Shri Binayendra Lal Roy and Others vs State of Tripura and Others

B.L. Hansaria, J.—In this proceeding under Article 226 of the Constitution we are concerned with two questions : (1) whether the petitioners were liable to pay sales tax on the sale of "jhama" ; and (2) whether sales tax could be levied on bricks supplied after July 1, 1976, on which date the Tripura Sales Tax Act, 1976, for short "the Act", had come into force, though the agreement to supply the bricks was prior to July 1, 1976.

The petitioners who are registered as dealers under the Act were charged to sales tax for the sale of jhama so also for the bricks which they had sold after July 1, 1976. The assessing authority, namely, the Superintendent of Taxes, took the view that jhama is akin to "bricks" which was a taxable commodity both of which are of the same nature, there being only a change in the form so far as jhama is concerned. The Superintendent of Taxes, therefore, held that jhama is basically a brick and levied tax on the sale of jhama also. The assessing authority also levied tax on the bricks supplied after July 1, 1976 though the agreement to that effect was reached prior to that date. Feeling aggrieved, appeal was preferred before the Assistant Commissioner of Taxes who demanded payment of 50 per cent of the assessed tax to hear the appeal on merits. A revision was preferred before the Commissioner of Taxes against that order, but the same did not yield any fruitful result, and so the petitioners approached this Court under Article 226 of the Constitution.

So far as jhama is concerned, it has been contended by Shri Majumder by referring to Modern Candle Works v. Commissioner of Taxes [1988] 71 STC 362 (Gau) ; (1988) 1 GLR 310 wherein large number of decisions were taken note of, that the basic material so far as jhama and bricks were concerned is clay--jhama being deshaped or over burnt bricks. Shri Majumder referred to Madanlal Khaitan v. Commercial Tax Officer [1972] 29 STC 625 (mad) which is a decision of the Calcutta High Court wherein sugar and sugar candy were held basically to be same. The learned Government Advocate also relied on State of Gujarat v. Sakarwala Brothers [1967] 19 STC 24 (SC) , wherein it was held that sugar may manifest itself in the form of patasa, alchidana or harda as a result of certain simple process being carried out because of which it cannot be said that sugar has ceased to be sugar merely because it takes a particular shape or form which appeals to certain class of people on festive occasions. Learned counsel also referred to Alladi Venkateswarlu and Others Vs. Govt. of Andhra Pradesh and Another, which dealt with taxability of "parched rice" and "puffed rice", and in which the Supreme Court was of the view that the term "rice" was wide enough to cover the aforesaid forms of rice also.

As against these decisions, Shri Das appearing for the assessees referred to State of Tamil Nadu Vs. Pyare Lal Malhotra and Others, wherein it was held that as soon as a separate commercial commodity emerges or comes into existence, it becomes a separate taxable goods or entity for the purpose of sales tax.

It may be pointed out here that in the Act as originally enacted jhama was not specifically mentioned as a taxable commodity which, however, was so done by the first amendment to the Act which came into force with effect from September 13, 1978. So there is no doubt that after September 13, 1978 jhama has to be taken as a taxable commodity. Question is what would be the position prior to September 13, 1978.

In this connection Shri Das brought to our notice a decision of the Sales Tax Tribunal rendered by its sole member on March 12, 1979 which held that jhama was not taxable under the head "bricks" before the Act was amended in 1978. In taking this view, the learned member observed that jhama metals which are mostly broken pieces coming out of the kiln are fit only for consolidation of roads but not for building. It was also pointed out that there is substantial price difference between the two as bricks were sold at Rs. 212 per thousand whereas jhama metal was supplied at Rs. 76 per thousand. Shri Majumder states in this connection that the aforesaid case was concerned with jhama metal which is different from jhama. A reference to the order, a copy of which has been produced before us, shows that the Tribunal was concerned with the taxability of jhama and as to this it was stated that jhama was specifically added in item 29 by the aforesaid amendment of the Act in 1978. A reference to the amendment shows that there is mention of jhama and metal separately, and no commodity has been described as jhama metal. A perusal of the order of the learned Tribunal leaves no doubt that it was concerned with the question whether jhama was included within the term "bricks" used in item No. 29 of the Schedule to the Act. It is admitted at the Bar that the department did not take up the matter further and accepted the Tribunal''s order. This being the position, we have not thought it fit to examine the contention advanced by learned counsel of both the sides by applying our own mind to find out whether jhama can be said to have been included within the word "bricks" as it found place in the Act as first enacted. It may however be stated that both the sides produced two articles, different in size and shape, in the court to show what a jhama is like. We would remain content by saying that as the decision of the Tribunal was accepted by the department, any departure from the same after a decade would not be equitable and so we state that jhama sold by the petitioners could not have been included in the assessment made by the Superintendent of Taxes for the period in question.

On the second question, namely, supply of bricks after July 1, 1976 though the agreement might have been made prior to July 1, 1976, we do not entertain any doubt that the same was subject to tax. This is apparent from the fact that tax was leviable on sale which took place after July 1, 1976. Shri Das however submits that as the dealer had not collected any tax from the purchaser, which in the present case was a Government department, the dealer might not be asked at this stage to pay sales tax as it would be a case of receiving money from the Government by one hand, and paying it back by the other hand. In this connection we have been referred to Collector of Customs & Collector of Customs and Central Exciseand Another Vs. Oriental Timber Industries, in para 16 of which the Supreme Court, while deciding the case in favour of the department, did not think it fit to ask the dealer to pay the tax after a long lapse of time which would have caused hardship and harassment to the dealer.

In this connection, Shri Majumder has submitted on instruction that other dealers have collected the tax from the purchasing departments and paid the same to the Sales Tax Department. We would like the petitioners also to do so. To this the concerned department would not raise any objection on the ground of limitation. If the petitioner succeeds in this venture, the tax realised by him shall be paid to the Sales Tax Department. If, however, any resistance is given by the department concerned, it is apparent that it would be inequitable to ask the dealer at this stage to pay the tax from his own pocket inasmuch as when the agreement was entered into with the department concerned. Sales tax was not leviable and so at that stage the dealer could not have asked the department to pay the sales tax. This observation of ours would not however apply to sales to private persons.

In the result, the petition is allowed as stated above.