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TMI Blog2007 (11) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished before the prescribed authority, which, in turn, will decide the nature of the goods, the purchasing dealer cannot claim payment of sales tax at the concessional rate of two per cent treating oxygen gas as raw material under the garb of the two notifications dated September 9, 1983 and February 3, 1986. Therefore, demand notices are perfectly justified. Appeal dismissed. - W.P. (T) No. 4693 of 2005 - - - Dated:- 2-11-2007 - KARPAGA VINAYAGAM M. C.J. AND AMARESHWAR SAHAY , JJ. M. KARPAGA VINAYAGAM C.J. B.O.C. India Ltd., petitioner herein, has filed this writ petition seeking issuance of a writ of certiorari for quashing the order as contained in letter No. 2432 dated July 25, 2005 issued by the Deputy Commissioner, Commercial Taxes, Jamshedpur, respondent No. 4, directing the petitioner-company to deposit an amount of Rs. 1,02,45,572 being the differential amount of one per cent sales tax on sale of oxygen gas to Tata Iron Steel Company, respondent No. 7, herein. The short facts leading to filing of this writ petition are as follows: (A) The petitioner is the producer and supplier of gases like oxygen gas, etc., for industrial and medical use. Tata Iron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TISCO would be at two per cent only and not three per cent. Therefore, the petitioner sold the goods to TISCO at the rate of tax at two per cent, in view of the aforesaid two notifications. Since sales tax at three per cent was not collected and paid, road permits were not issued to the petitioner. Therefore, the petitioner filed a writ petition before the High Court in W.P. (T) No. 1195 of 2004, which was disposed of by the High Court directing the respondents to issue road permits. In the meantime, respondent No. 7 also filed writ petition seeking exemption from payment of sales tax at three per cent and also sought for direction to pay sales tax at the concessional rate of two per cent under Jharkhand Industrial Policy. However, the favourable orders were not obtained from the High Court and so respondent No. 7 moved the honourable Supreme Court. The petitioner also went to the Supreme Court and filed necessary application seeking the said relief. However, both the matters were dismissed by the Supreme Court. Thereafter on April 20, 2005 and June 29, 2005, the Department issued notices to the petitioner demanding a sum of Rs. 1,02,45,572, being the differential amount of tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registration certificate issued under section 13(1)(b) of the Act. If the said oxygen gas is held to be raw material, there is no difficulty in holding that those notifications would apply to oxygen gas, especially when it is admitted that the raw material is required directly for manufacture of steel products by TISCO. Once it is established that oxygen gas falls under the category of raw material and is directly used for manufacture of steel products, it is immaterial whether the same was required to be amended in the registration certificate issued under section 13(1)(b) of the Act. Mere fact that there was no amendment in the List as contained in annexure B to the registration certificate does not change its nature and character of the raw material. So when those notifications dated September 9, 1983 and February 3, 1986 are applicable to the facts of the present case, the petitioner is liable to pay only two per cent sales tax and not three per cent. Therefore, demand for differential amount is not valid in law. The learned counsel for respondent No. 7 also made submissions in support of the claim made by the petitioner by adopting the arguments advanced on his behalf. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not is to be decided by the prescribed authority and after such a decision, the required certificate can be issued. So far as the petitioner, the selling dealer, is concerned, it is bound by the certificate granted to TISCO under section 13(1)(b) of the Act. The purchasing dealer or the selling dealer cannot decide the issue on their own. Further, whether oxygen gas is a raw material or not, cannot be decided by this court and the same has to be decided by the prescribed authority on the basis of the materials placed before it. In the absence of any claim for modification of the certificate issued by the prescribed authority, the selling dealer cannot assume the jurisdiction of the prescribed authority and hold that the purchasing dealer is liable to pay sales tax only at two per cent and not three per cent, despite the certificate issued under section 13(1)(b) of the Act in favour of the purchasing dealer specifically mentions that oxygen gas is listed in annexure B not as a raw material but as goods. Therefore, the demand notices are justified. The learned counsel for the parties on either side cited a number of authorities. The authorities cited by the learned Senior Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimately the same was dismissed. Thereupon TISCO filed special leave petition before the Supreme Court and the same was also dismissed. Similarly, the petitioner also filed writ petition before the Jharkhand High Court in W.P. (T) No. 1195 of 2004 and thereafter they filed petition before the Supreme Court seeking the said relief and the said applications were also dismissed. Only thereafter the demand notices in question were issued. (C) There is no dispute in the fact that either in the High Court or in the Supreme Court, both TISCO as well as the petitioner never claimed that TISCO is entitled to purchase oxygen gas only at the concessional rate of two per cent on the ground that oxygen gas is used by it as a raw material on the strength of the notifications dated September 9, 1983 and February 3, 1986. Similarly they never approached the prescribed authority raising the said point. Only after receipt of the demand notices, the petitioner claims that TISCO is liable to pay tax at two per cent and not at three per cent in the light of the notifications dated September 9, 1983 and February 3, 1986. (D) Under section 13(1)(b) of the Act, the registered purchasing dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler can purchase goods required by him directly for use in manufacture or for processing of goods for sale in respect of which purchasing dealer has been granted a certificate by the prescribed authority in the prescribed manner; (2) the concessional rate of tax leviable under section 13(1)(b) of the Act is to be notified by the State Government; (iii) under section 13(2)(i) of the Act, purchasing dealer is required to furnish a declaration to the selling dealer and (iv) the prescribed authority may require the selling dealer to satisfy himself that the sale was made to the purchasing dealer on the basis of the certificate granted to him under section 13(1)(b) of the Act. In the light of the above factors, let us go into the issue in question. (i) According to the learned senior counsel appearing for the petitioner, the oxygen gas is used as raw material by TISCO for manufacture of steel products and therefore, the petitioner is liable to collect sales tax only at two per cent and not three per cent on the basis of the notifications dated September 9, 1983 and February 3, 1986. On the other hand, the learned counsel appearing for the respondents submits that the question whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore it by the parties that it is used as raw material may allow the claim and include the goods as raw material in annexure A in the certificate by making necessary modification in the certificate granted under section 13(1)(b) of the Act. Admittedly, this has never been done by either of the parties. There is no reason whatsoever as to why they did not do the same. If that be so, how could the selling dealer, instead of adopting the required procedure, usurp the jurisdiction of the prescribed authority and form an opinion on its own that the purchasing dealer would be liable to pay only two per cent sales tax and not three per cent sales tax? Admittedly, there is no provision permitting the parties to form their own opinion without approaching the prescribed authority. (vi) As indicated above, in the earlier writ petitions filed by the selling dealer or the purchasing dealer seeking payment of concessional rate of sales tax at two per cent, both of them have never raised the issue that oxygen gas is a raw material, which is to be mentioned in annexure A and not in annexure B on the basis of the notifications dated September 9, 1983 and February 3, 1986. On the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissal of S.L.P. in the Supreme Court. (ix) Even according to the petitioner, it is collecting tax at three per cent from the year 1998 on the basis of the rates mentioned in the certificate, treating oxygen gas as goods. Only, later on, in the year 2000, it realised the mistake of law under which sales tax was collected at three per cent and correct rate should be two per cent in pursuance of the notifications dated September 9, 1983 and February 3, 1986 and thereupon the petitioner started collecting concessional rate of sales tax at two per cent. This submission regarding belated realisation is quite strange. If the petitioner had actually felt that it was a mistake, he should have immediately taken steps to approach the prescribed authority seeking modification. Similarly, if he felt that by mistake, he collected sales tax at three per cent, he should have taken steps to get back the excess amount paid to the authorities. This was not done. Similarly, the purchasing dealer also had not made any attempt before the prescribed authority to claim that he is iable to pay sales tax at two per cent in pursuance of the notifications dated September 9, 1983 and February 3, 1986 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n whether oxygen gas should find place in the list of raw materials or not can be raised only by the beneficiary, namely, TISCO, and not by the selling dealer. Similarly, the said question can be decided only by the prescribed authority on the application made by TISCO and not by the selling dealer. According to the Department, oxygen gas is not a raw material directly required for manufacture which is apparent from the certificate of registration issued to TISCO under section 13(1)(b) of the Act. The ceiling rate for goods directly required for manufacture is three per cent as contained in S.O. No. 14195 dated December 15, 1976 which is still in force. As indicated above, oxygen gas is not used as raw material for TISCO as per its registration certificate. Further perusal of the registration certificate makes it clear that from time to time, several amendments have been made in the certificate as per the applications submitted by TISCO and it is renewed and valid as on date. Even though TISCO had enough opportunity to have the oxygen gas listed in annexure A, as a raw material, by establishing the same, TISCO for reasons best known to it had not taken steps in this regard to in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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