Bihar Finance Act, 1981

Tata Iron and Steel Co. Ltd., a dealer under the Bihar Finance Act, operated a Hot Rolled Mill (HRM) and later set up a Cold Rolled Mill (CRM) as a diversification. The CRM received tax exemption under Bihar's 1995 Industrial Policy notifications 478/479, which was later withdrawn but restored by the Supreme Court. Aft…

Associated Cement Companies Ltd., a cement manufacturer, was granted sales‑tax exemption on incremental production under Bihar's 1995 Industrial Policy (effective 1‑Apr‑1998 to 31‑Mar‑2007). The company had been adjusting entry tax paid under the Bihar Entry of Goods into Local Areas Act, 1993, against its sales‑tax li…

M/s Eureka Forbes Ltd., the appellant, challenged the assessment of sales tax on its vacuum cleaners for the years 1990-91 to 1993-94, contending that the product should be taxed at the standard 8% rate. The State of Bihar, relying on Entry 81 of the Notification dated 26-12-1977 issued under Section 12 of the Bihar Fi…

The State of Jharkhand issued Notification S.O. No.25 on 25 June 2001 reducing the Central Sales Tax rate to 3% for the "sale of all types of glass and glass sheets" in interstate trade. M/s Laopalarg Ltd., a manufacturer of glassware, claimed that its products fell within the "types of glass" and therefore were eligib…

The State of Jharkhand sought to deny Tata Cummins Ltd. the sales‑tax exemption granted under Industrial Policy 1995 and notifications 478/479, arguing that the company did not have legal title to the land and could not produce a registered lease of fifteen years. Tata Cummins contended that it owned the building in wh…

Larsen & Toubro Ltd. filed returns under the Bihar Finance Act, 1981 for AY 1991‑92 and received an assessment order in 1996. An audit by the Auditor General identified an exemption of Rs 3.12 crore for consumables that, in the auditor’s view, should have been taxed, leading to a show‑cause notice in 2000 and a re‑asse…

The State of Bihar issued a notification requiring carriers transporting goods exceeding a specified quantity to carry Forms XXVIII A or XXVIII B as permits for verification and assessment of sales tax. Harihar Prasad Debuka, a registered dealer, was penalised for not correctly completing the form and challenged the no…

Steel City Beverages Ltd., a soft‑drink manufacturer, claimed deferment of sales‑tax on its investment in bottles and crates under the Bihar Sales Tax Supplementary (Deferment of Tax) Rules, 1990. The District Level Committee granted deferment on 90% of its fixed capital investment but excluded bottles and crates, a de…

The State of Jharkhand appealed against a Jharkhand High Court order that had treated a temporary registration certificate issued to Ambay Cements as the "prior permission" required for sales‑tax exemption under the Bihar Industrial Promotion Policy, 1995. The policy, as amended by Notifications S.O. 57 and 58 dated 2 …

The State of Bihar introduced an Industrial Policy in 1993 that, under clause 10.4(i)(b), granted a seven‑year sales‑tax exemption on raw‑material purchases to old industrial units whose plant‑and‑machinery investment did not exceed Rs 15 crore as of 1‑April‑1993. A notification issued on 4 April 1994 under Section 7 o…

The appellants, dealers and manufacturers of electronic goods in Bihar, relied on two notifications issued under Section 7(3) of the Bihar Finance Act, 1981 which exempted sales tax and purchase tax on electronic raw materials and finished electronic goods. For the assessment year 1989‑90 they claimed a similar exempti…

Parle Biscuits Ltd., a biscuit manufacturer, sought the concessional 4% sales‑tax rate on cardboard (corrugated) boxes used for packing, a benefit previously enjoyed by its predecessor under Section 13(1) of the Bihar Finance Act, 1981. After the 1985 amendment inserting clause (e) to Section 13(1) and the issuance of …

Indian Oil Corporation Limited (IOCL) imports crude oil into Bihar, refines it and sells petroleum products to two oil marketing companies (BPCL and HPCL) and to local retailers. IOCL pays Entry Tax when the products enter the Patna local area but claims that Value Added Tax (VAT) should be set off against this Entry T…

Universal Hydrocarbons Co. Ltd. purchased raw petroleum coke (RPC) and, after a manufacturing process, produced calcined petroleum coke (CPC). Sales tax was levied on the sale of CPC under the Bihar Finance Act, 1981 and the Central Sales Tax Act, 1956. The company claimed a refund under Section 15(b) of the Central Sa…

Tata Steel Ltd. had been granted an eight‑year sales‑tax exemption under the Bihar Industrial Policy (1995‑2000) and enjoyed the benefit from August 2000 to March 2006. When the Jharkhand Value Added Tax Act, 2005 came into force, the exemption was withdrawn and the company applied to convert the remaining exemption pe…

The State of Bihar imposed a 5% sales tax on all hosiery goods sold within the state from October 1, 1983, and by a notification dated August 1, 1984 exempted hosiery goods manufactured in Bihar as an incentive to local industry. The West Bengal Hosiery Association and other petitioners filed a writ petition under Arti…

The respondents, manufacturers of coke, were assessed for tax under the Bihar Finance Act, 1981 and the Deputy Commissioner issued revised assessment orders. After a change in the Deputy Commissioner, the new officer highlighted irregularities and informed the Joint Commissioner, who then exercised suo motu revision po…

Kalyanpur Cement Ltd., a sick industrial unit, sought a five‑year sales‑tax exemption under Bihar's Industrial Policy, 1995, as a condition for a financial restructuring package. The State repeatedly assured the company that a notification would be issued, but later withdrew the promise and issued orders on 6 January 2…

Tata Engineering & Locomotive Co. Ltd., a manufacturer of motor vehicles, purchased items such as tyres, tubes and batteries and claimed a concessional sales tax rate of 1% under Section 13(1)(b) of the Bihar Finance Act, 1981 and Notification S.O. 604. The Deputy Commissioner rejected the claim, holding that these ite…

The Supreme Court considered whether the sales‑tax exemption granted to industrial units under Bihar’s 1995 Industrial Policy (S.O. 478 dated 22‑12‑1995) survived the bifurcation of Bihar and the creation of Jharkhand. The Court held that Sections 84 and 85 of the Bihar Reorganisation Act, 2000 expressly continue all l…

The appellants, major pharmaceutical manufacturers, challenged the Bihar Finance Act, 1981 which imposed a 10% surcharge on dealers with a gross turnover exceeding Rs.5 lakh and prohibited those dealers from passing the surcharge on to purchasers. They argued that the provision conflicted with the Drugs (Price Control)…

M/s BOC India Ltd., a manufacturer and dealer of oxygen gas, supplied the gas to M/s Tata Iron & Steel Co. Ltd. (TISCO) for steel production. Oxygen was listed in BOC's registration certificate as a good taxable at 3%, but later notifications reduced the rate for raw materials used directly in manufacture to 2%. BOC be…

The State of Jharkhand challenged the tax treatment of oxygen gas sold by Linde India Ltd to Tata Steel, contending that it is not a "raw material" for steel production under Section 13(1)(b) of the Bihar Finance Act, 1981 and therefore should attract the normal 3% sales tax rather than the concessional 2% rate. The Hi…

Tata Cummins Ltd, a diesel engine manufacturer, obtained an eight‑year exemption from sales tax on raw material purchases under the Bihar Industrial Policy, 1995, valid until 31‑Dec‑2003. After the creation of Jharkhand, the state introduced the Jharkhand Industrial Policy, 2001, effective 15‑Nov‑2000, whose Clause 28.…