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of <h1>Court upholds shellac sales tax, rejects exemptions. Assessee to bear costs.</h1> <h3>Mahadeo Ram Bali Ram Versus The State of Bihar</h3> The Court ruled in favor of the State of Bihar, upholding the validity of taxing shellac sales. The Court determined that the sales did not qualify for ... - Issues:1. Interpretation of Article 286(1)(b) of the Constitution in the context of sales tax on shellac.2. Application of Article 286(1)(a) of the Constitution to exempt sales of shellac.3. Consideration of Article 286(2) of the Constitution in relation to sales tax.Analysis:Issue 1: Interpretation of Article 286(1)(b) of the ConstitutionThe case involved a dispute regarding the taxation of shellac sales under Article 286(1)(b) of the Constitution. The assessee argued that the sales were exempt as they were part of export activities. However, the Court held that for a sale to be exempt under Article 286(1)(b), it must be an integral part of the export process. Referring to precedent cases, the Court emphasized that the sale must be directly connected to the exportation of goods out of the country to qualify for exemption.Issue 2: Application of Article 286(1)(a) of the ConstitutionThe assessee also contended that the sales of shellac should be exempt under Article 286(1)(a) as they were intended for export. However, the Court rejected this argument as there was no evidence to support that the sales were specifically for consumption within the state of West Bengal. Therefore, the Court concluded that the sales did not meet the criteria for exemption under Article 286(1)(a).Issue 3: Consideration of Article 286(2) of the ConstitutionLastly, the assessee claimed that sales of shellac were exempt under Article 286(2) of the Constitution. The Court dismissed this argument, stating that the President's Sales Tax Continuance Order of 1950 allowed for the imposition of sales tax despite Article 286(2) restrictions. Citing a previous decision, the Court clarified that only the hurdle imposed by Article 286(2) needed to be overcome, which was achieved through the President's Order and Central Act No. 7 of 1956 for the relevant period.In conclusion, the Court held that the sales of shellac were validly taxed by the revenue authorities, rejecting all arguments presented by the assessee. The Court answered the question of law against the assessee and in favor of the State of Bihar, directing the assessee to bear the cost of the reference and the hearing fee.
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