2010 (4) TMI 1018 - HC - VAT and Sales Tax

Patna High Court clarifies liability on commercial tax for spirit supply pre-1989

Bihar Distillers Association and Others Versus State of Bihar and Another

Bihar Distillers Association and Others Versus State of Bihar and Another - [2011] 43 VST 472 (Pat) Issues involved: Liability for payment of commercial tax for spirit supplied to Government warehouses prior to April 1, 1989.The judgment by the Patna High Court addressed the issue of liability for payment of commercial tax by the petitioners for the spirit supplied to Government warehouses before April 1, 1989, which was then further supplied to manufacturers of country-made liquor. Initially, the Commercial Taxes Department accepted the petitioners' contention of no liability based on certain letters from the Excise Department. However, a revised order was issued imposing liability for the period before April 1, 1989. The dispute stemmed from conflicting views between the Excise Department and the Commercial Taxes Department, leading to the formation of a committee by the State Government to resolve such inter-departmental controversies. The court directed the issue to be referred to this committee for a thorough review and ordered that the interim restraint granted in 1996 would continue until the committee's decision, emphasizing the need for a timely resolution within four months. In a related application, it was highlighted that payment for the spirit supplied to the State Government warehouses by an intervenor had not been made, despite the demand drafts being deposited and revalidated as per court directions. The court noted that interest on the due amount would cease on the date of the initial deposit of demand drafts. This matter was also referred to the State Government's committee chaired by the Chief Secretary for prompt consideration and direction regarding the payment of legitimate dues to the intervenor within the same timeframe. The court disposed of this application accordingly.