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1959 DIGILAW 135 (PAT)

Dwarkadas And Radhakrishna v. State Of Bihar

1959-10-22

CHOUDHARY, V.RAMASWAMI

body1959
Judgment Ramaswami and Choudhary JJ. 1. Under Sec.25(1) of the Bihar Sales Tax Act the Board of Revenue has submitted the following questions of law with regard to the assessment for the financial year 1947-48 :- (1) Whether the sum of Rs. 91,641-9-0, being the valuable consideration for machinery parts contracted to be sold, delivered and consumed outside the State of Bihar had been legally taxed under the Bihar Sales Tax Act, 1947 ? (2) Whether in the facts and circumstances of the case the petitioners claim for deduction on account of sales to registered dealers had been legally rejected ? 2. With regard to the financial year 1949-50 the Board of Revenue has submitted the following question of law for the opinion of the High Court :- Whether the sum of Rs. 1,85,243-3-6, being the valuable consideration for machinery parts contracted to be sold, delivered and consumed outside the State of Bihar had been legally taxed under the Bihar Sales Tax Act, 1947 ? 3. With regard to the assessment for the period 1949-50, counsel on behalf of the assessee conceded that the question must be answered against the assessee and in favour of the State of Bihar in view of the decision of this Court in Messrs Tata Iron and Steel Company Limited V/s. State of Bihar AIR 1956 Pat. 92 . In our opinion, the principle of that decision applies to the present case and we hold that the question referred to the High Court with regard to the assessment for the year 1949-50 should be answered against the assessee and in favour of the State of Bihar. 4. With regard to the assessment for the year 1947-48 learned counsel on behalf of the assessee said that the second proviso to Sec.2(g) of the Bihar Sales Tax Act was inserted by the Bihar Sales Tax (Amendment) Act, 1948 (Bihar Act VI of 1949) and the second proviso came into force only with effect from the 1st October, 1948. Learned counsel, therefore, submitted that for the period 1947-48 the principle of Tatas Case A.I.R. 1956 Pat. 92 will not apply. It was contended on behalf of the assessee that the contracts were effected at the head office at Calcutta and in pursuance of the contract goods were manufactured at Sahebganj by the assessee and despatched to various customers outside the State of Bihar. 92 will not apply. It was contended on behalf of the assessee that the contracts were effected at the head office at Calcutta and in pursuance of the contract goods were manufactured at Sahebganj by the assessee and despatched to various customers outside the State of Bihar. It was argued that the title did not pass within the territorial limits of Bihar and the second proviso to Sec.2(g) of the Act, as it stood before the amendment by Bihar Act VI of 1949, will not cover the present case. Sec.2(g) of the Bihar Sales Tax Act as it stood on the material date states as follows :- 2. (g) Sale means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge : Provided that a transfer of goods on hire purchase or other instalment system of payment shall, notwithstanding the fact that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale : Provided further that notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930 (III of 1930) the sale of any goods which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in Sec. 4 of that Act is made, shall, wherever the said contract of sale is made, be deemed for the purposes of this Act to have been made in Bihar. 5. But such an argument does not appear to have been advanced before the Board of Revenue in revision, or before the Deputy Commissioner of Sales Tax in appeal. It is true that the Sales Tax Officer has come to a finding that at the time of the contract for sale the goods were in existence in Bihar and so the second proviso to Sec.2(g) of the Bihar Sales Tax Act would apply. It is true that the Sales Tax Officer has come to a finding that at the time of the contract for sale the goods were in existence in Bihar and so the second proviso to Sec.2(g) of the Bihar Sales Tax Act would apply. The argument of learned counsel for the assessee is that the finding of the Sales Tax Officer on this point is not supported by any evidence, but no such grievance was made by the assessee before the appellate authority and it was not argued in appeal that the finding of the Sales Tax Officer that at the time of the contract for sale the goods were in existence in Bihar was not supported by sufficient evidence. The point was apparently abandoned in appeal and the question really taken up was that sales tax was not properly levied upon goods which were despatched outside the State. In dealing with this point the Deputy Commissioner of Sales Tax has said, after an examination of the materials produced, that the transactions were outright sales by the assessee to the parties to whom the goods had been sent and it was not a case of mere despatch of goods by the assessee to its head office. It was observed by the Deputy Commissioner of Sales Tax that the orders of the head office were not produced by the assessee in support of his claim; and since the transactions were outright sales by the assessee, the title passed within the territorial limits of Bihar and so sales tax was properly levied upon these transactions. The point to be noticed is that before the Deputy Commissioner of Sales Tax the assessee never urged that the contracts were for the supply of future manufactured goods and the second proviso to Sec.2(g) of the Bihar Sales Tax Act, prior to its amendment by Bihar Act VI of 1949, was not applicable to the case of the assessee. The point to be noticed is that before the Deputy Commissioner of Sales Tax the assessee never urged that the contracts were for the supply of future manufactured goods and the second proviso to Sec.2(g) of the Bihar Sales Tax Act, prior to its amendment by Bihar Act VI of 1949, was not applicable to the case of the assessee. When the matter was taken up in revision, the argument addressed before the Board of Revenue was that the transactions of sale as a result of which the goods were despatched outside Bihar were not liable to be taxed under the Bihar Sales Tax Act; and counsel for the assessee referred in this connection to a passage from the judgment of the Supreme Court in The State of Bombay V/s. United Motors (India) Limited A.I.R. 1953 S.C. 252. It is clear, therefore, that the question of the application of the second proviso to Section 2 (g) of the Bihar Sales Tax Act, as it stood before the amendment, was not agitated by the assessee before the Board of Revenue in revision. The question of law submitted by the Board of Revenue under Sec.25(1) of the Bihar Sales Tax Act also does not refer to Sec.2 (g) of the Bihar Sales Tax Act. It is, therefore, not possible, in the circumstances, for us to permit learned counsel for the assessee to raise a new point of law for the first time during the hearing of this reference. Counsel on behalf of the assessee submitted that the question of law referred by the Board of Revenue may be suitably amended, but though the High Court has power of amending the question of law, it is not possible for us to do so in this case because an altogether new question is raised by learned counsel on behalf of the assessee and, further, the question was not agitated on behalf of the assessee before the Board of Revenue in revision. So far as the actual question referred by the Board of Revenue is concerned, it is conceded by learned counsel on behalf of the assessee that the question must be answered against the assessee and in favour of the State of Bihar, in view of the decision of this High Court in Tatas Case A.I.R. 1956 Pat. 92. So far as the actual question referred by the Board of Revenue is concerned, it is conceded by learned counsel on behalf of the assessee that the question must be answered against the assessee and in favour of the State of Bihar, in view of the decision of this High Court in Tatas Case A.I.R. 1956 Pat. 92. We, therefore, answer the first question referred by the Board of Revenue with regard to the year 1947-48 in favour of the State of Bihar and against the assessee. 6. As regards the second question referred by the Board of Revenue, the argument of learned counsel on behalf of the assessee was that Rule 36(2) made under the Bihar Sales Tax Act of 1944 said that a declaration was necessary to be produced by the assessee in respect of his claim even with regard to credit sales. It was pointed out that Rule 36(2) ceased to have any force after Rule 18 was framed by the State Government in exercise of the authority conferred by Sec.31 of the Bihar Sales Tax Act, 1947 (Bihar Act XIX of 1947). Rule 18 of the Bihar Sales Tax Rules, 1949, states as follows :- 18. Conditions subject to which a dealer may claim deduction: from gross turnover on account of sale of goods to registered dealers.- A dealer who wishes to deduct from his gross turnover the amount of a cash sale to registered dealers shall produce, in respect of such a sale, the copy of the relevant cash memo and a true declaration in Writing by the purchasing dealer or by such responsible officer as may be authorised in writing in this behalf by such dealer that the goods in question are specified in the certificate of registration of such dealer and are required by such dealer either for use in the manufacture of any goods for sale or in the execution of any contract or for re-sale. 7. It is manifest that this rule referred only to current sales and the argument of the assessee was that there was inconsistency between Rule 18 framed under the new Act and Rule 36(2) framed under the old Act of 1944. It was submitted that in view of the provisions of Sec.32 of the new Act it must be held that Rule 36(2) framed under the old Act ceased to have any operative force. It was submitted that in view of the provisions of Sec.32 of the new Act it must be held that Rule 36(2) framed under the old Act ceased to have any operative force. Section 32 of Bihar Act XIX of 1947 is to the following effect:- 32. Repeal and saving.-The Bihar Sales Tax Act, 1944 (Bihar Act VI of 1944), is hereby repealed : Provided that nothing in this repeal shall affect any liability to pay tax incurred before the date of such repeal and proceedings pending on the said date before the High Court, the Board of Revenue, the Commissioner or any person appointed under Sec.3 to assist him whether original or on appeal, reference or revision, as also all proceedings initiated after the commencement of this Act but relating to any such liability as aforesaid shall be continued and disposed of or initiated and disposed of, as the case may be, as if this Act had not been passed; Provided further that all rules made, notifications published, certificates granted, powers conferred and other things done under the said Act and in force on the commencement of this Act shall, so far as they are not inconsistent with this Act, be deemed to have been respectively made, published, granted, conferred or done under this Act. 8. The proviso to Sec.32 states that all rules made under the old Act shall, so far as they are not inconsistent with Act No. XIX of 1947, be deemed to have been made and published under the new Act. We do not accept the argument of learned counsel for the assessee that there is any inconsistency between Rule 36(2) framed under the old Act and Rule 18 framed under the new Act. It is also manifest that there is no inconsistency between the provisions of Rule 36(2) made under the old Act and any of the provisions of the new Act, namely, Bihar Act XIX of 1947. It is, therefore, not possible to accept the argument of learned counsel for the assessee that there is any inconsistency between Rule 36(2) and the provisions of the new Act within the meaning of the proviso to Sec.32 of the new Act and therefore Rule 36(2) of the old Act ceased to exist after the enactment of Rule 18 of the new Act, namely, Bihar Act XIX of 1947. It follows, therefore, that the Sales Tax Authorities did not commit any error of law in applying Rule 36(2) of the Rules made under the old Act to the case of the assessee for the relevant period. It follows, therefore, that in the circumstances of this case the petitioners claim for deduction on account of sales to registered dealers has been rightly rejected and the second question of law referred by the Board of Revenue for the year 1947-48 must be answered also in favour of the State of Bihar and against the assessee. The assessee must pay the costs of this reference. Hearing fee Rs. 250.