M.KARPAGA VINAYAGAM,.J. - (1.) B .O.C India Ltd., petitioner herein, has filed this writ petition seeking for issuance of a writ of certiorari for quashing the order as contained in letter No. 2432 dated 25.7.2005 issued by the Deputy Commissioner, Commercial Taxes, Jamshedpur, respondent No. 4, directing the petitioner company to deposit an amount of Rs 1,02,45,572/ - being the differential amount of 1% sales tax on sale of Oxygen Gas to Tata Iron and Steel Company, respondent No. 7 herein.
(2.) THE short facts leading to filing of this writ petition are as follows: (A) The petitioner is the producer and supplier of gases like oxygen gas etc. for industrial and medical use. Tata Iron and Steel Company (TISCO), respondent No. 7 herein, is one of the major purchasers and consumers of the products of the petitioner, mainly oxygen gas. On 16.3.1983, M/s. TISCO, respondent No. 7, 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 @ 3% 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 @ 1% was to be paid. Annexure - B contains list of various goods taxable @ 3%. Oxygen gas was mentioned as goods in Annexure - B. Hence sale of oxygen gas was taxable @ 3%. The certificate was issued for charging concessional rate of tax @ 3% on oxygen gas supplied to TISCO as per notification No. 1415 dated 15.12.1976. TISCO has been purchasing oxygen gas since 1983 by paying sales tax @ 3%. (B) On 12.4.1982, 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 1%. (C) At the time of issuance of certificate on 16.3.1983, raw materials were specifically mentioned in Annexure - A for which concessional rate @ 1% was to be charged. In the list of raw materials in Annexure - A, Oxygen Gas was not mentioned. Oxygen Gas is mentioned as goods in Annexure - B taxable at the concessional rate of 3% as per notification dated 15.12.1976. Thereupon the notification in S.O. No. 1096 dated 9.9.1983 was issued fixing the rate of 2% for raw materials required for manufacture and processing of the goods for sale. This is affirmed by yet another notification with modification in subsequent notification through S.O. No. 1054 dated 3.2.1986. (D) Though the petitioner had collected sales tax @ 3% from the beginning for sale of oxygen gas to TISCO, respondent No. 7 herein, as per the certificate, on coming to know the contents of the relevant notifications dated 9.9.1983 and 3.2.1986, the petitioner felt that the liability to pay sales tax on the goods being raw material sold to TISCO would be @ 2% only and not 3%. Therefore, the petitioner sold the good to TISCO at the rate of tax at 2%, in view of the aforesaid two notifications. Since sales tax @ 3% was not collected and paid, road permits were not issued to the petitioner, Therefore, the petitioner filed writ petition before the High Court in W.P.(T) No. 1195/2004, which was disposed of by the High Court directing the respondents to issue road permits. In the meantime, respondent No. 7 also filed writ petition seeking for exemption from payment of sales tax @ 3% and also sought for direction to pay sales tax at the consessional rate of 2% under Jharkhand Industrial Policy. However, the favourable orders were not obtained from the High Court and so the respondent No. 7 moved the Honble Supreme Court. The petitioner also went to Supreme Court and filed necessary application seeking for the said relief. However, both the matters were dismissed by the Supreme Court. Thereafter on 20.4.2005 and 29.6.2005, the Department issued notices to the petitioner demanding a sum of Rs. 1,02,45,572/ -, being the differential amount of tax, i.e. 3% - 2%, on the ground that S.L.Ps filed by it and respondent No. 7 were dismissed and informing that on failure to pay, penal proceeding under Section 16(9) of the Act would be initiated. (E) Again on 25.7.2005 another notice was issued against the petitioner stating that TISCO is liable to pay taxes @ 3% and not 2% 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 @ 3% 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 @ 3% 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 realized that it was a mistake of law under which 3% rate of tax was collected and paid and the correct rate of tax would be 2% on the basis of the notifications dated 9.9.1983 and 3.2.1986. Thereupon from the year 2000, the petitioner started collecting concessional rate of sales tax of 2% for sale of Oxygen Gas treating the same as raw material from TISCO. The two notifications, on the basis of which the petitioner claims payment of sales tax @ 2%, clearly used the same expression as is used in Section 13(1)(b) of the Act, namely, such rate of tax will be on the sale of raw materials required directly for use in manufacture or processing of any goods for sale These notifications would apply to the present case because Oxygen Gas, for which concessional rate of tax is claimed, is raw material and the said raw material is required directly for use in manufacture or processing of goods for sale by TISCO. (b) There is no dispute in the fact that Oxygen Gas is directly used for manufacture of steel products and thereby included in the List No. 4 in Annexure - B to the registration certificate issued under Section 13(1)(b) of the Act. If the said Oxygen Gas is held to be raw material, there is no difficulty in holding that those notifications would apply to Oxygen Gas, especially when it is admitted that the raw material is required directly for manufacture of steel products by TISCO. Once it is established that Oxygen Gas falls under the category of raw material and is directly used for manufacture of steel products, it is immaterial whether the same was required to be amended in the registration certificate issued under Section 13(1)(b) of the Act. Mere fact that then; was no amendment in the List as contained in Annexure - B to the registration certificate does not change its nature and character of the raw material. So when those notifications dated 9.9.1983 and 3.2.1986 are applicable to the facts of the present case, the petitioner is liable to pay only 2% sales tax and not 3%. Therefore, demand for differential amount is not valid in law. The learned Counsel for the respondent No. 7 also made submissions in support of the claim made by the petitioner by adopting the arguments advanced on his behalf.
(3.) THE reply given by the learned Counsel appearing for the State is as follows: (i) The petitioner had already raised the same issue under Jharkhand Industrial Policy, 2001 and the issues raised there were rejected by the 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 authorizes 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 realizing 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 the purchasing dealer will be used by it as raw material. For this reason, the purchasing dealer is required to apply before the prescribed authority for including a particular goods in the category of raw materials after producing relevant materials before the prescribed authority to satisfy itself that a particular goods is required by it for manufacture as raw materials or otherwise. After making enquiry, the prescribed authority may allow the claim and include the goods as raw material in the certificate issued under Section 13(1 )(b) of the Act by making necessary modification (ii) In this case, admittedly Oxygen Gas has been mentioned in Annexure - B, which is the list of goods taxable @ 3%. Therefore, TISCO is authorized to purchase Oxygen Gas from the petitioner only at concessional rate of 3% and not at the rate of 2%, claiming that the said Oxygen Gas is being used as raw materials. Whether it is a raw material or not is to be decided by the prescribed authority and after such a decision, the required certificate can be issued. So far as the petitioner, the selling dealer, is concerned, it is bound by the certificate granted to TISCO under Section 13(1)(b) of the Act. The purchasing dealer or the selling dealer cannot decide the issue on their own. Further, whether Oxygen Gas is a raw material or not, cannot be decided by the Court and the same has to be decided by the prescribed authority on the basis of the materials placed before it. In the absence of any claim for modification of the certificate issued by the prescribed authority, the selling dealer cannot assume the jurisdiction of the prescribed authority and hold that the purchasing dealer is liable to pay sales tax only @ 2% and not 3%, despite the certificate issued under Section 13(1)(b) of the Act in favour of the purchasing dealer specifically mentions that Oxygen Gas is listed in Annexure - B not as a raw material but as goods. Therefore, the demand notices are justified.;