Territorial limits on fiscal concession restrict concessional purchases; stock transfer outside the State triggers differential tax liability.

A fiscal concession under Section 13(1)(b) was treated as conditional, not absolute, and the second proviso was read with the Act's charging scheme to limit concessional raw materials to manufacture within Jharkhand and finished goods sold within Jharkhand or in inter-State trade and commerce originating there. Stock transfer of manufactured goods outside the State was outside the permitted scope and disentitled the dealer to the concession. Rule 13 and Form IX were treated as procedural aids only, so their amendment did not prevent levy of differential tax under Section 13(3) when the substantive conditions of the concession were not met.

---

---

Issues: (i) Whether the second proviso inserted in Section 13(1)(b) of the Bihar Finance Act, 1981 required that goods manufactured out of concessional raw materials be sold only within Jharkhand or in the course of inter-State trade and commerce originating from Jharkhand. (ii) Whether absence of a corresponding amendment in Rule 13 and Form IX prevented invocation of Section 13(3) to levy differential tax.

Issue (i): Whether the second proviso inserted in Section 13(1)(b) of the Bihar Finance Act, 1981 required that goods manufactured out of concessional raw materials be sold only within Jharkhand or in the course of inter-State trade and commerce originating from Jharkhand.

Analysis: The amended proviso was read with the scheme of the Act, the charging structure under Section 12, and the consequence provision in Section 13(3). The concession under Section 13(1)(b) was treated as a conditional benefit, not an absolute right. On a purposive and harmonious construction, the proviso was held to restrict the concession to raw materials used for manufacture within Jharkhand and to finished goods sold within Jharkhand or in inter-State trade and commerce originating from Jharkhand. Stock transfer of the manufactured goods outside the State was held to fall outside the permitted field of the concession.

Conclusion: The proviso was held to impose a geographical restriction on both manufacture and sale, and stock transfer outside the State disentitled the dealer to the concessional rate.

Issue (ii): Whether absence of a corresponding amendment in Rule 13 and Form IX prevented invocation of Section 13(3) to levy differential tax.

Analysis: Rule 13 and Form IX were treated as procedural aids for proving entitlement to the special rate, whereas Section 13(3) was treated as the substantive charging provision. Since liability arose directly from failure to satisfy the conditions of Section 13(1)(b) read with the second proviso, the absence of corresponding amendment in the form or rule did not render the substantive restriction inoperative. The decision distinguished the authorities relied on by the dealer and held that the purchaser's stock transfer outside the State constituted use for a purpose other than that permitted by the concession.

Conclusion: The absence of corresponding amendment in Rule 13 and Form IX did not bar levy of differential tax under Section 13(3).

Final Conclusion: The writ petitions failed, the impugned orders were upheld, and the dealer remained liable for differential tax on the concessional purchases used in the stock-transferred manufactured goods.

Ratio Decidendi: A fiscal concession may be conditioned by a proviso that limits both manufacture and sale to a specified territorial nexus, and non-compliance with that substantive condition attracts differential tax notwithstanding any procedural form remaining unamended.

---