section 85 of the Reorganisation has an overriding effect. Section 2(f) deals with definition of law. Section 2(e) defines "existing State of Madhya Pradesh" and section 2(j) defines "successor State ". The scheme of the Act has been scanned by the learned single Judge. We have also perused certain provisions. There is no difficulty in coming to hold that both the States are separate States and enjoy separate status. There is no provision of adoption of old law and notification. The learned single Judge has appreciated the decisions rendered in the case of Sada Singh AIR 1980 Punjab 222, Bhagwan Kaur AIR 1963 Punjab 522, R.S. Mahmood AIR 1963 AP 65, Gummadi Narayana Reddi AIR 1964 AP 373, Balbir Singh AIR 1977 SC 629, Shri Swamiji of Shri Admar Mutt AIR 1980 SC 1, Kalicharan Dixit v. Krishnachandra 1961 MPLJ 117 and M.P.V. Sundararamier Co. [1958] 9 STC 298 (SC); AIR 1958 SC 468 and distinguished them on facts. We have gone through the decisions and further appreciated the approach of the learned single Judge. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... categorical and definite enunciation of law by the apex Court leaves no room for doubt applicability and binding nature of the statutory orders/notifications of the Government of the erstwhile State of Bihar in the successor State of Jharkhand. In fact, there is no necessity of its being 'adopted', as observed by the learned Judge. Under section 84-unless repudiated or otherwise modified or superseded by a legislative mandate, they continue to be applicable and binding in the successor State. 11.. So far as the Industrial Policy, 2001 of the Government of Jharkhand is concerned reference to it by the appellants is wholly misplaced. The said policy resolution envisages giving certain tax benefits, among other things, to the new industrial units set up after November 15, 2000. It obviously refers to the industrial units situate in the State of Jharkhand and has nothing to do with the units situate outside the State. It has been referred to, perhaps, to point out that the Government of Jharkhand having declared an Industrial Policy of its own, the Industrial Policy of the erstwhile State of Bihar of 1995 came to an end and therefore, any tax benefit available to units thereunder als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution by itself can be termed to be 'law' either within the scope and ambit of section 2(f) of the Act or even otherwise. We are saying so, because on the touch-stone of section 84 read with section 86 of the Act, without the issuance of the requisite statutory notification (under the provisions of Bihar Finance Act, 1981), the policy resolution of 1995 by itself was not even enforceable or implementable. What was enforceable and implementable was the statutory notification. The policy resolution actually was translated into the statutory notification by the issuance of S.O. No. 478. The policy resolution of 1995 thus culminated into and merged with the statutory notification being S.O. No. 478 and once the statutory notification was issued, the policy resolution paled into oblivion and got eclipsed totally. What, therefore, is enforceable in law in terms of section 84 of the Act read with section 86 is the statutory notification being S.O. No. 478 and the statutory notification providing only for the exemption with respect to such sale transactions which have intra-State connotation, with respect to inter-State sales, the exemption cannot be claimed or granted in favour of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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