Messrs. Haji Noor Ali Sowdagar & Sons Ltd. Vs. Commissioner of Sales, Tax, Chittagong Zone, 34 DLR (AD) (1982) 339

Case No: Civil Appeal No. 100 of 1981

Judge: Ruhul Islam,

Court: Appellate Division ,,

Advocate: A.M. Mahmudur Rahman,,

Citation: 34 DLR (AD) (1982) 339

Case Year: 1982

Appellant: Messrs. Haji Noor Ali Sowdagar & Sons Ltd.

Respondent: Commissioner of Sales Tax

Subject: Fiscal Law,

Delivery Date: 1982-4-13

 
Supreme Court
Appellate Division
(Civil)
 
Present:
F.K.M.A.  Munim, CJ.
Ruhul Islam, J.
Badrul Haider Chowdhury, J.
Shahabuddin Ahmed, J.
 
Messrs. Haji Noor Ali Sowdagar & Sons Ltd., Chaktai, Chittagong
……………….... Appellant
Vs.
Commissioner of Sales, Tax, Chittagong Zone
…………………Respondent
 
Judgment
April 13, 1982.
 
Sales Tax Act, 1951
Sections 4(b) & 17
Exemption from payment of sales tax as provided under section 4(b) of the Act When can be claimed.
 
Lawyers Involved:
M, Hassan, Advocate instructed by S.M, Huq, Advocate-on-Record, — For the Appellant,
A.M. Mahmudur Rahman, Advocate instructed by Md. Sajjadul Huq, Advocate-on-Record.—For the Respondent.
 
Civil Appeal No, 100 of 1981
From the judgment and order dated 24-6-1980 passed by the High Court Division in Application No. 157 of 1972.
 
JUDGMENT
Ruhul Islam J.
 
This appeal by special leave arises from a decision of the High Court Division on an application under section 17(2) of the Sales-tax Act, 1951 raising the question as to whether the assessee is entitled to claim adjustment on refund of the sales- tax paid by him at the stage of importation of raw mate­rials against the tax payable on the finished products.
 
2. The appellant is a manufacturer of washing soap, and since 1-7-66 is a licensed manufacturer. The assessee filed sales-tax return showing consolidated turnover at Rs. 14, 52,455/ for the four quarters coding on 30th June, 1967. The Sales Tax Officer, however, deter­mined the assessee's turnover at Rs. 14, 60,935/-and assessed tax thereon at Rs. 72,622/-. Facts in short are that the assessee imported certain raw materials such as tallow, cocoanut oil, caustic soda prior to 1-7 66, that is before the assessee became licensed manufacturer, and paid sale-tax on the importation of these raw materials amounting to Rs. 96,170/-. The asses­ses contended that on the relevant date there was an opening stock of those imported raw materials which were consumed during the accounting period and the assessee claimed credit of Rs. 54,433/- being the amount paid as sales-tax on the raw materials consumed, against the sales-tax liability of the period under assessment The assessee claimed ad­justment of the amount already paid as sales-tax against the liability for the four quavers ending on 30-6 67, reason being that sales tax could not be imposed twice in respect of the tame item. The Sales-tax Officer did not ac­cept the contention of the assessee and the claim for credit for Tk. 54,433/ was dis­allowed. However, the assesses was allowed credit of Rs. 18,189/- already paid by the as­sessee. The appeal preferred by the assessee was dismissed by the Appellate Assistant Com­missioner of Income-fax. The assesses being unsuccessful before the Appellate Assistant Commissioner of Income-tax and then before the Income-tax Appellate Tribunal, filed an application under section 17(1) of the Sales-tax Act before the Income-tax Appellate Tri­bunal sod prayed for referring the question framed therein to the High Court Division. The Tribunal by its order dated 21-4-72 rejected the application on the ground that no ques­tion of law arose out of the Tribunal. Thereafter the assessee filed an application under section 17(2) of the Sales-tax Act before the High Court Division framing four questions which had been framed in the application under section 17(1) of the Sales-tax Act, The High Court Division however, took up for decision only one question, namely, "whe­ther the assessee could claim adjustment or refund of sales-tax paid by the assessee at the s age of importation against the sales-tax payable on the finished products." The High Court Division also did not find any merit in the contention of the assessee and by the order dated June 24, 1980 rejected the applica­tion Thereafter the assessee moved this Court and leave was granted to examine the conten­tion whether upon a true construction of sections 4(b) and 27(1) of the Sales-tax Act the assessee was entitled to claim adjustment or refund of sales-tax paid al the stage of Importation of the raw materials against the sale-tax payable on the finished products sec­tion 27(i) of the Sales-tax Act reads as under:-
 
"27.—(1) Where partly manufactured goods are purchased by a licensed manu­facturer and tax has been paid on those goods OB importation or any previous sale, a refund of the amount of the tax so paid  shall be made to  the licensed manufacturer."
 
Section 4(b) of the Sales -tax Act reads as under:-
 
"4. Notwithstanding anything contained in section 3, the tax shall not be pay­able on—
****        *******
(b) goods imported by a licensed manufacturer if the goods are partly manu­factured goods."
 
3. Mr. M Hasan appearing for the appellant strenuously argued that washing soap was exempted from sales-tax under Notifica­tion No. S R.O, 475 (E)/65 dated 14-6-1965, and the exemption continued till 30-9-1966, but sale-tax at the rate of 5% was imposed on washing soap with effect from 1-7-66 vide notification No. S. R. O.114(R)/66 dated July 1, 1966. He submitted that the assessee rightly claimed that on the raw materials consumed in the manufacturing of washing soap sale-tax at the standard rate having been already paid at the Customs stage, the end products are liable to be exempted from payment of sales-tax, and the assessee is entitled to get credit of the amount already paid as sales-tax, against the outstanding sales-tax liability, Mr. Hassan argued that unless adjustment as prayed for is given, this will amount to double taxation. He further sub­mitted that the raw materials is question being partly manufactured goods within the meaning of section 2(12) of the Sales-tax Act, a component part of washing soap, which is subject to sales-tax, the sales-tax paid on the partly manufactured goods, is refundable, and the assessee is entitled to the credit of the sales-tax paid on the partly manufactured goods.
 
4. It is admitted that the appellant was not a licensed manufacturer at the time of importation of the raw materials. Section 4(b) provides for exemption in the cases of imports by licensed manufacturers. According to Mr. Hasan, the assessee being a licensed manufac­turer during the period under assessment and the partly manufactured goods having been consumed in the manufacturing of washing soap, the assessee should be treated as entitled to the benefit of the exemption provided under section 4(b). In support of his submissions Mr. Hassan also referred to section 27 (1). In view of clear language of section 4 (b) and section 27 (1) of the Sales-tax Act the argu­ment cannot be accepted. The learned Judges of the High Court Division were correct in taking the view that the import of raw mate­rials for using in the manufacture of washing soap must be by a licensed manufacturer. Section 4(b) speaks about goods imported by a licensed manufacturer. Similarly, section 17(1) speaks about purchase of partly manufactured goods by a licensed manufacturer. On examining sections 4(b) and 27(1) of the Sales-tax Act I have not the least doubt that the exemptions as contemplated in section 4(b) and the remedy as provided in section 27 (1) are not available to the assessee because he-was, not a ''licensed manufacturer" when partly manufactured goods were imported. Washing soap was made tax free under the Notification No. S.R.O. 475(E)/65 dated 14-6-65 and the exemption continued till 30-6-66 and sales-tax at the rate of 5% was imposed on washing soap under Notification No. S.R.O. 114(R)/66 dated 1-7-67, with effect from 1-7-66. In the absence of any provision either in the Noti­fication or any change in the existing law, that is, the charge section and the exemption provided in section 4(b) of the Act, the Sales-tax Officer has not got the authority to grant the relief to the assessee. Only because wa­shing soap was included as one of the taxable items subsequently, that will not make the importer of the raw materials of washing soap entitled to claim adjustment of the sales-tax paid  on the  raw materials against his sales-tax liability on the manufactured pro­ducts, that is, the end products. It may cause some hardship, but in the face of the clear language of the statutory provisions, the con­tention of the assessee cannot be accepted. In my opinion the question has been correctly decided by the High Court Division.
 
Therefore, the appeal is dismissed with costs.
 
Ed.