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of <h1>Court ruling favors assessee on 'loom hours' taxation issue but upholds Department on gunny bags exemption.</h1> <h3>The State of Bihar Versus Rameshwar Jute Mills Ltd.</h3> The State of Bihar Versus Rameshwar Jute Mills Ltd. - [1953] 4 STC 179 (Pat) Issues Involved:1. Whether 'loom hours' are considered 'goods' under Section 2(d) of the Bihar Sales Tax Act, 1947.2. Whether sales to registered dealers of Bihar, through commission agents outside Bihar, are exempt from taxation under Section 5(2)(a)(ii) of the Act.Detailed Analysis:Issue 1: Whether 'loom hours' are considered 'goods' under Section 2(d) of the Bihar Sales Tax Act, 1947.The assessee claimed that the sale of 'loom hours' did not fall within the ambit of the Bihar Sales Tax Act. The taxing authorities rejected this argument, leading to the formulation of the first question for the High Court: 'Are the sales of 'loom hours' in the circumstances of this case taxable under the provisions of the Bihar Sales Tax Act of 1947Rs.'The court examined whether 'loom hours' could be classified as 'goods' under Section 2(d) of the Bihar Sales Tax Act. Section 2(d) defines 'goods' as 'all kinds of movable property other than actionable claims, stocks, shares or securities and includes all materials, articles and commodities, whether or not to be used in the construction, fitting out, improvement or repair of immovable property.' The court noted that the definition of 'movable property' in the General Clauses Act includes 'property of every description except immovable property.'The court found that the sale of 'loom hours' did not fall within the definition of 'goods' under the Bihar Sales Tax Act. The court reasoned that 'goods' in the Bihar Sales Tax Act must be construed to mean only tangible corporeal property and not abstract rights like 'loom hours.' Therefore, the sale of 'loom hours' was not taxable under the Act.Issue 2: Whether sales to registered dealers of Bihar, through commission agents outside Bihar, are exempt from taxation under Section 5(2)(a)(ii) of the Act.The second issue concerned the sale of gunny bags to Messrs. Tata Iron & Steel Co. Ltd., Jamshedpur, through Messrs. Shaw Wallace & Co. The assessee claimed that the sales were to a registered dealer and should be exempt from sales tax under Section 5(2)(a)(ii) of the Bihar Sales Tax Act. The taxing authorities rejected this claim, stating that the sale was effected in favor of Messrs. Shaw Wallace & Co., not Tata Iron & Steel Co. Ltd.The court examined the evidence and found that the sales were indeed made to Messrs. Shaw Wallace & Co. and not to Tata Iron & Steel Co. Ltd. The books of the assessee showed that the goods were credited to Shaw Wallace & Co., and the responsibility for payment of the price rested with them. Therefore, the sales were not exempt from tax under Section 5(2)(a)(ii) of the Act.Conclusion:The court answered the first question in favor of the assessee, concluding that the sale of 'loom hours' does not fall within the ambit of the Bihar Sales Tax Act and is not taxable. The second question was answered in favor of the Department, concluding that the sales of gunny bags were made to Messrs. Shaw Wallace & Co. and not to Tata Iron & Steel Co. Ltd., and therefore, were not exempt from tax under Section 5(2)(a)(ii) of the Act. There was no order as to costs of this reference.
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