Tax liability survives exemption where the charging provision applies, so entry tax adjustment remains available.

Liability under the Bihar Finance Act, 1981 was treated as distinct from exemption from actual payment of sales tax, because the charging provision continued to fasten tax liability on the dealer. The Court held that an industrial exemption from sales tax on part of the turnover did not extinguish the underlying statutory liability. Since the assessee remained liable under the charging section, the entry tax adjustment notification applied to the extent of entry tax paid. The notices refusing that reduction were therefore unsustainable.

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Issues: Whether the assessee, though enjoying exemption from sales tax on a part of its turnover, was still liable under the Bihar Finance Act, 1981 so as to claim reduction of that liability by the entry tax paid under the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993.

Analysis: The charging provision under the Bihar Finance Act created tax liability on the dealer, while exemption operated only as a relief from payment of tax otherwise attracted by the statute. Liability to tax and actual quantification or payment of tax were treated as distinct concepts. The exemption notification under the entry tax scheme reduced liability under the Bihar Finance Act to the extent of entry tax paid, and the fact that sales tax was not payable on a portion of turnover because of an industrial exemption did not erase the underlying statutory liability. Since the assessee remained a dealer liable under the charging section, the adjustment contemplated by the notification was available.

Conclusion: The assessee was entitled to reduction of its liability under the Bihar Finance Act, 1981 to the extent of entry tax paid, and the notices denying that adjustment were unsustainable.

Ratio Decidendi: Exemption does not negate an existing statutory tax liability; where the charging provision attracts liability, a notification granting reduction or adjustment must be applied to the extent its conditions are satisfied.

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