Ranchi: A Jharkhand High Court Bench of Chief Justice R Banumathi and Justice Aparesh Kumar Singh has termed the stock transfer of products manufactured by the Tata Steel Limited after purchasing raw materials at discount under the Bihar Finance Act 1981, Section 13-1 (B) as contravening the said Act.
This decision of the HC will lead to a revenue profit of Rs 42 crore to the commercial tax department of the state government.
Under the Bihar Finance Act 1981, Section 13 (1) B, there was a provision that the registered traders could produce goods after purchasing raw materials at a discounted rate. But such produced goods were required to be sold within the state or in the inter-state trading. Under the said provision, the company was purchasing raw materials at discounted rate, but a substantial stock of the products were reportedly transferred to other branches of the company in other states and the state and inter-state trading of the products was much lower than the out-of-state sales, sources said.
The commercial tax authorities had imposed full tax on the raw materials utilized in production of goods transferred in stock to other states. An additional tax of Rs 42 crore approximately was demanded by the department for the period 2004-05 and 2005-06. Tata Steel Limited had appealed against this demand of the tax authorities before the Jamshedpur Division of the Joint Commissioner (Appeal), but the appeal was rejected. Again the company went in appeal to the Commercial Tax Tribunal, which too, rejected the appeal.
The HC Bench heard the appeal plea filed by the company against the Commercial Tax Tribunal for three consecutive days. The appeal was filed in the year 2001. Holding the stock transfers as against the provisions of the Finance Act, the Bench rejected the plea for relief against the order of the commercial tax department to pay Rs 42 crore as additional tax.
Advocates AR Choudhary and Sumit Gadoriya argued for the company while public prosecutor Rajesh Shankar and Abhay Prakash argued for the government.