TaxTMI 
TaxTMI 
2004 (9) TMI 380
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....981 (in short "the Act") before the High Court. Notices were issued on the purported basis that the appellant was not entitled to adjustment of tax paid under the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 (hereinafter referred to as "the Entry Tax Act"). The High Court upheld the validity of the notice and action taken by concerned respondents. 3.. Factual position in a nutshell is as follows: 4.. The appellant is a public limited company registered under the Companies Act, 1956, and has two manufacturing units-one at Sindri and another at Jhinkpani. Prior to bifurcation of the erstwhile State of Bihar the units were registered under the Act and as well as under the Entry Tax Act and the consolidated registration was made at Patna Special Circle, under the Act. On November 15, 2000, the erstwhile State of Bihar was bifurcated into two States, namely, State of Jharkhand and the State of Bihar and the said two manufacturing units of the appellant now have fallen in the State of Jharkhand. 5.. In the year 1995, the State Government has come out with Industrial Policy to give incentives to the new units or the existing units ha....
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....turnover which has suffered tax and it is the tax levied in respect of such turnover which is available to be adjusted in terms of the exemption notification and not otherwise. This was stated to be an erroneous reading of the relevant provision. 9.. Learned counsel for the respondent submitted that the exemption notification has to be construed strictly. There cannot be any exemption by implication. When there is no liability to tax because of the exemption granted, the question of any adjustment of tax in respect of goods which have not suffered tax does not arise. 10.. It would be appropriate to take note of the relevant provisions of the Entry Tax Act and the Act. Section 2(c) of the Entry Tax Act reads as follows: "2(c): 'Entry of goods', with all its grammatical variations and cognate expressions means entry of goods into a local area from any place outside that local area or any place outside the State for consumption, use or sale therein: [Provided that in case of such goods which are liable to tax under section 12(1) of the Bihar Finance Act, 1981, entry of goods shall mean entry of goods into local area from any place outside the State for consumptio....
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.... dealer- (a) with effect from the date of commencement of the Bihar Finance Act, 1981, if his gross turnover during a period not exceeding twelve months immediately preceding the said date exceeded the specified quantum; (b) to whom clause (a) does not apply with effect from the date immediately following the day on which his gross turnover during a period not exceeding twelve months immediately preceding such date first exceeded the specified quantum. Explanation.-In this section, the expression, 'specified quantum' means- (i) in relation to an importer-nil; (ii) in relation to any dealer, who himself manufactures any goods-nil; (iii) in relation to any dealer engaged in execution of works contract-where the total value of works contracts taken together exceeds Rs. 25,000 twenty-five thousand in a year; (iv) in relation to any dealer engaged in the delivery or supply of goods as a result of transfer of the right to use any goods for any purpose-nil; (v) in relation to any other dealer-Rs.1,00,000: Provided that the State Government may, by notification published in the Official Gazette and subject to condition of one month's previous notice, increase or ....
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....e taken place in any of the ways mentioned in clause (a), (b) or (c) of sub-section (1). (3) The State Government may, by notification and subject to such conditions or restrictions as it may impose, exempt from the sales tax or purchase tax- (a) sales of any goods or class or description of goods; (b) sales of any goods or class or description of goods to or by any class of dealers; (c) ................ (d) purchase of any goods by any class of dealers or any purchase or category or description of purchases of such goods. (4) Where exemption from the levy of tax under this Part on any sale or purchase of goods is claimed by a dealer under the provisions of this section or section 21, the burden of proof shall lie on such dealer and the prescribed authority may require the dealer to substantiate the claim in the prescribed manner." 14.. Literally "exemption" is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on ec....
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.... December 12, 1995 as part of the Industrial Policy, 1995 granting exemption from payment of sales tax on production of extended industrial unit which undertakes expansion of their capacity, no question of adjustment arises. To put differently stand of the respondent is that when there was no tax liability on such sales, there was no liability to pay any tax and, therefore, the benefit of adjustment available under clause (2) of the Notification S.O. No. 37, dated February 25, 1993 does not arise. The interpretation put forward by the respondent found acceptance by the High Court. 19.. Crucial question, therefore, is whether the appellant had any "liability" under the Act. The answer to this lies in section 3 of the Act which is extracted above and is the charging section. In sub- section (1) subject of the provisions of the Part (i.e., Part I) sales tax or purchase tax, as the case may be, shall be paid by every dealer as provided in the section itself. Section 7 speaks of exemption. Sub- section (3) of section 7 stipulates that Sate Government may, by notification and subject to such conditions or restrictions as it may impose, exempt from sales tax or purchase tax certa....