1958 (9) TMI 69 - HC - VAT and Sales Tax

Bihar Sales Tax Act: Taxation on Sugar Despatches Upheld by High Court

Commissioner of Sales Tax, Bihar Versus. Champaran Sugar Company Ltd.

Commissioner of Sales Tax, Bihar Versus. Champaran Sugar Company Ltd. - [1959] 10 STC 196 (Pat) Issues:1. Interpretation of Bihar Sales Tax Act, 1947 regarding taxation on sugar despatches outside the State of Bihar.Detailed Analysis:The judgment pertains to a case stated under section 25(3) of the Bihar Sales Tax Act, 1947, involving the assessment of sales tax on a sugar manufacturing company for despatches outside Bihar. The assessee was initially assessed by the Sales Tax Officer, and subsequent appeals and revisions were made, leading to the matter being referred to the High Court for a decision on the taxation of sugar despatches to other states. The primary issue revolved around whether the despatches of sugar outside Bihar were liable to be taxed under the Act.The Chief Justice noted that the assessee, a sugar manufacturer in Bihar, had despatched sugar to various states under orders of the Sugar Controller, resulting in a sales tax assessment for the quarter ending 30th September, 1947. The Deputy Commissioner of Sales Tax upheld the assessment, which was later challenged in revision before the Board of Revenue. The Board set aside the assessment order, ruling that the assessee was not liable to pay sales tax on the amount of sugar despatched to other states. The Board then referred the question of law to the High Court for determination.The judgment highlighted that the Sugar Controller allocated sugar based on requisitions from state governments, with detailed despatch instructions provided to the sugar factories. The Government Advocate argued that the assessee had admitted in the appeal memorandum that permits issued by the Sugar Controller led to the treatment of sugar as sold and reserved for supply upon receipt of permits. The Court considered the facts and admitted statements, concluding that the despatches of sugar to other states were subject to taxation under the Bihar Sales Tax Act.In the final decision, the Chief Justice ruled in favor of the State of Bihar, holding that the sugar despatches outside Bihar were liable to be taxed under the Act. The judgment aligned with a similar case precedent, and the assessee was directed to pay the costs of the reference. Justice Kanhaiya Singh concurred with the decision, and the reference was answered accordingly. The case was reported as Commissioner of Sales Tax, Bihar v. New India Sugar Mills, Darbhanga [1959] (10 S.T.C. 74).