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2006 DIGILAW 1245 (PAT)

H. M. P. Sugars Ltd. , Bagaha v. State Of Bihar

2006-12-13

AFTAB ALAM, SAMARENDRA PRATAP SINGH

body2006
Judgment 1. Heard Mr. Y.V. Giri, Senior Advocate appearing for the petitioner and Mr. Advocate General representing the State. 2. The petitioner seeks to challenge the assessment order and the orders of the appellate and the revisional authorities for the assessment period 1999-2000 in so far as the revenue authorities did not allow the application of the lower rate of sales tax on sale of molasses by the petitioner to M/s. S.K.G. Distillery, worth Rs. 96,30,751.98 on the ground of non-production of Form IX issued by the buyer i.e. S.K.G. Distillery. During the assessment period in question the petitioner had shown sale of molasses to S.K.G. Distillery worth Rs. 1,64,63,514.98. It produced five declarations in Form IX issued by the buyer. The five declarations covered sales to the extent of Rs. 68,32,763.00. The revenue authorities accordingly allowed the petitioners claim for application of the lower rate of taxes on that amount but the balance of Rs. 96,30,751.98 was subjected to the higher rate of 25% of taxation. 3. Mr. Giri submitted that molasses was not a free-sale commodity and it could only be sold under orders passed by the Molasses Controller who also happened to be the Excise Commissioner of the State. He further submitted that molasses produced by the petitioner sugar factory was directed to be sold during the assessment period in question by the Molasses Controller to two establishments, namely, Riga Distillery and S.K.G. Distillery for production of spirit from molasses. All the sales of molasses to S.K.G. Distillery (amounting to Rs. 1,64,63,514.98) were made under the orders of the Molasses Controller/Excise Commissioner. The sales were further made under the supervision of the excise officials posted at the petitioner sugar factory. The sales were made at a time when S.K.G. Distillery was engaged in litigation concerning its take over by the State. For the assessment period it issued five declarations in Form IX in favour of the petitioner. The petitioner could not obtain from it declarations with regard to the balance sales for various reasons. Eventually the buyer S.K.G. Distillery lost out its case with regard to its take over and its take over by the State was confirmed by the Supreme Court in the year, 2003. 4. Mr. The petitioner could not obtain from it declarations with regard to the balance sales for various reasons. Eventually the buyer S.K.G. Distillery lost out its case with regard to its take over and its take over by the State was confirmed by the Supreme Court in the year, 2003. 4. Mr. Giri emphasised that since ail the sales of molasses to S.K.G. Distillery were in the nature of statutory sale and were made directly in compliance with the order of Molasses Controller, the action of the revenue authorities in rejecting the petitioners claim for application of the lower rate of taxation simply for non-production of Form IX was quite unreasonable and arbitrary. 5. Mr. Advocate General submitted that in some cases the Supreme Court had held the production of Form IX as mandatory for the claim of any lower rate of taxation. However, having regard to the fact that in the case in hand sales were made under the order(s) of the Molasses Controller and the supervision of the excise officials, he would have no objection to the matter being examined afresh and the petitioner being allowed an opportunity to satisfy the revenue authorities that all the sales to S.K.G. Distillery were, made under the orders of the Molasses Controller and the molasses taken out from the petitioners bonded warehouse were as a matter of fact delivered at S.K.G. Distillery. 6. In view of the reasonable stand taken by the Advocate General the assessment order, dated 20.7.2002 (alongwith the appellate order, dated 15.2.2005 and the revisional order, dated 5.12.2005) in so far as relating to application of higher rate of taxation on sale of molasses to S.K.G. Distillery Ltd. to the extent of Rs. 96,30,751.98 is set aside and the matter is remitted to the Assistant Commissioner, Commercial Taxes, Bagaha to re-examine the matter in light of this order. In order to facilitate an early disposal of the matter the petitioner is directed to appear before the Assistant Commissioner, Commercial Taxes, Bagaha alongwith a certified copy of this order within three weeks from today. 96,30,751.98 is set aside and the matter is remitted to the Assistant Commissioner, Commercial Taxes, Bagaha to re-examine the matter in light of this order. In order to facilitate an early disposal of the matter the petitioner is directed to appear before the Assistant Commissioner, Commercial Taxes, Bagaha alongwith a certified copy of this order within three weeks from today. The Assistant Commissioner shall allow the petitioner an opportunity to produce all materials in support of its case that all the sales of molasses to S.K.G. Distillery Ltd. were made in compliance with the allotment order of the Molasses Controller and the quantities of molasses taken out from the sugar factory were in fact delivered to S.K.G. Distillery Ltd. In case that is established, the Assistant Commissioner shall allow the petitioners claim for taxation at the lower rate even without insisting for production of Form IX. A final order in the matter is expected to be passed within three months from the date of appearance of the petitioner before the Assistant Commissioner, Commercial Taxes, Bagaha. 7. This writ petition is disposed of with the aforesaid observations and directions.