MIS BOC INDIA LTD v. STATE OF JHARKHAND & Ors.

Judgment

• ., .. t ,, • "': [2009] 4 S.C.R. 253 MIS BOC INDIA LTD. v. STATE OF JHARKHAND & ORS. Civil Appeal No. 1538 of 2009 MARCH 5, 2009 [S.B. SINHA AND CYRIAC JOSEPH, JJ.] A B c Bihar Finance Act, 1981: s.13(1}(b) - Sa/es Tax - Gas producer supplying gas to steel manufacturer who showed oxygen in the list of goods taxable at 3% as specified in the Annexure 'B' appended to the Registration Certificate - By subsequent Notification, sales tax on sale of raw materials required directly for use in manufacture of goods fixed at 2% - Gas supplier started charging 2% sales tax on supplies of gas to steel manufacturer - Demand notice on gas supplier opining that steel manufacturer was liable to pay purchase tax at 3% on oxygen gas- Writ petition - Dismissed on ground that gas supplier had no locus standi to file writ petition as tax was payable by steel manufacturer - Held: Demand was made on gas supplier- He was person aggrieved and thus had locus standi to file writ petition - Question as to whether oxygen gas E was raw material or not in the manufacture of steel is essentially a question of fact and cannot be decided in writ petition - Demand is set aside- Question to be considered by Assessing Officer when raised by assessee - Bihar Sales Tax Rules, 1983 - r. 6. F D Mis Tata Iron & Steel Company Limited (TISCO) produced steel. For the said purpose, it purchased oxygen gas from M/s B.O.C. India Ltd. (BOC). TISCO was granted a registration certificate in terms G of the provisions of Section 13(1)(b) of the Bihar Finance Act, 1981. The said certificate originally was granted on 16.3.1983 and was renewed from time to time. Oxygen was 253 H 254 SUPREME COURT REPORTS [2009] 4 S.C.R A shown in the list of goods taxable at 3% as specified in Annexure 'B' appended to the registration certificate. • B From time to time several Notifications were issued in terms whereof varying rate of tax were prescribed in respect of goods required directly for use in manufacture. By Notification dated 3.2.1986, sales tax on sale of the raw materials required directly for use in the manufacture of processing of goods for sale excluding such raw materials which had already undergone any manufacturing or production process and which are required for further c assembly thehrewith shall be at the rate of 2%. TISCO never applied for amendment or modification of the Registration Certificate. Oxygen gas continued to be allowed to remain in Annexure 'B' of the Registration Certificate wherefor sales tax was payable at the rate of 3%. Till the Assessment Year 2002-2003, for supply of oxygen gas to TISCO, BOC charged sales tax at the rate of 3%. However, the said purported mistake was sought to be rectified by BOC in terms of the said Notification dated 3.2.1986 charging 2% sales tax on the supplies of oxygen gas made to TISCO. BOC also deposited tax at the rate of 2% on the sale of industrial gases to TISCO. Department issued a demand notice on BOC. Questioning the validity of the notice, a writ petition was filed before the High Court which was dismissed on the ground that BOC had no locus standi to file writ petition as admittedly tax was payable by TISCO; that TISCO was authorized to purchase at the concessional rate of 3% and not at the rate of 2% and, thus, the demand was unassailable; that the selling dealer was bound by the certificate granted to it under Section 13(1 )(b) of the Act. It was also held that whether oxygen gas was a raw material or not cannot be decided/determined in writ petition filed by BOC as TISCO alone was competent to explain to the prescribed authority as to how an item which had all along D E F G H ,_ t .. ·~ ' ... " • MIS BOC INDIA LTD. V STATE OF JHARKHAND & ORS. 255 l been treated and mentioned as goods as per Annexure A 'B', could be treated as raw material. BOC and TISCO filed these appeals. ;. ... ·' ' • ·' Allowing the appeals, the Court HELD: 1. BOC was the manufacturer of oxygen gas. B It was a dealer within the meaning of the provisions of the Bihar Finance Act. It was an assessee. It even as an agent of the State was bound to collect taxes on its behalf and deposit the same in accordance with law. Non-compliance thereof would lead to penal actions. Even in the demand c notice, it was threatened with proceedings for recovery of the differential amount unless it produced the evidence of deposit thereof. Thus, a demand was made on BOC. Hence, it had locus standi to maintain the writ application. TISCO was entitled to purchase the said goods at a concessional rate. If the material was used for manufacture, the rate of tax was 3% whereas if the material is used as raw material for processing and/or manufacturing of the end product, the rate of tax would be 2%. Not only the penal proceedings but also other proceedings could be initiated against it for non-deposit E of the aggregate amount of tax within the prescribed period. If an order of assessment is passed against the assessee, the only remedy before it was to prefer an appeal/revision in terms of the provisions of the Act. Thus, it was a person aggrieved to maintain a writ application. F [Paras 16, 17]. [269-A-G] 0 Kabushiki Kaisha Toshiba vs. TOSIBA Appliances Co. and Ors. 2008 (8) SCALE 354 - relied on. Tata Iron & Steel Co. Ltd. vs. State of Jharkhand & Ors. G (2005) 4 SCC 272; The Trade Mark No. 70, 078 of Wright, Crossley, and Co. (1898) 15 RPG 131- referred to.

2.1. The expression "raw material" is not defined. It has to be given its meaning as is understood in the H 256 SUPREME COURT REPORTS (2009) 4 S.C.R. A common parlance of those who deal with the matter. [Para 20] [270-C] B