TaxTMI 
TaxTMI 
2004 (5) TMI 528
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....d comprising territories which before the appointed day comprised the territories of the State of Bihar, the benefits flowing from the Industrial Policy 1995 of the then State of Bihar crystallized in the Notification of the Government of Bihar issued under section 7(3)(b) of the Bihar Finance Act 1981 published in the Official Gazette on 22.12.1995, enures to the benefit of the beneficiaries under the Policy and under the Notification after the appointed day. In the cases in hand, we are primarily concerned with the benefit of exemption from payment of sales tax on purchase of raw materials extended to new units, and similar benefits to units, undertaking expansion/diversification for their expanded/ diversified capacity and incremental production. Civil Appeal No.7798/2002 arises out of the judgment of a Division bench of the High Court in a writ petition filed by the respondents, namely, M/s Swarn Rekha Cokes and Coals Pvt. Ltd. and others. The respondent claimed that it was entitled to the incentive promised in the Industrial Policy 1995 and the Notification issued pursuant thereto granting exemption from payment of sales tax on purchase of raw materials. It had fulfilled al....
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.... which was the writ petitioner before the High Court in CWJC No.15620/2001. In this writ petition, the appellant-Company had prayed for quashing of an order of 20th November, 2001 passed by the Assistant Commissioner, Commercial Taxes Incharge, Patna Special Circle, Patna holding that the appellant was liable to pay sales tax after 15.11.2000 on the sale of goods earlier exempted by exemption certificate dated 20th December 1995 granted in favour of it under Section 7(3)(b) of the Bihar Finance Act 1981 in terms of the Industrial Policy of the State of Bihar for the period from 1.4.1998 to 31.03.2007. The appellant-Company had been granted such exemption in view of the fact that pursuant to the policy decision of the Government of Bihar it had expanded its cement works located at Sindri and had applied for exemption certificate on the sale of its incremental production as envisaged by the aforesaid industrial policy. Its claim had been accepted and an exemption certificate granted to it for the period from 1.4.1998 to 31.3.2007. It had been availing of the said benefit, but by the impugned order of the Assistant Commissioner, Commercial Taxes, it was held not entitled to the exempt....
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....se specified in section 3." Sections 84 and 85 of the Act which are crucial for determination of the questions involved in these appeals are reproduced below: "84. The provisions of Part II of this Act shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to the State of Bihar shall, until otherwise provided by a competent Legislature or other competent authority be construed as meaning the territories within the existing State of Bihar before the appointed day. 85. For the purpose of facilitating the application in relation to the State of Bihar or Jharkhand of any law made before the appointed day, the appropriate Government may, before the expiration of two years from that day, by order, make such adaptations and modifications of the law, whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority. Explanation-In this section, the....
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....below for ready reference:- "Govt. of Jharkhand Department of Finance (illeg.) NOTIFICATION Dated 15.12.2000 Ranchi, No. 17 In exercise of power under part (2) of section 283 of the Constitution of India and under Section 85 of the Bihar Re-organization Act, 2000 (Act No. 30 of 2000), the Governor, Jharkhand, hereby order that the following Acts/Rules effective immediately before 15th Nov. 2000 in Bihar State shall be extended to the State of Jharkhand constituted under provisions of Bihar Re-organization Act, 2000 (Act No. 30 of 2000) from the period of the said date and they shall be deemed effective from dt. 15 (fifteen) November, 2000 with necessary changes. I. (1) Bihar Finance Act, 1981 Part I/Bihar Sales Tax Rules, 1983. (2) Bihar Advertisement Tax Act, 1981/Bihar Advertisement Tax Rules, 1983. (3) Bihar Entertainment Tax Act, 1948/Bihar Entertainment Tax Rules, 1984. (4) Bihar Electricity Duty Act, 1948/Bihar Electricity Duty Rules, 1949. (5) Bihar's Hotel, Luxary Goods Taxation Act, 1988/Bihar's Hotel, Luxary Goods Taxation Rules, 1988. (6) In the entry of goods for utility or sales in Bihar Taxation Act, 1943/Taxation Rules ....
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....en issued under S.O. 478, 479, 480 and 481 dated 22.12.95 in terms of the Industrial Policy, 1995 will continue to get the exemption and other benefits for the remaining period after constitution of the State of Jharkhand or not? (ii) (iii) (iv) This matter was under consideration before the State Government. After taking legal opinion in this matter, the State Government has taken the following decisions: 1. So far as the question no. (i) is concerned, the units mentioned therein who were granted Exemption Certificates prior to the constitution of the State of Jharkhand will continue to get the benefit in terms of the Exemption Certificates for the remaining period after constitution of the State of Jharkhand also. 2 . 3 ." Counsel appearing on behalf of the private parties have placed considerable reliance on the adaptation Notification of 15th December 2000 as well as the Circular issued by the Commissioner of Commercial Taxes, Jharkhand dated 1st of June 2002 to support their contention that in fact S.O. 478 dated 22.12.1995 was adopted by the State of Jharkhand and it became apparent that th....
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....e of Bihar as reconstituted, did not provide any benefit to the State of Bihar and, therefore, there was no justification for the State of Bihar to extend any such benefit of exemption to such Units. The basis of exemption was really the premise that the Unit would continue its manufacturing processes within the State of Bihar with all consequential benefits both direct and indirect accruing to the State of Bihar. That is why Industrial Policy of the Bihar Government of the year 1995 made it a condition for grant of exemption that the Unit existed and continued its manufacturing processes in the State of Bihar. He referred to the notifications and the Forms and submitted that the Scheme postulated that the Unit existed in the State of Bihar. Once the Unit ceased to be so located within the State of Bihar, the notification could have no application to it. So far as Section 84 of the Act is concerned, he submitted that it could not be doubted that it was intended to provide for continuity of laws to avoid a vacuum situation in the State of Bihar. He submitted that the provision should not be given a literal and liberal construction as advocated by the appellant in the appeal, but ....
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....fore the Division Bench which heard the Letters patent Appeal on the ground of lack of jurisdiction. He further submitted that the objection raised on the ground of inter-State sales being not covered by the Industrial Policy of 1995 and the notification issued pursuant thereto, was based on a complete misconception of Section 84 of the Act. Though Sections 3 to 8 comprised in Part II of the Act divided the territories of erstwhile State of Bihar and constituted two separate States of Jharkhand and Bihar, for the purpose of Section 84, they were not to be so treated because Section 84 in explicit terms provided that the provisions of part II shall not be deemed to have affected any change in the territories to which any law in force immediately before the appointed day applied until otherwise provided by a competent Legislature or other competent authority. Mr. Abhishek Manu Singhvi, senior Advocate appearing on behalf of the appellant in Civil Appeal No. 3765/2003 referred to the notifications/circulars issued by the State of Jharkhand on 15.12.2000 and 1.6.2002 and submitted that there was no question of the State of Jharkhand repealing the notification either expressly or imp....
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.... Letters Patent Appeal impugning the judgment and order of the learned Single Judge. In the Letters Patent Appeal, no objection was taken to the jurisdiction of the Patna High Court to entertain the writ petition. Moreover, as submitted by Mr. Parasaran, it cannot be said that the entire cause of action was in the State of Jharkhand because the notification of the State of Bihar issued under section 7(3)(b) of the Bihar Finance Act 1981 formed the basis on which the respondents founded their claim. This, therefore, necessarily formed a part of the cause of action and the respondents had to satisfy the Court that the aforesaid notification supported their claim for exemption from payment of sales tax on the purchase of raw materials. No doubt, in these circumstances the State of Jharkhand ought to have been made a party-respondent. This, however, is of no consequence now in view of the fact that the State of Jharkhand itself sought to prefer an appeal against the order of the learned Single Judge and in fact preferred a Letters Patent Appeal and contested the claim of the respondents. It did not object to the jurisdiction of the High Court at Patna to entertain the writ petition. Si....
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....iration of two years from that day, by order, make such adaptations and modifications of the law, whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority. The language in these sections is clear and unambiguous. These sections provide that the laws which were applicable to the undivided State of Bihar would continue to apply to the new States created by the Act. The laws that operated continue to operate notwithstanding the bifurcation of the erstwhile State of Bihar and creation of the new State of Jharkhand. They continue in force until and unless altered, repealed or amended. It is not disputed before us and indeed it cannot be disputed in view of the wide definition given to 'law' in section 2(f) of the Act that the notification issued under section 7(3)(b) of the Bihar Finance Act 1981 is law within the meaning of sections 84 and 85 of the Act. Thus, the notification published in the Bihar Gazette on 22.12.1995 bearing S.O. 478 continues to operate in the State of Jharkhan....
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....and Others reported in (1976) 3 SCC 242, Sher Singh and Others vs. Financial Commissioner of Planning, Punjab and Others reported in (1987) 2 SCC 439 and Dhayanand etc. vs. Union of India and Others reported in (1996) 7 SCC 47. In the first of these cases, i.e. in state of Punjab and Others vs. Balbir Singh and Others (supra), this Court was concerned with an Administrative order and not a law with which we are concerned in the instant case. Section 88 of the Punjab Re-organization Act was noticed as also the definition of law under section 2(g) of that Act. Section 2(g) of that Act did not define law as widely as it has been defined under section 2(f) of the Act. This Court agreed with the High Court that the impugned administrative orders in question were not law within the meaning of section 2(g) of that Act and hence, were not saved by Section 88. However, this Court held that when there is no change of sovereignty and it is merely an adjustment of territories by reorganization of a particular State, the administrative orders made by the government of the erstwhile State continue to be in force and effective and binding on the successor States until and unless they are modified....
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....ances in the absence of anything in the Industrial Policy 2001 of the Government of Jharkhand or in the notification or order issued by the Government of Jharkhand, the notification No. S.O. 478 dated 22.12.1995 must continue to operate in the State of Jharkhand and the concerned appellants or respondents, as the case may be, must be held entitled to the benefits and incentives envisaged by the said notification. The submission which found favour with the High Court of Jharkhand at Ranchi in Civil appeal No.3765/2003 is that the statutory notification issued by the erstwhile State of Bihar envisaged only intra-State sale transactions and not inter-State sale transactions. With the coming into existence of two States, incentive by way of exemption from payment of sales tax, cannot be claimed in respect of transactions which can now be categorized as inter- State sale transactions. The submission overlooks the provisions of Sections 84 and 85 of the Act, which create a legal fiction. It is well-settled that in interpreting a provision creating a legal fiction, the Court must ascertain the purpose for which the fiction is created and having done so, to assume all those facts and conse....
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....at in reality intra-State sale transactions may have become inter-State sale transactions. Law gives authority to the concerned State to bring about a change in the state of affairs, if it so considers necessary or expedient by modifying, or amending the law or by altering, repealing or amending it by legislation. We have, therefore, no doubt that the High Court of Jharkhand at Ranchi was wrong in dismissing the writ petition on the ground that the notification of 22.12.1995 could not apply to inter-State sale transactions. We have carefully considered the decisions relied upon by Shri Rakesh Dwivedi in Rattan Lal and Co. and Anr. vs. The Assessing Authority and Anr. reported in 1969 (2) SCR 544, The State of Mysore vs. P.B. Hussain Kunhi & Co. reported in (1967) 19 STC 215 and Commissioner of Sales Tax, Madhya Pradesh vs. Minerva Minerals reported in (1970) 25 STC 64 and we find that none of those decisions in any manner advance the case of the State. The decisions in those cases depended on the interpretation of the provisions of the Acts concerned which were not at all similar to the provisions with which we are concerned in the instant appeals. In Civil Appeal No.2450/2003, ....