Sales Tax Judgement

M/S Arvind Techno Engineers Pv vs The State Of Bihar &Amp;
Ors on 5 February, 2010

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Article 226 in The Constitution Of India 1949
The Finance Act, 1996
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Civil Writ Jurisdiction Case No. 4490 of 2006 -----------
In the matter of an application under Article 226 of the Constitution of

India. -----------
M/S Arvind Techno Engineers Private Limited Dehri-on-Sone,

District- Rohtas through its Managing Director- Arun Jain, son of Late
Nirmal Prasad Jain Dehri-on-Sone, Rohtas --- -- ----------- Petitioner.
Versus
1. The State of Bihar
2. The Commissioner of Commercial Taxes, Bihar, Patna.
3. The Deputy Commissioner of Commercial Taxes, Sasaram, Circle,

Sasaram.
4.The Assistant Commissioner of Commercial Taxes, Sasaram Circle.
5. M/S Somdutt Builders Limited- N.C.C (J.V.) Dehri-on-Sone,

District- Rohtas ---- -- --------- Respondents. ------------
For The Petitioner : Mr. K.N. Jain,
Sr.Advocate,
Mr. Rabindra Prasad &

Dr. R. Usha.
For The Respondent : Mr. Sunil Kumar Karn, A.C. to A.A.G. 6.
--------
PRESENT
THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE

HON'BLE MR. JUSTICE KISHORE K. MANDAL S. K. Katriar &
Kishore K. Mandal, JJ. This writ petition is directed against the

following orders of assessment passed by the learned Assistant
Commissioner of Commercial Taxes, Sasaram Circle, Sasaram, against
the petitioner under the provisions of the Bihar Finance Act, 1981
(hereinafter referred 2
to as the Act), whereby he has made best-judgment assessment with

respect to the taxable turnover of the petitioner for having executed
works contract within the Sasaram Circle, and has assessed it to tax
under the Act:
(i) Order dated 7.2.2006 (Annexures 8 series), with respect to the

financial year 2002-2003.
(ii) Order dated 7.2.2006 (Annexures 8 series), with respect to the

financial year 2003-2004.
(iii) And the order dated 7.2.2006(Annexures 8 series), with respect to

the financial year 2004-2005.
2. According to the writ petition, Somdatt Builders Ltd.(hereinafter

referred to as 'the main contractor'), has been awarded contract for
laying down and/or strengthening, widening, and improvement of
national highway by the National High Way Authority, Government of
India. The main contractor has awarded sub-contract of its work to the
petitioner company by an agreement between them. The petitioner's
further case is that the privity of contract is between the Authority and
the main contractor, and the latter has been submitting returns and
paying taxes under the Act to the State of Bihar. The learned Assessing
3
Officer declined to accept this position, and has assessed the petitioner
to tax under the Act notwithstanding the petitioner's contention that
the main contractor has returned the figures with respect to the work
off loaded to the petitioner, and (the main contractor) has paid taxes
for the three financial years in question.
3. While assailing the validity of the impugned orders, learned counsel

for the petitioner submits that the position is evident that the
petitioner has worked only for the main contractor in the Sasaram
Circle. He next submits that the assessment orders with respect to the
main contractor have been completely over-looked by the learned
Assessing Officer. He also submits that the respondent authorities
have disclosed their case in the counter affidavit in this Court which
shows that the learned Assessing Officer has taken into account
documents which are of later dates than those of the assessment
orders. He relies on the following reported judgments in support of his
submission that double taxation with respect to work contracts is
impermissible in law. Once it is established that the main contractor
had paid the taxes under the Act with respect to the works contract in
question, the 4
sub-contractor can not be made liable. He relies on the following

reported judgment:
(i) State of Andhra Pradesh and others Vs. Larsen & Toubro Limited
and others, 2008(9) S.C.C.191.
(ii) Hindustan Dorr-Oliver Ltd. and another V. Union of India and

others, 1989 (75) S.T.C.211(Pat.).
4. Learned Government Counsel submits that the petitioner did not

file returns before the learned Assessing officer in spite of repeated
opportunities except for one quarter for the financial year 2002-2003.
5. We have perused the materials on record and considered the
submissions of learned counsel for the parties. It appears to us that the
petitioner is a registered contractor under the provisions of the Act. It
further appears that he has executed works contract in the Sasaram
Circle and was, therefore, liable to submit returns which it did not do
except for one quarter for the financial year 2002-2003, showing gross
turn- over as NIL. It is evident on a perusal of the assessment order(s)
that the learned Assessing Officer gave repeated opportunities to the
petitioner to appear and produce documents in support of its case. The
petitioner did not 5
produce any material or document in support of its case, and indeed

did not set up any case at all before the learned Assessing Officer
creating a clear impression that it was trying to evade disclosure of the
relevant information. The petitioner was represented by its counsel,
and did not avail of the repeated opportunities afforded to it to
produce the relevant documents. The learned Assessing Officer was
very indulgent to the petitioner by adjourning the matter repeatedly
for the purpose. The petitioner was determined to adopt unethical
practices of total suppression of material facts and documents. The
learned Assessing Officer was, therefore, left with the only option of
best-judgment assessment. In view of complete absence of materials
before the learned Assessing Officer, it was neither known to the
learned Assessing Officer, nor is known to us, that Somdatt Builders
Ltd. is the main contractor and the petitioner is the sub- contractor.
There was no material to show that the main contractor had paid the
taxes. It is a possible situation that the privity of contract may be
between the Authority and the petitioner. On a perusal of the
impugned orders, it is evident that the learned Assessing Officer acted
with full fairness, giving repeated opportunities 6
to the petitioner to produce materials and documents in support of its

case and was driven to the course of best-judgment assessment. As
stated above, the petitioner has /had the audacity of not submitting its
returns except for one quarter and that too showing gross turn-over as
NIL. We are of the view that the learned Assessing Officer acted with
great care and caution in determining the taxable turn-over of the
petitioner and has reached the conclusions which are essentially in the
domain of facts. In exercise of writ jurisdiction, we do not find it
possible to examine the same. We entirely agree with the view taken
by the learned Assessing Officer.
6. Learned counsel for the petitioner has made attempts before us to

criticize some of the submissions made in the counter affidavit along
with Annexures thereto, in an effort to satisfy us that irrelevant
materials has been taken into account by the learned Assessing
Officer. The attempt on the part of the petitioner is tantamount to
converting this Court into one of Assessing officer. He is not mindful
of the position that it is not a forum of facts, and it is difficult for us to
go into those questions. Had this been placed before, and brought to
the 7
notice of, the learned Assessing Officer, then this Court might have
been in a position to go into those questions in exercise of supervisory
writ jurisdiction to find out whether or not the conclusions arrived at
by the learned Assessing Officer are grossly unjust and arbitrary, or
are possible conclusions.
7. Learned counsel for the petitioner has relied on the two reported
judgments which undoubtedly are to the effect that in a case of works
contract, double taxation is impermissible. If the main contractor has
been taxed for the goods incorporated in the production of the final
product, then the sub-contractor can not be fastened with the liability
of sales tax for the same goods. We are of the view that, it is an equally
possible situation that there may be a contract between the main
contractor and sub- contractor that the entire tax liability shall be
discharged by the sub-contractor in which case the latter is surely
liable for the taxation under the Act. No case at all was made out
before the learned Assessing Officer. In that view of the matter, the
judgments are inapplicable to the facts and circumstance of the
present case. 8
8. In the result, there is no merit in this writ petition. It is accordingly
dismissed. There shall be no order as to costs.
( S. K. Katriar, J.)
(Kishore K. Mandal, J.)
High Court Patna,
Dated 5th February, 2010.
Vinay/ NAFR

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M/S Arvind Techno Engineers Pv vs The State Of Bihar &Amp;

Ors on 5 February, 2010

Civil Writ Jurisdiction Case No. 4490 of 2006 -----------

In the matter of an application under Article 226 of the Constitution of

M/S Arvind Techno Engineers Private Limited Dehri-on-Sone,

1. The State of Bihar

2. The Commissioner of Commercial Taxes, Bihar, Patna.

3. The Deputy Commissioner of Commercial Taxes, Sasaram, Circle,

4.The Assistant Commissioner of Commercial Taxes, Sasaram Circle.

5. M/S Somdutt Builders Limited- N.C.C (J.V.) Dehri-on-Sone,

For The Petitioner : Mr. K.N. Jain,

Mr. Rabindra Prasad &

For The Respondent : Mr. Sunil Kumar Karn, A.C. to A.A.G. 6.

THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE

Kishore K. Mandal, JJ. This writ petition is directed against the

to as the Act), whereby he has made best-judgment assessment with

(i) Order dated 7.2.2006 (Annexures 8 series), with respect to the

(ii) Order dated 7.2.2006 (Annexures 8 series), with respect to the

(iii) And the order dated 7.2.2006(Annexures 8 series), with respect to

2. According to the writ petition, Somdatt Builders Ltd.(hereinafter

3. While assailing the validity of the impugned orders, learned counsel

sub-contractor can not be made liable. He relies on the following

(ii) Hindustan Dorr-Oliver Ltd. and another V. Union of India and

4. Learned Government Counsel submits that the petitioner did not

produce any material or document in support of its case, and indeed

to the petitioner to produce materials and documents in support of its

6. Learned counsel for the petitioner has made attempts before us to

(Kishore K. Mandal, J.)

High Court Patna,

Dated 5th February, 2010.

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