COMMISSIONER OF COMMERCIAL TAXES Vs. STATE TRADING CORPORATION OF INDIA LIMITED

JUDGEMENT

(1.) This is a reference under Section 33(3) of the Bihar Sales Tax Act, 1959, on the following questions:

(2.) The S.T.C. is a registered dealer under the Central Sales Tax Act, 1956 (hereinafter referred to as the Act), bearing registration No. SG-575-(c) under the Chaibasa sub-circle of the commercial taxes department and deals in iron and manganese ore. The assessment year for which the assessment is in question is the year 1959-60, the period of assessment being 1st April, 1959t to 31st March, 1960. The dealer S.T.C. obtained a gross turnover of Rs. 38,24,724.44 during the relevant year from supply of iron ore to the H.S.L., which also has been held to be a registered dealer. The claim of the S.T.C. before the assessing officer was that it had purchased iron ore from certain mine owners in Bihar on f.o.r. (free on rail) loading-station-basis for selling it to the H.S.L. for their units in Durgapur in West Bengal, Bhilai in Madhya Pradesh and Rourkela in Orissa. The sales by the mine owners to the S.T.C. were inter-State sales within the meaning of Section 3 of the Central Sales Tax Act and the sales by the S.T.C. to the H.S.L. were the subsequent inter-State sales with respect to the same goods during the same movement and as such the subsequent sales were exempt from taxation by virtue of the provisions of Sub-section (2) of Section 6 of the Act.

(3.) The assessing officer, accepted the gross turnover returned by the S.T.C. but did not accept the claim for exemption and held that the sales by the mine owners to the S.T.C. and the sales by the S.T.C. to the H.S.L. were distinct and separate transactions. The first was an intra-State sale and the next was an inter-State trade sale. The sales made by the S.T.C. to the H.S.L. were, therefore, taxable. Since, however, the declaration in form 'C had been produced from the H.S.L. in respect of a part of the turnover, that part was taxed at 1 per cent, of the turnover and the rest was taxed at 7 per cent, of the turnover. The S.T.C. having failed in its appeal before the Deputy Commissioner of Commercial Taxes, Ranchi, filed a revision application before the Board of Revenue which transferred the matter to the Sales Tax Tribunal, the latter having been formed by that time to deal with revisions against appellate orders.