Patna High Court
The Union Of India Through General ... vs The State Of Bihar & Ors on 27 August, 2012
Author: Shiva Kirti Singh
Bench: Shiva Kirti Singh, Vikash Jain
IN THE HIGH COURT OF JUDICATURE AT PATNA
Miscellaneous Appeal No.883 of 2010
======================================================
The Union of India through General Manager
East Central Railway, Hajipur
.... Petitioners/Appellants
Versus
1. The State of Bihar
2. The Joint Commissioner, Department of Commercial Taxes, Patna
Special Circle, Government of Bihar, Patna
3. The Assistant Commissioner, Department of Commercial Taxes, Patna
Special Circle, Government of Bihar, Patna
.... Opp. Parties/Respondents
======================================================
With
Miscellaneous Appeal No.933 of 2010
======================================================
The Union of India through General Manager
East Central Railway, Hajipur
.... Petitioners/Appellants
Versus
1. The State of Bihar
2. The Joint Commissioner, Department of Commercial Taxes, Patna
Special Circle, Government of Bihar, Patna
3. The Assistant Commissioner, Department of Commercial Taxes, Patna
Special Circle, Government of Bihar, Patna
.... Opp. Parties/Respondents
======================================================
With
Miscellaneous Appeal No.934 of 2010
======================================================
The Union of India through General Manager
East Central Railway, Hajipur
.... Petitioners/Appellants
Versus
1. The State of Bihar
2. The Joint Commissioner, Department of Commercial Taxes, Patna
Special Circle, Government of Bihar, Patna
3. The Assistant Commissioner, Department of Commercial Taxes, Patna
Special Circle, Government of Bihar, Patna
.... Opp. Parties/Respondents
======================================================
Appearance :
(In MA No.883 of 2010)
For the Appellant/s : Mr. Anil Kumar Sinha, Advocate
Mr Mritunjay Kumar, Advocate
For the Respondent/s : Mr. Lalit Kishore, AAG 1
Mr Piyush Lall, AC to AAG 1
(In MA No.933 of 2010)
For the Appellant/s : Mr. Anil Kumar Sinha, Advocate
Mr Mritunjay Kumar, Advocate
For the Respondent/s : Mr. Lalit Kishore, AAG 1
Patna High Court MA No.883 of 2010 dt27-08-2012
2/ 22
Mr Piyush Lall, AC to AAG 1
(In MA No.934 of 2010)
For the Appellant/s :
Mr. Anil Kumar Sinha, Advocate
Mr Mritunjay Kumar, Advocate
For the Respondent/s : Mr. Lalit Kishore, AAG 1
Mr Piyush Lall, AC to AAG 1
===========================================================
CORAM: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH
and
HONOURABLE MR. JUSTICE VIKASH JAIN
CAV JUDGMENT
(Per: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH)
Date: 27-08-2012
All the three appeals are directed against a common
judgment dated 30.6.2010 passed by the Commercial Taxes Tribunal,
Bihar, Patna in Revision Case Nos. PT- 64, 65 and 66/2010 whereby
the revision applications preferred by the appellant under Section 73
of the Bihar Value Added Tax Act,, 2005 (hereinafter referred to as
„the VAT Act‟) have been dismissed by holding that the appellant is a
"dealer" under the Bihar Tax on Entry of Goods Into Local Areas For
Consumption, Use Or Sale Therein Act, 1993 (hereinafter referred to
as „the ET Act‟). As a result, all the three orders of assessment, the
common appellate order and the imposition of entry tax and penalty
have been upheld. Since all the three appeals involve common
questions of law and facts and have been heard together, they are
being disposed of by this common judgment.
2. For the purpose of disposal of these appeals, the facts
may be noticed only in brief because this Court framed the following
Patna High Court MA No.883 of 2010 dt27-08-2012
3/ 22
two substantial questions of law for determination in these appeals at
the stage of issuance of notice. They are to the effect :-
(i) Whether the Tribunal has erred in law in holding the
department of Railways of Union to be a dealer under Section 3 of the
ET Act on the basis of Section 2 (1) (b) of this Act which adopts the
definition of dealer in the repealed Bihar Finance Act, 1981? and
(ii) Whether the Tribunal ought to have relied upon the
definition of the term "dealer" as given in the VAT Act whereby
Bihar Finance Act, 1981 was repealed in 2005?
However, at the time of final arguments learned counsel
for the appellant also raised another question as to whether, in the
facts of the case, considering the bona fide of the appellant in raising
the aforesaid dispute, imposition of penalty was legal and
permissible?
3. Revision Case No. PT 64/2010 relates to the period
29.8.2006to 31.3.2007 and involves entry tax of Rs.2,96,23,534 and an equal amount of penalty. Revision Case No. PT 65/2010 relates to period 2007- 08 and the entry tax is Rs.5,17,64,764 along with equal amount of penalty. The third case pertains to period 2008- 09 wherein the amount of entry tax is Rs.6, 71, 98, 452 with equal amount of penalty. In the first two cases the assessment order is dated 23.12.2009 and in the third case it is dated 11.1.2010 passed by the Patna High Court MA No.883 of 2010 dt27-08-2012 4/ 22 assessing authority ACCT, Patna, Special Circle. The appeals preferred by the appellant against the assessment orders were dismissed by a common order dated 23.3.2010 passed by JCCT (Appeal), Central Division, Patna. Thus, the total entry tax involves in these appeals is Rs.14, 85,86,750 and together with equal amount of penalty the total demand against the EC Railway is of Rs.29, 71, 73, 500/-. After the appellate order when notice of demand was issued the appellant filed a writ petition before this Court bearing CWJC No.5587 of 2010 which was disposed of on 7.4.2010 and the appellant was allowed to approach the Commercial Taxes Tribunal, Bihar, Patna. The three revision petitions filed before the Tribunal were dismissed by the common judgment dated 30.6.2010 which is subject matter of these appeals.
4. It is not in dispute that the EC Railway, during the relevant periods, brought into Bihar Iron and Steel from Steel Authority of India Limited, Bhilai Steel Plant, Bhilai, Madhya Pradesh. Those goods were used and consumed by EC Railway. The Commercial Tax Department of Bihar obtained information from Steel Authority of India in respect of the concerned goods, which were specified goods liable to entry tax. Since the EC Railway did not apply and obtain registration under Section 5 of the ET Act in spite of being asked to do so by the concerned authority hence actions Patna High Court MA No.883 of 2010 dt27-08-2012 5/ 22 were taken under Section 8 of the ET Act read with Section 28 of the VAT Act. The authority resorted to provisions for the best assessment judgment and imposition of penalty on tax assessed.
5. The main contention advanced on behalf of the appellant is that the term "dealer" in the ET Act of 1993 has not been defined exhaustively and the Legislature has merely referred to the Bihar Finance Act, 1981 for the purpose of defining "dealer" and, therefore, when the Bihar Finance Act, 1981 was repealed by the VAT Act in 2005, the definition of "dealer" must be held to have undergone an amendment because the VAT Act defines the term "dealer" differently and does not include Central Government or its departments. An alternative argument was also advanced that even if definition of "dealer" remains the same as in Bihar Finance Act, 1981, Exception II of Section 2(a) would cover only the State government under the clause "a government" and not the Central Government because under Section 2 (ii) of the Bihar Finance Act, 1981 "Government" means only Government of the State of Bihar.
6. So far as the alternative argument is concerned it needs to be noticed only for rejection. Section 2 (ii) of the Bihar Finance Act, 1981 no doubt defines the word Government to mean the Government of the State of Bihar but Explanation II to Section 2(a) uses the term "A Government"and not the word "Government". When Patna High Court MA No.883 of 2010 dt27-08-2012 6/ 22 the entire Explanation II is read as a whole it is clear that the term "a Government" has been deliberately used to describe any Government and not the Government of the State of Bihar. As a result of said explanation any Government, whether or not in course of business, buys, sells, supplies or distributes goods, directly or otherwise, shall be deemed to be a dealer. If this explanation was meant to include only the State Government, the words "a" and "which" preceding and succeeding the word "Government" are not only inappropriate but redundant. It is a well accepted rule of interpretation that courts must avoid an interpretation which shall render words used by the Legislature superfluous or otiose. Therefore, it must be held that Explanation II includes any Government, State or Central.
7. For appreciating the main contention noticed above, it would be useful to extract Section 2(e) of the Bihar Finance Act, Section 2 (1) (b) of the ET Act, 1993 and Section 2 (i) of the VAT Act, 2005 because these provisions contain definition of the term "dealer".
Section 2 (e) of the Bihar Finance Act, 1981- "dealer" means any person who carries on (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods, directly or indirectly, for cash, or for deferred payment, or for commission, remuneration or other valuable consideration and includes -
(i) a local authority, a body corporate, a company, any co- operative society or other society, club, firm, Hindu undivided family or other association of persons which Patna High Court MA No.883 of 2010 dt27-08-2012 7/ 22 carries on such business;
(ii) a factor, broker, commission agent, del- credere agent, or any other mercantile agent, by whatsoever name, called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying, selling, supplying or distributing, goods belonging to any principal whether disclosed or not; and
(iii) an auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal.
Explanation I- Every person who acts as an agent, in the State of Bihar or a dealer residing outside the State of Bihar and buys, sells, supplies or distributes, in the State or acts on behalf of such dealer as-
(i) a mercantile agent as defined in the Sales of Goods Act, 1930 (3 of 1930), or
(ii) an agent for handing of goods or the documents of title relating to goods, or
(iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment;
And every local branch or office in the State of Bihar of a firm registered outside the State of Bihar or a company or other body corporate, the principal office, or headquarters whereof is outside of the State of Bihar shall be deemed to be dealer for the purposes of this Act. Explanation II- A Government which whether or not in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, for cash or for deferred payment or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purpose of this Act., Section 2 (1) (b) of the ET Act- "Dealer" shall have the meaning assigned to it under the Bihar Finance Act, 1981. Patna High Court MA No.883 of 2010 dt27-08-2012 8/ 22 Section 2(i) of the VAT Act- "Dealer" means any person who, whether regularly or otherwise, in the course of business buys, sells, supplies, distributes or does anything incidental to such buying, selling, supplying or distributing of goods, directly or indirectly, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes -
(A) a local authority;
(B) a Hindu undivided family;
(C) a company, or any society (including a co-
operative society), club, firm, association of persons or body of individuals, whether incorporated or not, which carries on such business;
(D) a society (including a co-operative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to its members;
(E) an industrial, commercial, banking or trading undertaking, whether or not of the Central Government or of any of the State Governments or of a local authority;
(F) a casual trader;
(G) a commission agent, broker, factor, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of the principal.
Explanation: Every person who acts as an agent on behalf of a dealer residing outside the State of Bihar and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as -
(a) a commission agent, broker, factor, a del-
credere agent, an auctioneer or any other mercantile agent, by whatever name called; or
(b) an agent for handling goods or documents of title to goods; or
(c) an agent for the collection or the payment of the Patna High Court MA No.883 of 2010 dt27-08-2012 9/ 22 sale price of goods or as a guarantor for such collection or payment; or
(d) a local branch of a firm or company situated outside the State, shall be deemed to be a dealer for the purpose of this Act.
8. The question as to whether definition of the term "dealer" in the ET Act will be as per definition of the term in the repealed Bihar Finance Act, or as per the VAT Act is dependent upon ascertaining the fact as to whether the Legislature has legislated Section 2 (1) (b) of the ET Act merely by referring to the Bihar Finance Act, 1981 in general or the legislation is by incorporation and not only by reference/ citation. According to learned counsel for the appellant, the Legislature has merely referred to the Bihar Finance Act and, therefore, by virtue of provisions in the General Clauses Act, after coming into force of the repealing Act the reference to the former repealed enactment should be construed as a reference to the repealing Act i.e. the VAT Act of 2005. On the other hand, learned counsel for the State of Bihar has taken a contrary stand. According to him, the General Clauses Act will not be applicable in the present case because the Legislature had a different intention and it has legislated Section 2 (1) (b) of the ET Act by incorporation which amounts to bodily lifting the definition or meaning given to the term "dealer" in the Bihar Finance Act, 1981 for the purpose of having the same meaning to this term under the ET Act.
Patna High Court MA No.883 of 2010 dt27-08-2012 10/ 22
9. In order to supplement and support his submission learned State counsel has placed reliance upon the following three judgments of the Supreme Court-
1. AIR 1963 SC 553 (Ram Sarup v. Munshi)
2. AIR 1979 SC 798 (Mahindra & Mahindra Ltd. v. Union of India
3. AIR 1986 SC 1085 (Vrajlal Manilal and Co. v. State of MP)
10. The Constitution Bench of the Supreme Court in the case of Ram Sarup (supra) considered a similar provision in Section 3 (1) of the Punjab Pre-emption Act, 1913 wherein agricultural land was defined thus- "agricultural land" shall mean land as defined in the Punjab Alienation of Land Act, 1900 ( as amended by Act 1 of 1907), but shall not include the rights of a mortgagee, whether usufructuary or not, in such land. Although the earlier Act of 1900 was subsequently repealed by a later Act of 1951, the Supreme Court held that the repeal of the Act of 1900 has no effect on the continued operation of Pre-emption Act, 1913 and the expression "agricultural land" has to be read as if its definition had been bodily transposed into it. Relevant part of paragraph 11 of the judgment reads thus-
"11. The problem here raised is dependent upon the construction which the several provisions which we have set out earlier would bear after the repeal of the Punjab Alienation of Land Act, 1900. One thing is clear and that is that the authority which enacted the repeal of Patna High Court MA No.883 of 2010 dt27-08-2012 11/ 22 the Punjab Alienation of Land Act did not consider that Punjab Act 1 of 1913 had itself to be repealed. We shall now consider the effect of the repeal of the Punjab Alienation of Land Act with reference to each of the provisions :
(1) Definition of 'agricultural land' under S.3(1):
Where the provisions of an Act are incorporated by reference in a later Act the repeal of the earlier Act has in general, no effect upon the construction or effect of the Act in which its provisions have been incorporated. The effect of incorporation is stated by Brett. L.J. in Clarke v. Bradlugh, (1881) 8 QBD 63.
"Where a statute is incorporated, by reference into a second statute the repeal of the first statute by a third does not affect the second."
In the circumstances, therefore, the repeal of the Punjab Alienation of Land Act of 1900 has no effect on the continued operation of the Pre-emption Act and the expression 'agricultural land' in the later Act has to be read as if the definition in the Alienation of Land Act had been bodily transposed into it."
11. In the case of Mahindra & Mahindra Ltd. (supra) a similar question was answered similarly in the context of Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969. That Section provided for an appeal against the order of the Commission to the Supreme Court on "one or more of the grounds specified in Section 100 of the Code of Civil Procedure, 1908". Section 100 of the Code of Civil Procedure was amended in 1976 so as to make the provision of appeal more stringent and instead of three grounds on which a second appeal could be brought to the High Court, only one ground was permitted which was- only if the High Court is satisfied that the case involves a substantial question of law. The Supreme Patna High Court MA No.883 of 2010 dt27-08-2012 12/ 22 Court held that the wordings used in Section 55 amounted to more than mere reference to or citation of one enactment in another without incorporation. According to the Supreme Court, the later Act had incorporated provision of earlier Code of Civil Procedure and, therefore, the repeal or amendment of Code of Civil Procedure in 1976 would have no effect on the incorporating statute. In this judgment several authoritative judgments of Courts of England and of our Supreme Court were extracted to highlight the difference between legislation by mere reference of one enactment in another and legislation by incorporation. It was held that "legislation by incorporation is a common legislative device implied by the Legislature, where the Legislature for convenience of drafting incorporates provisions from an existing statute by reference to that statute instead of setting out for itself at length the provisions which it desires to adopt. Once the incorporation is made, the provision incorporated becomes an integral part of the statute in which it is transposed and thereafter there is no need to refer to the statute from which the incorporation is made and any subsequent amendment made in it has no effect on the incorporating statute".
12. So far as judgment in the case of Vrajlal Manilal & Co. (supra) is concerned, it has been cited only to highlight that a provision somewhat similar to Explanation II to Section 2 (e) of the Patna High Court MA No.883 of 2010 dt27-08-2012 13/ 22 Bihar Finance Act, 1961 was introduced in the Madhya Pradesh General Sales Tax Act and by fiction the Central or State Government even if it did not carry on required business, was deemed to be a dealer if it buys, sells, supplies or distributes goods and such provision was found legal and valid by the Supreme Court.
13. In the present case, there is no challenge to legality or constitutional validity of any statutory provision. For deciding whether the definition of dealer in the ET Act is legislation by mere reference or by incorporation, it is relevant to notice not only the legal precedents noticed above but also the preamble and provisions of the ET Act. Whereas the Bihar Finance Act 1981 was legislated to consolidate and amend the law relating to the levy of tax on the sale and purchase of goods in Bihar, the ET Act is to provide for levy and collections of tax on entry of goods into local areas for consumption, use or sale therein. The Finance Act imposes tax on the transaction of sale or deemed sale of goods within the State of Bihar chargeable from a dealer. On the other hand, entry tax, as per the charging section 3 is levied on entry of scheduled goods for consumption, use or sale in Bihar. The purpose of such tax is development of trade, commerce and industry in the State. According to Section 3 (2) of the ET Act, the tax under this Act is to be paid by every dealer liable to pay tax under Bihar Finance Act, 1981 or any other person who bring Patna High Court MA No.883 of 2010 dt27-08-2012 14/ 22 or causes to be brought such scheduled goods within Bihar. However, as per proviso no tax shall be leviable in respect of entry of such scheduled goods effected by a person other than the dealer if, the value of such goods does not exceed 25 thousands in a year. Section 2 (1) (a) contains definition of the word "Commissioner" by specifying that Commissioner means the Commissioner of Commercial Taxes or the Additional Commissioner of Commercial Taxes appointed under the Bihar Finance Act, 1981 and includes any other officer upon whom the State Government may by notification confer all or any of the powers and duties of Commissioner under this Act. This is followed by definition of the term "Dealer" already noticed. Section 2 (1) (c) defines "Entry of goods". Proviso thereto relies upon Bihar Finance Act, 1981 for a stipulation that for goods which are liable to tax under that Act, entry of goods shall mean entry of goods into local area from any place outside the State for consumption, use or sale therein. Section 2 (1) (g) defines moter vehicle in following words - "Motor Vehicle" means a motor vehicle as defined in clause (28) of Section 2 of the Motor Vehicles Act, 1988. Section 2 (2) provides that words and expressions used in this Act but not defined therein shall have the meaning assigned to them under the Bihar finance Act, 1981. As already noticed, Section 3 (2) provides for payment of tax under this Act by every dealer liable to Patna High Court MA No.883 of 2010 dt27-08-2012 15/ 22 pay tax under Bihar Finance Act, 1981 besides other person who meets the specification. In fact, Section 3 (2) refers to the Bihar Finance Act, 1981 in the third proviso also which is by way of an exception to the second proviso which was amended by Act 19 of 2006 to refer to the provisions of the VAT Act, 2005 for reduction of tax liability to the extent of tax paid under this Act in case the importer of scheduled goods incurs liability to pay tax at the rate specified under Section 14 of the VAT Act. The subsequent amendments whereby reference has been made to the VAT Act clearly show that the Legislature has at places retained and relied upon the provisions of the Bihar Finance Act, 1981 even while introducing amendments containing reference to the VAT Act, 2005.
Section 7 (4) relating to offences and penalties provides that subject to other provisions of the Act all the provisions of relating to offences and penalties of the Bihar Finance Act, 1981 relating to assessment, reassessment, calculation and enforcement of payment of tax required to be collected shall apply mutatis mutandis in relation to any process connected with such assessment, reassessment, collection or enforcement of payment of tax under this Act as if the tax under the Act is payable under this Act. Section 8 provides that the provisions of the Bihar Finance Act, 1981 and rules made thereunder shall be applicable subject to other provisions of this Act and the rules framed Patna High Court MA No.883 of 2010 dt27-08-2012 16/ 22 thereunder, in respect of the authority empowered to assess, reassess, collect and enforce payment of tax and penalty payable by a dealer under the Bihar Finance Act, 1981. They shall perform the aforesaid tasks under this Act and for that purpose they may exercise all or any of the powers assigned to them under the Bihar Finance Act and the Rules made thereunder. For this purpose the provisions relating to returns, assessment, reassessment, escaped assessment, recovery of tax, special mode of recovery, maintenance of accounts, inspection, search and seizure liability in representative character, refund, appeal, revisions and reviews, statement of cases to the High Court, compounding of offences and other miscellaneous matter of the said Act shall apply mutatis mutandis.
14. From the aforesaid provisions of the ET Act it is clear that this Act is not a self contained code. It is dependent for its working and effectiveness upon provisions of the Bihar Finance Act, 1981 which have been referred to in general terms in respect of procedural matters covered by Section 8 of this Act and have been incorporated by reference in the definitions provided by Section 2 of this Act. In view of law laid down by the Supreme Court noticed above, particularly in the case of Ram Sarup v. Munshi (supra) decided by a Constitution Bench of the Supreme Court it is evident that for the purposes of definition not only the Legislature has Patna High Court MA No.883 of 2010 dt27-08-2012 17/ 22 incorporated the meaning assigned to certain words in the Bihar Finance Act, 1981 but has also preferred to retain those provisions even after repeal of that Act by the VAT Act of 2005. However, wherever found necessary such as in Section 3 (2) the Legislature has brought about amendments for referring to the provisions of the VAT Act 2005 also. Such a state of affairs clearly indicates that the Legislature did not intend to merely refer to the Bihar Finance Act 1981 in general for the purpose of defining the term "dealer" but it incorporated the said definition and as a result the meaning of the term "dealer" in the Bihar Finance Act 1981 has to be treated as bodily lifted and made a part of Section 2 (1) (b) of the ET Act, 1993. In such a situation, the subsequent repeal of the Bihar Finance Act, 1981 by the VAT Act 2005 shall have no effect upon the definition of the term "dealer" which must derive its meaning as given in the Bihar Finance Act, 1981 regardless of its subsequent amendment or repeal.
15. On behalf of the appellant, in course of reply, a submission was advanced that in view of the law laid down by the Supreme Court in the case of Girnar Traders (3) v. State of Maharashtra, (2011) 3 SCC 1 and in the case of Bharat Coop. Bank (Mumbai) Ltd. Coop. Bank Employees Union, (2007) 4 SCC 685, it should be held that since the ET Act is not a complete code in itself but relies upon other Acts such as Bihar Finance Act and the VAT Patna High Court MA No.883 of 2010 dt27-08-2012 18/ 22 Act, the proper course would be to interpret even the definition clauses in a manner so as to allow the definition of the term "dealer" to be replaced by definition given in the VAT Act 2005 because it repeals the Bihar Finance Act, 1981. We find no substance in the aforesaid contention. The case of Girnar Traders (3) did not relate to a taxing statute which has to be strictly construed. Further in that case exceptions were pointed out to legislation by incorporation or by reference on account of doctrine of pith and substance and harmonious application of two statutes. The submission that the ET Act is supplemental to Bihar Finance Act, 1981 and, therefore, all provisions of the VAT Act, 2005 whereby Bihar Finance Act, 1981 was repealed must be read into ET Act, does not have merit. Learned counsel for the State has rightly pointed out that source of power for entry tax is available in Entry 52 of List II of the 7 th Schedule of the Constitution and requires President‟s assent under Article 304 of the Constitution of India which has been obtained whereas tax on sale of goods under the Bihar Finance Act, 1981 flows out of Entry 54 of List II of 7th Schedule. Both the Acts operated in different areas. While entry tax becomes payable on account of entry of the specified goods in the local area and it is chargeable even from persons other than a dealer, the tax on sale of goods is leviable on a Dealer in the event of sale or deemed sale of the specified goods within the State of Bihar. Patna High Court MA No.883 of 2010 dt27-08-2012 19/ 22 Paragraph 88 of the judgment in the case of Girnar Traders (3) refers to judgment of the Supreme Court in the case of M. V. Narasimhan, (1975) 2 SCC 377 to notice four exceptions to the doctrine of legislation by reference and incorporation. The exceptions can arise when (1) The subsequent Act and the previous Act are supplemental to each other, (2) where the two Acts are in pari materia, (3) where the amendment in the previous Act, if not imported into the subsequent Act also, would render the subsequent Act wholly unworkable and ineffectual and (4) where the amendment of the previous Act, either expressly or by necessary intendment, applies the relevant provisions to the subsequent Act. In our considered view, none of the four situations are applicable in the present case so as to militate against the consequences of our finding that the term "dealer" has been defined in the ET Act by way of legislation by incorporation.
16. The judgment in the case of Bharat Coop. Bank (Mumbai) Ltd. (supra) was a case where a plea of exceptional situation was not accepted on the ground that the concerned Act was a complete and self contained code and its working was not dependent upon the earlier Act which was subsequently amended. That case cannot be treated to be an authority for laying down the proposition that if an Act is not a complete code by itself, there can be no legislation by incorporation in such an Act. That judgment reiterates Patna High Court MA No.883 of 2010 dt27-08-2012 20/ 22 the well established principle that determination of the question whether legislation is by incorporation or by reference is ultimately a matter of probing the legislative intention. It may require insight into the working of the concerned enactment if one or the other view is adopted. It was highlighted that the kind of language used in the provision, the scheme and purpose of the incorporating statute is of substantial consequence. In the facts of the case, we find that the working of the ET Act is not at all impaired on account of our finding that the meaning of the term "dealer" in the ET Act is on account of incorporation of the relevant provisions in the Bihar Finance Act, 1981 by reference.
17. In view of the aforesaid finding and discussion, the two substantial questions of law noticed above in respect of definition of the term "dealer" are answered in favour of the State and against the appellant.
18. So far as imposition of penalty is concerned, learned counsel for the appellant has placed reliance upon a Division Bench judgment of this Court in the case of M/s Indian Oil Corporation Ltd. v. State of Bihar, 2003 (3) PLJR 561. Paragraphs 18 to 20 of that judgment deal with the issue whether a penalty should have been imposed under provisions of the Finance Act, 1981. Reliance was placed upon judgment of the Supreme Court in the case of Hindustan Patna High Court MA No.883 of 2010 dt27-08-2012 21/ 22 Steel Ltd. v. State of Orissa, 25 STC 211 and in the case of EID Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes, reported in AIR 2000 SC 551 for holding in paragraph 21 that since the petitioner of that case had a bona fide belief in his case that the Act was invalid, his conduct being in good faith and bona fide, no penalty should have been imposed upon him. To same effect is the judgment of Supreme Court in the case of Cement Marketing Co. of India Ltd. v. Assistant. Commissioner of Sales Tax, Indore & ors. (1980) 1 SCC 71 in which it has been held that in case of bona fide legal dispute no penalty is leviable, even if minimum is prescribed. The facts of the present case disclose that the appellant was pursuing his case bona fide under the belief that it was not a dealer in view of repeal of the Bihar Finance Act, 1981 by the VAT Act, 2005. The assessment orders and the appellate orders were passed within a short period of four months between 23.12.2009 to 23.3.2010. The revisional order was also passed on 30.6.2010 but even before that as per facts given in the synopsis of the appeals, an amount of Rs.26,00,26,812/- was realized by the department through the appellant‟s bank, the State Bank of India. Clearly the appellant did not indulge in any dilatory tactics which could show that it was not acting bona fide. Even as per law laid down on the subject, it is not easy to decipher whether legislation such as one under consideration Patna High Court MA No.883 of 2010 dt27-08-2012 22/ 22 is by way of incorporation by reference or is merely by reference or citation. In such circumstances, following the aforesaid Division Bench judgment of this Court it is held that imposition of penalty upon the appellant in all the three cases was improper and not in accordance with law.
19. The appeals are, therefore, allowed in part. The orders imposing penalty are set aside. But the orders of assessment imposing entry tax and the appellate and revisional orders upholding that part are confirmed. In the facts of the case, there shall be no order as to costs.
(Shiva Kirti Singh, J) I agree.
(Vikash Jain, J) AFR sk