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Judgment
G.C. Bharuka, J.—The present reference arising out of an order passed by this Court u/s 33(2) of the Bihar Sales Tax Act, 1959, (hereinafter to be referred to as the Act only) involves the following questions of law : (1) Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that the petitioner was not entitled to the exemption on and from 2.4.70 but only from 10.7.70.?
(2) Whether on the facts and circumstances of the case, the Tribunal is right in holding that registration by the Industries department was to take affect only from 10.7.70 and not from the date of making of the application on 2.4.70?
The relevant facts for the present purpose may be set out as follows : The assessee has set up a small scale industries, which has commenced its production on 4.4.1969. On 2.4.1970, it filed an application before the Industries Department of the Government of Bihar for grant of an registration certificate, which was granted on 10.7.70. The assessee claimed exemption of sales tax under the Act with effect from the date of filing of the application i.e., 2.4.1970 in accordance with the notification of the State Government bearing no. STGL-E-1013/69-9924 F.T. dated 19.9.69. But the Tribunal took the view that the assessee is entitled to exemption from the date of actual grant of certificate of registration and not from the date of filing of the application by the assessee.
Shri K.N. Jain appearing for the assessee has submitted that the assessee is entitled to the benefit of the notification as promised and ensured therein to the small-scale industries, which has been issued in consonance with the Government policy to accelerate the pace of industrialisation in the State and the intention of law-makers and the above all the object behind it can not be defeated because of inactions and casualness on the part of the executing authorities. His submission is that once an application is filed, which is otherwise in order, then whenever the registration certificate is granted in pursuance thereof, it should be deemed to have become effective from the date when it was applied for. On the other hand Learned Counsel for the other side has submitted that the exemption is a privilege and not a right and, therefore, the claim of exemption can be based only on a strict compliance of the statutory provisions.
Before proceeding to examine the rival contentions, it will be better to quote the notification, which is as under : --
19th September, 1969
No. STGL - E - 1013/69 - 9924 - F.T. - In exercise of the powers conferred by clause (b) of sub-section (3) of Section 4 of the Bihar Sales Tax Act, 1959, (Bihar Act XIX of 1959), the Governor of Bihar is pleased to exempt from the levy of both "general sales tax" and "special sales tax", sales of finished products by the newly set up small-scale industries at the first stage of sale after production for a period of five years from the date the Industry starts its production.
Explanation -(1) "Small Scale Industries" means an industrial unit with an investment up to Rs. 7.5 lacs on plant and machinery, excluding the value of land and building, and approved and registered by the Industries Department of the Government of Bihar. (2) "Newly set up small-scale industries units" includes such units which have already been set up but have not yet completed a period of 5 years from the date of starting of production.
The notification shall remain in force from 19th June, 1969 to 31st March, 1974.
By order of the Governor of Bihar. N. Nagmani Addl. Secretary to Government
The notification provides for grant of exemption from levy of both "general sales tax" and "special sales tax". Under this notification newly set up Small Scale Industries as defined under the explanation are entitled to exemption from tax on sales of their finished products at the first stage of sale after production for a period of five years from the date the industry starts its production. In view of the explanation such industries should be approved and registered by the Industries Department of the Government of Bihar. The notification, however, does not provide as to at what point of time the approval and registration from the Industries Department is to be obtained by such Small Scale Industries. But it would be beyond the scope of this reference to enter into this aspect of the matter and, therefore, I refrain myself from entering into that aspect.
In the present reference the only question to be examined is as to whether the small scale industries will be deemed to be approved and registered by the Industries Department from the date of filing of the application or from the date when the registration certificate is actually granted. The notification in question does not provide anything in this regard. It does not even provide the time by which an application is to be made or the outer time limit by which it is to be granted. Therefore, interpretation, of the notification per se is of no avail for seeking answer to the question involved in this reference. Therefore, the issue has to be resolved keeping in view the principles of equity and fair play which are now being firmly recognised as embedded in Article 14 of our Constitution. The doctrine of strict compliance frequently applied in tax jurisprudence has to subserve the requirement of fair play.
A question similar to that with which we are faced, had fallen for consideration before the Supreme Court in the case of the Assessing Authority and others Vs. Patiala Biscuits Manufacturers Pvt. Ltd., reported in (1977) 39 S.T.C. 381, with reference to Section 7 of the Punjab General Sales Tax Act, 1948, which provided for registration of dealers. In that case the assessee had filed application for grant of registration certificate on 1st January, 1966, which was granted only on 27th March, 1966 with effect from the date of application. The Assessing Officer treating the dealer as unregistered, for the period prior to actual grant of registration certificate, disallowed various claims. On these facts when the case went to Supreme Court, their Lordships held that, "provisions have to be construed in accord with the general tenor of the section as a whole, and in a manner which would avoid oppressive, unreasonable and anomalous results". Their Lordships also approved the view taken by the High Court in the case of Chandra Industries Vs. Punjab State (1972) 29 S.T.C. 558 wherein in the context of a dealer making an application for registration, it was held that, "done all which lay in his power to obtain the registration certificate, should pull down his shutters and keep his business closed under pain of being punished u/s 23(1) and await indefinitely the pleasure and leisure of the prescribed authority in issuing the registration certificate. Adoption of such a construction would be to make the applicant liable to punishment for the laches and delays of the authority and its office.
A Bench of this Court also took the similar view in the case of Parshva Properties Ltd. Vs. The State of Bihar, reported in (1975) 35 S.T.C., 324 (at p. 330) by posing questions : "Can it be said that the intention of the legislature was to defeat the claim or relief to an assessee for no fault of his merely because the departmental authorities, for whatever reason, may take some time in actually issuing such a certificate? Can it then be said that the purchaser and the dealer who sells to such a purchaser, who have actually done all that was required of them by the statute to be done, should be made to suffer merely because of the procedural delays in the grant of such certificates? The answer to these question, in my opinion, can be one and one only : The purchaser or the dealer dealing with him can not, in the absence of anything to the contrary, either expressly or by necessary intendment, be made so to suffer".
In the case of Shyam Cold Storage Vs. Sales Tax Officer, Shahjanpur, reported in (1976) 38 S.T.C., 386, it has been held that, "It is, however, well-settled that a person can not be made to suffer on account of laches or delay on the part of public authorities. The petitioner had made the application for registration on 8th April, 1974. That application was complete in all respects and no defect had been found or pointed out to us in that application. The mere fact that the Sales Tax Officer did not pass the order immediately cannot possibly be a ground for making the registration effective from the date of the order. Any other view, would inflict unnecessary hardship on a dealer for no fault of his, in case orders are not passed expeditiously on his application by the appropriate authority". Similar view has been taken by the Orissa High Court in the case of Subhash Chandra Ghosh Vs. State of Orissa reported in (1970) 26 S.T.C., 211.
Keeping in view the foregoing discussions, in the facts and circumstances of the case, it is held that registration certificate of the assessee had taken effect from the date of the application i.e. 2.4.1970 making him entitled to exemption pursuant to the notification in question. Thus both the questions referred to us are answered in negative and against the department with a cost assessed at Rs. 500/- (five hundred). Let a copy of this judgment be transmitted to the Commercial Taxes Tribunal, Bihar, Patna.
S.K. Chattopadhyaya, J.
I agree.