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PETITIONER: M/S. KUMAR DISTRIBUTORS (P) LTD.BELTEK INDIA LTD.

       Vs.

RESPONDENT: STATE OF BIHAR & ORS.

DATE OF JUDGMENT17/08/1995

BENCH: VENKATASWAMI K. (J) BENCH: VENKATASWAMI K. (J) VERMA, JAGDISH SARAN (J)

CITATION:  1995 AIR 2475            1995 SCC  (5) 593  1995 SCALE  (4)780

ACT:

HEADNOTE:

JUDGMENT:                           JUDGMENT K.VENKATASWAMI,J.      Leave granted.      A common  question of  law arises  for consideration in these two  appeals. That  question of  law can be set out in the following words:-      Whether  an   exemption  notification  published  under Section  7(3)   of  Bihar  Finance  Act,  1981  (hereinafter referred for  short as  the ‘Act’) will also cover exemption from charge  of additional tax levied under Section 6 of the Act.      Brief facts are the following:-      The appellant  in  the  first  case  was  a  dealer  in television sets,  watches and  mixers. The  appellant in the second case  is a  manufacturer of  television sets  in  the State  of  Bihar.  The  State  Government  with  a  view  to encourage  industries   in  the  State  from  time  to  time announced various schemes granting incentives in the from of exemption from  sales tax  or purchases  tax as the case may be. One  such notification  bearing No.S.O. 92 dated 18.1.88 was issued  under the  express provision  of Section 7(3) of the Act  exempting from  the levy  of sales  tax as  well as purchase tax on the sales of electronic raw materials to the owner of  electronic units  approved and  registered by  the Department  of   Industries,  Government  of  Bihar  or  the competent authority of Government of India for a period of 5 years w.e.f.  1.9.1986 subject  to  the  conditions  imposed therein; and  another notification  bearing No.S.O.94  dated 18.1.1988 under the express provision of section 7(3) of the Act granting  exemption from  the levy of sales tax on sales of electronic  goods manufactured  by electronic  industrial unit  approved   and  registered   by  the   Department   of Industries, Government  of Bihar  or the competent authority of Government  of India for a period 5 years w.e.f. 1.9.1986 subject to the condition mentioned therein was issued.

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    For the  assessment year  in question, namely, 1989-90, the appellants claimed exemption from the levy of additional tax payable  under section  6  of  the  Act.  The  assessing authority  (Commercial  Taxes  Officer)  refused  to  exempt ‘additional tax’  as claimed by the appellants. Aggrieved by that, the  appellants moved  the High  Court of  Patna under Articles 226/227  of the constitutions of India for grant of necessary relief/appropriate relief. A Division Bench of the Patna High  Court after  considering the scope and extent of the notifications  referred to  above with  reference to the substantive provisions  viz. Section 6 and 7 of the Act held that the  appellants are  liable to  pay additional  tax and they are  not entitled  to claim  exemption from  payment of additional tax  on  the  basis  of  exemption  notifications issued under  Section 7(3)  of the  Act. Still aggrieved the present appeals are filed in this Court.      Learned counsel  appearing for the appellants submitted that a  look at  the definition of ‘tax’ in Section 2(x) and taxable turnover  in Section  21 will  go to  show that  the exemption notifications  issued under Section 7(3) will come to the aid of the appellants to claim exemption from payment of additional  tax. Learned  counsel placed  reliance on two judgments of  this Courts reported in Deputy Commissioner of Sales Tax  Vs. Aysha  Hosiery Factory  (p) Ltd.  etc.  etc., (1992 Supp  (2) SCC  178) and  State of Karnataka Vs. Sungar Brothers (1993  (3) SCC  16) to  support his contention that Sales tax  will include  additional  tax.  We  can  at  once dispose of  this contention  by stating  that  there  is  no dispute that  ‘tax’ includes  additional tax  in as  much as Section 2(x)  of the  Act is  clear and  unambiguous on this issue.      But the question is whether the exemption notifications issued specifically  under Section  7(3) of  the  Act  would extend to  exemption from  payment of additional tax charged under Section  6 of the Act when the provision for exemption from payment of additional tax is made in Section 6(2).      For considering  the issue  on hand, it is necessary to set out  certain provisions  in the Act. We will now set out Section 2(x), Section 6, Section 7(3) and Section 21:- "Section 2(x):  "Tax" includes  the sales  or  purchase  tax levied under  section 3  as also additional tax levied under Section 6 of this part. Section  6:  Charge  of  additional  tax  -  Notwithstanding anything contained  in  sub-section  (3)  of  section  7  or sections 11,  12, (13)  and 21 or in any notification issued thereunder every  dealer having  a gross  turnover exceeding the specified  quantum as laid down in section 3 shall, with effect from  a date  to be specified by the State Government by a  notification published  in Official  Gazette,  pay  an additional tax  at such rate, not exceeding two percentum of his gross turnover (excluding the sales or purchase of goods which have  taken place  either in the course of inter-State trade or commerce, or outside the State, or in the course of import of  goods  into,  or  export  of  goods  out  of  the territory of  India) as  the State Government may, from time to time by notification in the Official Gazette, fix:      Provided that  State Government may fix different rates within the ceiling rate of 2 percentum on the gross turnover of different goods:      Provided further that in the case of declared goods, as defined in  the Central  Sales Tax  Act, 1956  (Act LXXIV of 1956)-      (i)Where the  tax payable  under section 3 or section 4 equals the  maximum amount  of tax permissible under section 15 of the Act, no additional tax shall be payable under this

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section:      (ii)  Where  the  additional  tax  under  this  section together with  the tax  payable under section 3 or section 4 would exceed  the maximum  amount of  tax permissible  under section 15  of that  Act, the  additional  tax  shall  stand reduced to  such amount as, together with the tax payable as aforesaid, equals the said maximum amount.      (2)  The  State  Government  may  by  notification  and subject to  such conditions  and  restrictions,  as  it  may impose exempt from the levy of additional tax gross turnover in respect of any goods or class or description of goods. Section 7.  (1)*************             (a)*************             (b)*************             (c)*************             (2)*************      (3) The State Government may, by notification and subject to such conditions of restrictions as it may impose, exempt from the sales tax or purchase tax-      (a) sales  of any  goods or  class  or  description  of goods;      (b) sales of any goods or class or description of goods to or by any class of dealers;      (c) any sale or category or description of sales; and      (d) purchase  of any  goods by  any class of dealers or any purchase or category or description of purchases of such goods.      (4) ************** Section 21  Taxable turnover  - (1)  For the purpose of this part the  taxable turnover of a dealer shall be that part of his gross turnover which remains after deduction therefrom-      (a) (i)  in case  of the  work contract  the amount  of labour and  any other  charges in  the  manner  and  to  the extents prescribed;      (a) (ii)  sale price on account of sales exempted under Section 7;      (b) amount  of sales tax actually collected as such, if any, along  with the  sale prices  received or receivable in respect of sales of goods;      (c) sale  prices on  account of  sales to  a registered dealer other  than a  dealer liable  to pay  tax under  sub- section (8)  of section  3 of goods mentioned in sub-section (4) of  section 11 specified in his registration certificate as being  required for  re-sale by  him inside  Bihar or  in course of inter-State trade or commerce;      Provided that in the case of such sale a declaration in the prescribed  form duly filled up signed by the registered dealer to whom the goods are sold or by his manager declared under Section  15 is  furnished in  the prescribed manner by the selling dealer;      (d) sale  prices at the subsequent stages of sales such goods as  are specified  by a notification issued under sub- section (1)  of Section  11 as  being subject  to tax at the first point  of sale  in Bihar,  if  necessary  evidence  as required by  sub-section (2)  of Section  11 are produced in the prescribed manner before the prescribed authority. (1A) Where  any dealer  claims that  he is not liable to pay tax on  any part  of his  gross turnover  in respect  of any goods by  reason of  transfer of  such goods  by him  to any other dealer  or to  his agent or principal, as the case may be, for  sale, the  burden of proving this claim shall be on the dealer  and for  this purpose along with other evidences he  shall   furnish  before   the  prescribed   authority  a declaration in the forms and in the manner prescribed.      (2) Where  any goods  or sales exempted from the levy

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of tax by a  notification issued  by the  State Government  in this behalf under sub-section (3) of Section 7 are purchased by a dealer after  furnishing a  declaration as  mentioned in  or provided by the notification or where any goods specified in the certificate  of registration  of a dealers are purchased by him  after furnishing a declaration as provided in clause (c) of  sub-section (1)  but are  utilized by  him  for  any purpose other than those specified in such a notification or specified in  clause (c) of sub-section (1), as the case may be, the  sale price of the goods so purchased shall, without prejudice to  any action  which is  or may  be  taken  under Section 49,  be deducted  from the  gross  turnover  of  the selling dealer but shall be included in the taxable turnover of the purchasing dealer."      From a  careful reading  of  Section  6,  it  would  be crystal clear  that so  far as  charge of  additional tax is concerned, this  section  is  self-contained  not  only  for charging  additional   tax  but   also  for  its  exemption. Therefore, the  exemption notification  specifically  issued under section  7(3) will  not cover charge of additional tax to enable  the appellants to claim exemption from payment of additional from  payment of  additional tax. Even though the position is so clear, the learned counsel for the appellants argued that in the light of Section 21, the turnover will be nil  and,   therefore,  there   is  no  scope  for  charging additional tax.  This argument is based on a misconstruction of Section  6 of the Act. We have pointed out that Section 6 is self-contained  and there  is an  unbuilt  provision  for exemption from levy of ‘additional tax’ therein, in addition to Section  7(3) which  provides for  exemption from levy of ‘sales tax’  and ‘purchase  tax’. The  non obtain  clause in Section  6  also  overrides  Section  7(3)  and  Section  21 expressly. The position is, therefore, clear in this Act.      For the  foregoing reasons,  we find  no  substance  in these appeals  and High  Court was  right in  dismissing the writ petitions. Accordingly these appeals are dismissed with costs.