Patna High Court
United Breweries Limited vs The State Of Bihar on 24 January, 2024
Bench: Chief Justice, Rajiv Roy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Miscellaneous Appeal No.1050 of 2018
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United Breweries Limited (Formerly M/s Millennium Beer Industries
Limited) havinh its registered office at UB Towers, U.B. City No.24, Vittal
Mallya Road, Bangalore 560001 through its Authorised Signatory Shri Ajay
Kumar Singh, aged about 53 years, Son of Late Sarbdeo Singh, Resident of
Shail Bhawan, R.M.S. Colony, Kankarbagh, P.S. Kankarbagh, District Patna.
... ... Appellant/s
Versus
1. The State Of Bihar through the Commissioner of Commercial Taxes, Bihar,
Patna having its office at Vikas Bhawan, Bailey Road, Patna.
2. The Deputy Commissioner of Commercial Taxes, Patliputra Circle,
Patliputra.
3. The Assistant Commissioner of Commercial Taxes, Patliputra.
4. The Commercial Taxes Officer, Patliputra.
... ... Respondent/s
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Appearance :
For the Appellant/s : Mr. Satyabir Bharti, Advocate
Ms Kanupriya, Advocate
Mr. Abhishek Kumar, Advocate
For the Respondent/s : Mr. Vikash Kumar, Advocate
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CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE RAJIV ROY
CAV JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 24-01-2024
The following substantial questions of law
arise in the above case :-
1. Whether under Section 3 of the Bihar
Tax on Entry of Goods into Local Areas for
Consumption, Use or Sale Therein Act, 1993 read
with Entry 52 List II, as it existed prior to its
repeal, mere Entry of Goods into a local area, is
Patna High Court MA No.1050 of 2018 dt.24-01-2024
sufficient for levy of 'Entry Tax', or such entry
should be for the purposes of consumption, use
or sale in the State of Bihar?
2. Whether since certain quantity of goods
were destroyed in transit and storage at the
warehouse, the appellant is entitled to refund of
Entry Tax deposited on such stock and enable
refund by way of an adjustment against the VAT
liability?
2. The assessee is engaged in the manufacture
of beer brands, which are imported and sold within the State
of Bihar. The appellant while importing beer from breweries
situated outside the State of Bihar through stock transfer
deposit Entry Tax on the import value of beer. The Entry Tax
paid at the rate of 16% is set off on the tax payable on beer
sold within the State, which in the subject year was at the rate
of 50%. In the financial year 2008-09, the appellant deposited
Entry Tax of Rs. 2,66,86,475/-. It is alleged that beer valued at
Rs. 12,32,966/- was lost in transit and while stored in the
godown, due to breakage. It is the contention of the appellant
that the stock so destroyed was never sold, used or consumed
Patna High Court MA No.1050 of 2018 dt.24-01-2024
within the State and hence, the Entry Tax paid will have to be
refunded.
3. The assessment passed based on the entire
Entry Tax being set off against the VAT liability resulted in an
audit objection. Reassessment was carried out and the tax
component with respect to the value of destroyed stock was
denied set off in the final liability.
4. The Appellate Authorities confirmed the
order of reassessment against which the instant appeal was
filed by the assessee. The learned counsel for the assessee
relied on Hindustan Lever Ltd. v. State of Bihar; (2003) 1
PLJR 535 to contend that the Entry Tax paid would be
entitled to be reduced from the total liability, when the
damaged goods were not sold within the State. Reliance was
placed on Unitech Wireless (Tamilnadu) P. Ltd. v. State;
2016 (1) PLJR 147, to contend that the intention not to
consume, sale or use need not be there at the time of import of
goods. It was held therein, that, in the normal course of
running of a business, if there is no actual consumption, sale
or use within the local area, then there can be no levy of Entry
Tax on import of such goods. Reliance is also placed on
Indian Oil Corpn. v. Municipal Corpn., (1993) 1 SCC 333,
Patna High Court MA No.1050 of 2018 dt.24-01-2024
wherein it was held that the State legislature was competent to
levy tax only on the entry of goods for consumption, use or
sale into a local area; wherein the issue was with respect to
the levy of Octroi by a Municipality on petroleum products
transported by the oil company to its depot situated within
municipal limits for export thereof to dealers outside the
municipal limits, for consumption, use or sale in the limits
outside the limits of the municipality, within which was
located the godown.
5. The learned Government Advocate submits
that the issue is covered squarely by the decision in Division
Bench in M.A. No. 149 of 2015 titled as M/s ACC Limited v.
State of Bihar & Ors. dated 30.11.2023. The learned
Government Advocate also relies on Associated Cement
Companies Ltd. v. State of Bihar; (2004) 7 SCC 642.
6. The issues are squarely covered and is no
longer res integra going by the decision of the Hon'ble
Supreme Court in Associated Cement Companies Ltd.
(supra). The decision in Hindustan Lever Ltd. (supra) was
considered in M.A. No. 149 of 2015 (supra). In Hindustan
Lever Ltd. (supra) the goods brought into the Patna local area
were sold to persons in other local areas and stock transfered
Patna High Court MA No.1050 of 2018 dt.24-01-2024
outside the State thus establishing that the goods were not
brought into the local area for consumption, sale or use within
the local area. Even then, it was found that it was for the
dealer to prove to the satisfaction of the assessing authority,
that the import was for the purpose of re-export and not for
the consumption, sale or use within the local area. The
decision in Unitech Wireless (Tamilnadu) P. Ltd. and
Indian Oil Corpn. (both supra) were also only to the said
effect.
7. We perfectly agree with the opinion of the
Division Bench in Unitech Wireless (Tamilnadu) P. Ltd.
(supra) that the intention not to consume, sale or use need not
be there at the time of import of goods. But Unitech Wireless
(Tamilnadu) P. Ltd. (supra) cannot be relied on by the
appellant since the goods were brought into the State for sale,
which did not fructify, only because they were destroyed.
When there is an import of goods into the local area of the
State, definitely there should be payment of Entry Tax. If the
said goods are not consumed, sold or used within the local
area; as was the case in the cited decision, wherein goods
were then exported outside the local area, then necessarily a
refund could be claimed, based on the substantiation of such
Patna High Court MA No.1050 of 2018 dt.24-01-2024
export having been carried out. This is a reaffirmation of the
principle that if the goods are not used, consumed or sold
within the State of Bihar, then the fact should be proved by
sufficient evidence.
8. The decision in M.A. No. 149 of 2015
(supra) also considered Indian Oil Corpn. (supra). M.A. No.
149 of 2015 (supra) as is seen from paragraph nos. 18 to 20 of
the decision are extracted hereunder:-
18. Indian Oil Corporation Ltd.
(supra) is a case on point, dealing with the set-off
of entry tax when the imported goods did not
suffer further liability to tax within the State of
Bihar at the hands of the importer itself. The
assessee therein imported crude oil from outside
the State of Bihar, manufactured high speed oil,
petrol etc. at its refinery within the State and
transferred it to its branch at Patna from where it
was sold inter alia to other oil marketing
companies (OMC) who in turn sold it to retailers,
end consumers through its own petroleum outlets
inside and outside Patna; which sales were
effected by the assessee too. The sale to OMCs
did not suffer tax under the Bihar Finance Act,
2005 since by a notification, the point of levy of
tax on petroleum goods, sold to OMCs, was
shifted to the point of their sale to retailers and
end consumers. The appellant paid entry tax at
the rate of 16% and was liable to sales tax @
24.5%, from which total liability, set-off was
claimed and accepted by the department; which
later stood reversed giving rise to proceedings
before the Advance Ruling Authority. After
Patna High Court MA No.1050 of 2018 dt.24-01-2024
copious reference to the provisions the Hon'ble
Supreme Court held so in paragraph 13:
"13. Since the set-off in question de-
pends upon the interpretation of Sec-
tion 3(2) of the Entry Tax Act, it is ne-
cessary to state, at the outset, that the
following conditions need to be satis-
fied for claim of set-off under the said
provision:
(i) First and foremost, under Section
3(2) itself, the tax leviable by way of
entry tax can only be paid by every
dealer liable to pay tax under the VAT
Act;
(ii) The set-off can only be granted
if the assessee is an importer of sched-
uled goods, who is liable to pay tax un-
der the VAT Act;
(iii) The assessee must incur tax li-
ability at the rates specified under Sec-
tion 14 of the VAT Act;
(iv) This must only be by virtue of
the sale of imported scheduled goods;
and
(v) "His" tax liability under the VAT
Act will then stand reduced to the ex-
tent of tax paid under the Act."
19. The assessee being a registered
dealer under the Finance Act was found to be
satisfying the first condition and though the
assessee was the importer of the goods, it had no
liability to pay VAT on its sales to OMCs thus not
satisfying the second & third condition. The
assessee also did not satisfy the fourth condition
since the words employed in the provision; 'or
sale of goods manufactured by consuming such
Patna High Court MA No.1050 of 2018 dt.24-01-2024
imported scheduled goods' which connotes a sale
by the importer itself, who alone is entitled to the
set-off as per the fifth condition. The dictum
squarely applies in the instant case where
admittedly the appellant-assessee did not suffer
tax on the imported goods within the State of
Bihar thus disabling the appellant from claiming
set-off to the extent of such imported goods
which did not suffer tax within the State of Bihar.
20. Associated Cement Company
Limited (supra) strongly relied on by the assessee
was distinguished in Ĭndian Oil Corporation Ltd.
(supra) on two counts; one, that there the
question was raised of an exemption which does
not efface the liability to tax and next that the
words: 'by virtue of sale of imported scheduled
goods or sale of goods manufactured by
consuming such imported scheduled goods' was
added to the provision granting set-off by way of
an amendment, later to the ACC case. It was
categorically held that set-off is a concession
which none can claim as a matter of right unless
the specific conditions under which it is granted
are satisfied. The matter was remanded only for
consideration of the ground raised of no liability
of entry tax since the OMC's to which the
appellant had sold petroleum products had sold it
outside Patna and thus the goods were not
consumed, used or sold within the local limits of
Patna.
9. We perfectly understand that there could be
no substantiation of the claim of breakage. The learned
counsel also submitted that for the purpose of levy of excise
duty, breakage is reckoned, which is available in the statute
itself. Insofar as the import into the State for consumption, use
Patna High Court MA No.1050 of 2018 dt.24-01-2024
or sale, there is no exemption given to breakage under the
statute levying Entry Tax or the VAT Act and there cannot be
any incorporation of the concession given in another statute,
to the taxing statute, by this Court. Further, it has to be
noticed that if such unlimited breakage is permitted then even
without any breakage, the same could be claimed for refund.
It is for the State to decide whether such benefit can be
conferred on the assessee. So long as such benefit is not
conferred, it is for the assessee to take proper care and ensure
that there is no breakage.
10. We find absolutely no reason to entertain the
appeal. The questions of law are to be answered against the
assessee and in favour of the revenue.
11. The appeal stands dismissed.
(K. Vinod Chandran, CJ)
Rajiv Roy, J: I agree
(Rajiv Roy, J)
Aditya Ranjan/-
AFR/NAFR AFR
CAV DATE 16.01.2024.
Uploading Date 24.01.2024.
Transmission Date
