Patna High Court
Bijay Metal Works And S.C.I. India ... vs State Of Bihar And Ors. on 30 March, 2001
Equivalent citations: [2001]124STC493(PAT)
Author: Shashank Kumar Singh
Bench: Shashank Kumar Singh
ORDER
1. These two petitions are being taken up together as the issues raised are similar. Apart from that between the petitioner, Bijay Metal Works and in other petition S.C.I. India Limited, the two are not strangers and there is a nexus between the partners of one petitioner and the directors of the other. This aspect is not in issue and acknowledged by both the parties.
2. The matter relates to the sale of country liquor and the issues are whether sales tax may be due and yet has to be paid by the petitioners to the State of Bihar. The petitioners have their own explanation that nothing is "legally" due but the State of Bihar contends that such taxes are due, were collected, retained but not deposited. In between this lie the issues.
3. The petitioners impugn the order of the Commercial Taxes Tribunal, Bihar, Patna, dated April 13, 1999 in Revision Case No. B.H. 155 of 1999 (Bijay Metal Works v. State of Bihar). The order of the Commissioner of Commercial Taxes in Revision Case No. C.C.(s) 355 of 1996-97 is also challenged. The order of the Commercial Taxes Tribunal, Patna, is annexure 7 and the order of the Commissioner of Commercial Taxes, dated February 16, 1999, is annexure 6.
4. Mainly, what is supposed to have aggrieved the petitioners is that, according to the petitioners, the "consolidated registration" has been denied within the meaning of Sub-rule (4) of Rule 3 of the Bihar Sales Tax Rules, 1983. The contention of the petitioners is that as it carried on business at several place in Bihar (Jharkhand, not excluded, as such circumstances are on record) the State of Bihar is obliged to grant a "consolidated registration", to put it in the words of the petitioners under the aforesaid rule.
5. At the outset the court will take this matter up first as the petitioners appear to be under some misunderstanding on an aspect of being given permission to have the convenience of a "consolidated registration" as opposed to a consolidated return. In so far as the registration is concerned, before a person takes up a business venture which may attract the provisions of the Bihar Finance Act, 1981 and the Bihar Sales Tax Rules, 1983, it is an obligation of the trader, businessman or an industrialist to apply for registration. This application would be considered under Sub-rule (3) of Rule 3. If everything is in order then there is no issue on behalf of the State of Bihar, also, that it is obliged to grant the registration. But this is not a case where the petitioners have applied for registration under Sub-rule (3) of Rule 3. Plainly, what the petitioners' desire is that they may be assessed at one place. There is no such thing as a "consolidated registration". In context, the law prescribes to grant indulgence or permit the furnishing of "consolidated returns". But this is not the argument or the prayer of the petitioners. The permission to furnish consolidated returns is a circumstance which is noted in Sub-rule (10) of Rule 7.
6. The contention of the petitioners is that they be permitted to receive a "consolidated registration" within the meaning of Sub-rule (4) of Rule 3 assuming that such permission can be granted. Whereas to receive registration, if everything is in order, may be the right of a trader, businessman or an industrialist, the indulgence that registration be permitted in a circle or sub-circle within a State when the business may be carried on at more than one place is a circumstance which is permissive. Whereas the power exercised under Sub-rule (3) to grant registration may be an obligation, permitting registration at more than one place is an indulgence which may be permitted by the State of Bihar. Yet, what could perhaps be considered is whether the petitioners may be entitled to furnish consolidated returns within the meaning of Sub-rule (10) of Rule 7 which enjoins that where a registered dealer has more places of business than one, the Commissioner may by an order in writing permit the dealer to furnish consolidated returns, instead of separate returns in respect of each place of business. But, even this is an indulgence which may be permitted. Even if it were a matter of a request for furnishing a consolidated returns (this is not so in the present case) then there is no escape that a return of every place of business has to be furnished, though consolidated with returns of other places of business and filed at one place as the Commissioner may so permit.
7. In so far as the aspects in the present case are concerned, whether the order of the Tribunal ought to be quashed the entire circumstance has to be taken into account.
8. The reason why the Tribunal did not permit the petitioners to receive a "consolidated registration", as the petitioners call it and desire it, this is best noticed, in the order of the Tribunal. The passages are reproduced :
"The learned Commissioner has refused consolidated registration on the ground that the petitioner is engaged in malpractices and unfair means hence it would be prejudicial to the work of collection of taxes if consolidated registration is granted. Really when complete separate account of sales, purchases and expenses at different branches have not been made it would not be fairly possible to assess the entire transaction at a distant central place and the local officer of the branches who are at the spot having more information those could assess the transaction better there if occasion to best judgment arise in absence of any account books maintained for those places of business, hence the learned Commissioner rightly did not find it a fit case for consolidated registration and refused the prayer.
Above all the learned Commissioner has said in his order that he has received information that pressure on the tax authorities was also exercised. The learned counsel for the petitioner submitted that there is no material on record to show that the petitioner ever indulged in any unfair means and bringing pressure on any official. The learned counsel for the State replied that no doubt there is no independent material on the record of the revision case before the Commissioner but he is also the administrative head of the department and he has many source of informations which may be confidential and cannot be divulged for the interest and safety of the officers and the department and that in such cases the Commissioner cannot be called upon to prove such facts, as required in a criminal case before exercising his discretion."
9. In concluding its decision the Tribunal observed :
"But in the light of the facts that proper and independent accounts of sales, purchases or expenses of the branches was not maintained, there was information of exercise of unfair means and pressure on the authorities and information regarding payment of collected tax was not furnished it was rightly felt on judicious exercise of discretion that grant of consolidated registration was not in the interest of the State and the collection of tax hence the prayer was rightly refused. There is no merit in this revision hence it fails."
10. Now, the controversy can be seen better after the counter-affidavit of the State respondent is taken into account. The counter-affidavit is of the Commercial Taxes Officer. On the aspect of what was the admitted tax and what the petitioners may have paid, paragraph 11 of the counter-affidavit mentions that between the period of May 21, 1997 to March 31, 1998 sales tax amounting to Rs. 58,30,705.00 was due. For the period April 1, 1998 to March 31, 1999 sales tax amounting to Rs. 33,63,292.50 was due. It is stated that against these outstanding amounts only a meagre amount of Rs. 1,00,000 was paid by the petitioner on April 29, 1999 much after the filing of the writ petition. The contention in this paragraph of the counter-affidavit is that when an issue was raised whether the liability to tax is there or not, the averment is : "The petitioner is just trying to buy time and confuse the issue. The whole game seems not to pay the tax due and to postponed (sic) it as long as possible by way of filing cases and raising issues". This averment has not been answered by the petitioners in the rejoinder and a reply has been evaded. Then there is another affidavit which has been filed by the State of Bihar on February 28, 2001. In this counter-affidavit the situation in the other writ petition is also being taken care of. The contention in this counter-affidavit in paragraph 3(e) in the matter relating to S.C.I. India Limited is, to the effect, that the turnover of this petitioner stood at Rs. 17,96,40,136. On this, the tax, i.e., the sales tax amounted to Rs. 4,49,10,034, It is stated by the State of Bihar that the High Court by its order dated October 16, 1998 directed the petitioner to deposit the amount, and consequentially the amount of tax standing at Rs. 4,49,10,034 should have been deposited. It is contended that the petitioners disputed the aforesaid figures by filing an interlocutory application in which they have admitted that they have collected sales tax on sale of spiced country liquor/country liquor amounting to Rs. 1,25,89,200. The department on the contrary placed figures that petitioner's turnover with regard to country liquor/spiced country liquor for the period between November 18, 1997 and September 30, 1998 stood at Rs. 11,21,65,018.54. On this tax stood at Rs. 2,80,41,253.77. The narration in the counter-affidavit states that if the petitioners paid tax of Rs. 1,25,89,200 then further tax which is still due stands at Rs. 1,54,52,053.77. It is contended that the High Court by the order of November 2, 1998, directed the petitioners to deposit this further amount of sales tax by November 17, 1998, failing which the petitioners would be liable to pay commercial interest thereon.
11. In a reference to the petitioner, i.e., Bijay Metel Works, the State has made its contention in paragraph 3(g). It is stated :
"That as per inspection report dated 25-5-99 (Bhagalpur Circle) the petitioners country liquor sale figure for the period 21-5-1997 to 31-3-98 and 1-4-98 to 31-3-99 is Rs. 2,33,22,820.66 and Rs. 1,32,53,170.60 respectively. The tax amount comes to Rs. 1,00,58,397.80 which has not been paid by the petitioner. Moreover no books of accounts were produced before the inspecting officer.
Reports received from different commercial taxes divisions indicate that the petitioner is effecting sales after manufacturing country liquor/spiced country liquor without taking any registration in the concerned commercial taxes circle as per the provisions of the Bihar Finance Act, 1981. Action under Section 17(5) of the Bihar Finance Act, 1981 has been initiated.
That non-payment of outstanding admitted dues by the petitioner clearly indicates the true nature of the trade. The petitioner has not only ventured to bid good bye to the provisions of Bihar Finance Act but has in fact put in collected public money in furtherance of its own trade at the cost of poor masses of the State. More so, it has also ventured to defy the honourable Court's observation dated October 16, 1998 made in the matter of S.K.G. Consolidated Ltd. 'We already observed by our order dated October 8, 1998....penal consequence will ensue....' That it is also established principle of law that the person willing to avail any facility under the law should approach the authorities with clean hands. Whereas evidences available with the department reveal that dealers engaged in the trade of country liquor have not only wilfully avoided payment of sales tax on one pretext or another but have also not deposited the tax amount in the Government treasury even after collecting the same from the purchasers. Other evidences which are in possession of the department reveal that these dealers deliberately reduced their taxable turnover by not including the amount of excise duty in their sale price and in almost all cases they unauthorisedly collected additional tax on the sale of country liquor. Even after repeated instructions of the honourable Court they have not discharged their full statutory liability on account of sales tax.
That the petitioner was originally registered as a dealer under Section 14 of the Act at Bhagalpur. That the procedure adopted by the petitioner is that the spirit manufactured at Bhagalpur factory is consigned to his different bonded warehouses (as authorised by Excise Department) and it is at these bonded warehouses the country liquor is manufactured/prepared and sacheted for marketing. Because the production takes place at different bonded warehouses, the department strongly feels that the verification of production sale account of the petitioner cannot be verified if the petitioners are granted permission under Rule 3(4)(a) of the Rules as a particular circle does not have the statutory jurisdiction overall the places. It is also relevant to point out here that a huge volume of data and records would be generated by the dealer which would be almost impossible to keep track of and control from one circle if permission under Rule 3(4)(a) of the Rules is granted for places ranging from 15 to 50. Moreover the spirit of Rule 3(4) is to facilitate one business being transacted in different circles whereas the liquor trade, as explained earlier is of different business transactions at different circles by one entity the two are definitely distinct. The latter is not amenable to monitoring and control by one circle of the department and necessarily warrants local monitoring control through registration and have assessment of business transactions in the respective circles. Further, licence to prepare/manufacture, sachet and sell spiced country liquor, country liquor is granted at the district level by the Excise Department for three years at a time. In the event that the licence for a particular place/places is withdrawn or not re-granted it would warrant consequent changes to be effected to the permission order under Rule 3(4)(a) certificate of registration. All these factors lead to the distinct possibility that any inadvertent lapse in this process at any level would result in a loss/leakage of revenue."
12. The counter-affidavit further contends that reports are being received from the different commercial taxes divisions indicating that the petitioner is effecting sale after manufacturing country liquor/spiced country liquor without taking any registration in the concerned registration circle as the law so provides and that action against the petitioner under Sub-section (5) of Section 17 is being initiated. This question relates to the requirement of law that upon the department discovering that an assessee wilfully failed to apply for a registration and has carried on business then the tax which may have escaped is liable to be paid. Though the petitioner will have a reasonable opportunity of being heard and assessed, yet if he fails to satisfy the assessing authority the principle of best judgment may be invoked. The section prescribes that such of the tax which may have escaped payment, penalty would also be considered.
13. In so far as the latter counter-affidavit filed on February 28, 2001 is concerned, the petitioners evaded replying to it.
14. The submissions are only to the effect that as long as the stay order of the High Court was there the petitioners stood protected under the cover of the stay order so as not to deposit the tax. The petitioners forget that the stay order only provides a temporary reprieve and upon an action not succeeded then the liability during that period does not disappear. So the argument which the petitioners are taking is of no help.
15. The only issue is whether the State of Bihar was right in not permitting, even if it were to go to the ultimate extent on a prayer not made, the indulgence of filing the consolidated return. The petitioners desire "consolidated registration". Of the totality of the circumstances which are on record upon the State of Bihar coming to a prima facie satisfaction that it would not be in the interest of the State to even consider the prayer of the petitioners to grant indulgence of either "consolidated registration" or the filing of a consolidated returns, this Court is unable to be persuaded that the Tribunal has committed any error.
16. At the close of the submissions it needs to be recorded that the court did make it clear to counsel for the petitioners that if they desired the tax be paid in instalments. Counsel for the State of Bihar was not objecting. The court received no answer.
17. Both the petitions are dismissed with costs.