TATA IRON AND STEEL CO LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) In these two cases the Board of Revenue has referred the following questions of law under Section 25 of the Bihar Sales Tax Act for the opinion of the High Court:

(2.) Six of these questions have been examined by the High Court in a previous case, namely, Tata Iron and Steel Co. Ltd. v. State of Bihar, 1956-7 STC 158: (AIR 1956 Pat 92) (A). The constitutional question has been elaborately discussed and the conclusion was reached that the provisions of Section 2 (g) of the Bihar. Sales Tax Act (Bihar Act 19 of 1947) as amended by Bihar Act 6 of 1949 were constitutionally valid. The High Court also expressed the opinion that it was not necessary for the purpose of legislative jurisdiction that all the legal ingredients of sale or even the transfer of title should have taken place within the State. It is sufficient if there was some territorial nexus or connection between the taxing authority and the transaction sought to be taxed. The High Court also reached the conclusion that the fact that the goods are manufactured in Bihar constitutes a sufficient territorial nexus or connection which confers jurisdiction upon the State Legislature to impose the tax. The High Court also expressed the view that the authority of the decision of the Supreme Court in the State of Bombay v. United Motors (India) Ltd., 1953 SCR 1069; (AIR 1953 SC 252) (B) and Poppatlal Shah v. State of Madras, 1953 SCR 677: (AIR 1953 SC 274) (C), on the doctrine of nexus has not been affected in any way by the subsequent decision of the Supreme Court in Bengal Immunity Co. Ltd. v. The State of Bihar, 1955-6 STC 446: ((S) AIR 1955 SC 661) (D). We reiterate and affirm the principles of law expressed by the Division Bench of this High Court in 1956-7 STC 158: (AIR 1956 Pat 92) (A). On the basis of the authority of that decision we hold that questions (1), (2), (3) and (4) referred by the Board of Revenue must be answered against the assessee and in favour of the State of Bihar. In that case, the High Court also held that the amount collected by the registered dealer from the customers as sales tax and paid over to the Government cannot be treated as part of the sale price under Section 2 (h) and so does not constitute part of the taxable turnover of the registered dealer. For the same reasons we answer questions (5) and (6) in the present case in favour of the assessee and against the State of Bihar.

(3.) As regards question No. 7, Mr. Baldeva Sahay put forward the argument that the amount of railway freight collected by the petitioners ought not to be included in the taxable turnover of the petitioners. In support of his argument learned Counsel referred to Section 2 (h) of the Bihar Sales Tax Act which defines ''sale price" to mean