TaxTMI 
TaxTMI 
2007 (11) TMI 582
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....was granted certificate under section 13(1)(b) of the Bihar Finance Act, 1981 (hereinafter referred to as, "the Act") wherein it is mentioned that M/s. TISCO would be liable to pay sales tax at three per cent on the oxygen gas purchased by it. In the certificate granted to it under section 13(1)(b) of the Act, there are two lists of goods. Annexure A contains the raw materials on which concessional rate of tax at one per cent was to be paid. Annexure B contains list of various goods taxable at three per cent. Oxygen gas was mentioned as goods in annexure B. Hence sale of oxygen gas was taxable at three per cent. The certificate was issued for charging concessional rate of tax at three per cent on oxygen gas supplied to TISCO as per Notification No. 1415 dated December 15, 1976. TISCO has been purchasing oxygen gas since 1983 by paying sales tax at three per cent. (B) On April 12, 1982, the Government of Bihar notified through Notification No. 604 that the sales tax on raw materials payable under section 13(1)(b) of the Act contained in annexure A was fixed at one per cent. (C) At the time of issuance of certificate on March 16, 1983, raw materials were specifically mentioned in....
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....e Act would be initiated. (E) Again on July 25, 2005 another notice was issued against the petitioner stating that TISCO is liable to pay taxes at three per cent and not two per cent as in the certificate issued to it under section 13(1)(b) of the Act, it was specifically mentioned that the company is liable to pay sales tax at three per cent and further directing the petitioner to pay the entire differential amount, failing which other modes of recovery will be adopted against it. Challenging those notices, the petitioner has filed this writ petition. The crux of the submissions made by the learned senior counsel appearing for the petitioner is as follows: (a) The petitioner started manufacturing oxygen gas from 1998. The petitioner has been selling the oxygen gas to TISCO from 1998 onwards. Though for some years, the petitioner has collected and paid sales tax at three per cent on the sale of oxygen gas to TISCO in view of the certificate issued in favour of TISCO under section 13(1)(b) of the Act, the petitioner later realised that it was a mistake of law under which three per cent rate of tax was collected and paid and the correct rate of tax would be two per cent on the ba....
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....he Department as well as by the Supreme Court. Hence, the petitioner cannot raise such a dispute again on the same issue. Section 13(1)(b) of the Act authorises the registered dealer to purchase goods required by him directly for use in the manufacture or processing of any goods for sale at the concessional rate of tax to be notified by the State Government in respect of goods for which purchaser has been granted a certificate by the prescribed authority in the prescribed manner. If any claim for concessional rate is made, the purchasing dealer is required to furnish a written declaration to the selling dealer that he is entitled to concessional rate. Thereafter the prescribed authority may require the selling dealer to satisfy himself that the sale was made to the purchaser as per the certificate granted under section 13(1)(b) of the Act. Therefore, the selling dealer before realising the tax at concessional rate under section 13(1)(b) of the Act is required to satisfy itself that the goods sold by it to the purchasing dealer is mentioned in the certificate granted to the purchasing dealer by the prescribed authority. The selling dealer cannot decide that the goods sold by it to ....
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.... Ltd. [2002] 125 STC 212 (SC), Tata Engineering & Locomotive Company Ltd. v. State of Bihar [1995] 96 STC 211 (SC), Tata Iron & Steel Co. Ltd. v. State of Jharkhand [2004] 137 STC 93 (SC), Tata Iron & Steel Co. Ltd. v. State of Jharkhand [2005] 140 STC 284 (SC) and Reckitt Benckiser (India) Limited v. State of Bihar [2004] 137 STC 537 (Patna). The authority cited by the learned counsel appearing for the respondent-State is as follows: Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Thomas Stephen & Co. Ltd. [1998] 69 STC 320 (SC); AIR 1988 SC 997. We have heard learned Senior Counsel appearing for the petitioner and learned counsel appearing for the respondents. We have also given our anxious consideration to the rival contentions. Before deciding the issue in question, we have to bear in mind the following factors: (A) The certificate under section 13(1)(b) of the Act was issued to TISCO, seventh respondent herein, on March 16, 1983. In that certificate, the prescribed authority mentioned oxygen gas in annexure B, which contains list of goods at the concessional rate of three per cent. Annexure A contains the list of raw materials. Admittedly ox....
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....of the Act in the prescribed manner relating to the goods purchased by the registered purchasing dealer from the selling dealer. (E) Since two rates of tax have been prescribed by the State Government under section 13(1)(b) of the Act, the prescribed authority is required to mention the nature of goods which the purchasing dealer can purchase at the concessional rate of two per cent and other goods which the purchasing dealer can purchase at the concessional rate of three per cent. One rate of tax is in relation to the raw materials and another rate of tax is in relation to the goods which are directly used for manufacture. Before grant of certificate under section 13(1)(b) of the Act, the prescribed authority has to follow the procedures as contemplated under rule 6 of the Bihar Sales Tax Rules, 1983. As per the procedures, the prescribed authority has to make an enquiry to satisfy itself with reference to the nature of goods and to find out whether the goods is a raw material or other goods and only after being satisfied, it will grant a certificate to the purchasing dealer under section 13(1)(b) of the Act. (F) Therefore, there are two lists of goods. Annexure A deals with the....
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....i) It cannot be debated that both purchasing dealer and selling dealer are bound by the certificate granted to the purchasing dealer under section 13(1)(b) of the Act. It also cannot be disputed that oxygen gas, which is sold by the selling dealer to the purchasing dealer, has been treated as goods mentioned at serial No. 4 of annexure B as one of the goods taxable at three per cent and not treated as raw materials mentioned in annexure A. Similarly, there is no dispute in the fact that the selling dealer from the beginning up to 2000 has been collecting three per cent sales tax from the purchasing dealer on sale of oxygen gas treating as goods and not as a raw material and collecting and depositing the same as per the certificate issued in favour of the purchasing dealer. (iii) It is not the case of the purchasing dealer that at the time of issuance of certificate on March 16, 1983, it was pleaded before the prescribed authority that oxygen gas was only purchased as raw material and therefore, it must be mentioned in annexure A and not in annexure B. Admittedly even thereafter no steps have been taken by the purchasing dealer pleading before the prescribed authority for modificat....
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....mittedly the said writ petition was ultimately dismissed by the Supreme court holding that TISCO is not entitled to the said benefit. Thus, it is clear that both the dealers, namely, the purchasing dealer and selling dealer, having failed to avail of the said benefit of concessional rate of tax at two per cent under the Jharkhand Industrial Policy, 2001, have now claimed before this High Court that they are entitled to avail of the benefit of the concessional rate of tax at two per cent under the notification dated September 9, 1983 and February 3, 1986, since oxygen gas is a raw material. (vii) As correctly pointed out by the learned counsel appearing for the respondents, the prescribed authority, at the time of issuance of the certificate in favour of TISCO, decided and mentioned oxygen gas as goods in annexure B. If the purchasing dealer wants to make out a new claim that oxygen gas is a raw material and the same is to be mentioned in annexure A in order to avail of the benefit under notifications, he ought to have approached the prescribed authority who is competent to consider the claim of the purchasing dealer and to find out whether oxygen gas is a raw material and whether ....
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...., notices were issued by the prescribed authority to the selling dealer asking him as to why he was collecting sales tax at two per cent instead of three per cent from the purchasing dealer. In its reply, the petitioner never said that it started collecting sales tax at two per cent in pursuance of the notifications dated September 9, 1983 and February 3, 1986. On the other hand, the petitioner sent a reply to the effect that since TISCO has already claimed exemption before the authorities concerned in pursuance of the Jharkhand Industrial Policy, 2001, claiming that he is entitled to pay sales tax at two per cent, the petitioner started collecting two per cent sales tax on sale of oxygen gas from TISCO. (xi) This shows that the petitioner has now taken altogether a different stand to the effect that oxygen gas is being used by TISCO as raw material and as such, TISCO is entitled to the benefit of the two notifications dated September 9, 1983 and February 3, 1986. As mentioned above, the petitioner is not the competent authority to decide about the same as per the provision. As a selling dealer, the petitioner has to merely collect sales tax from the purchasing dealer as per the c....
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....s competent to explain to the prescribed authority as to how oxygen gas, which was all along treated and mentioned as goods as per annexure B, has suddenly become raw material. In the same way, the prescribed authority alone is competent to decide about the same. Hence, the petitioner's claim, on the basis of the notification referred to above, which is quite contrary to the earlier stand, is not sustainable under law. We think it fit not to refer to any of the authorities cited by both the parties as those decisions would be of no use as the specific issue in question has not been dealt with therein. In view of the discussions made in the preceding paragraphs, we conclude as follows: "As per the registration certificate issued under section 13(1)(b) of the Act, oxygen gas was treated as goods as mentioned in annexure B. Endorsing the same, the purchasing dealer has been paying the tax at the concessional rate of three per cent for a long number of years treating oxygen gas as goods. The selling dealer is bound by the said certificate. Accordingly, he has been collecting sales tax at three per cent from the beginning till 2000 and thereafter he started collecting sale....