THE COMMISSIONER OF COMMERCIAL TAX, RANCHI AND ANR. versus M/S. SWARN REKHA COKES AND COALS PVT. LTD. AND ORS.

Citation: [2004] SUPP. 2 S.C.R. 633 · Decided: 07-05-2004 · Supreme Court of India · Bench: N. SANTOSH HEGDE

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

THE COMMISSIONER OF COMMERCIAL TAX, 
RANCHI AND ANR. 
v. 
MIS. SWARN REKHA COKES AND COALS PVT. LTD. AND ORS. 
MAY 7, 2004 
(N. SANTOSH HEGDE AND B.P. SINGH,' JJ.] 
Constitution of India, 1950: 
A 
B 
Article 226(2)-"Cause of action"-"Wholly or in part"-State of C 
Bihar, before its bifurcation, issued a notification granting exemption from 
sales tax-Patna High Court issued mandamus to State of Jharkhand to 
grant sales tax exemption to the petitioner-Correctness of-Held: The 
notification issued by the State of Bihar formed the basis on which the 
petitioner founded its claim-Hence, it cannot be said that the entire cause D 
of action accrued in the State of Jharkhand-However, it necessarily 
formed a part of the cause of action-In the circumstances of the case, the 
State of Jharkhand ought to have been made a party-respondent. 
Bihar Reorganization Act, 2000: 
Sections 84 and 85-Continuation and applicability of-State of 
Jharkhand was created out of the erstwhile State of Bihar-Applicability 
of Ss. 84 and 85 to State of Jharkhand-Held: The language of Ss. 84 and 
E 
85 is clear and unambiguous-These Sections provide that the laws which F 
were applicable to the undivided State of Bihar would continue to apply 
to the new State of Jharkhand. 
Sections 84 and 85-Sales tax-Exemption from-In respect of 
intra-State sale transactions-Applicability of-In respect of inter-State 
sale transactions on bifurcation of the State-Held: Court must not permit G 
its mind to boggle by imagining that what was one State earlier has now 
become two and consequently what were intra-State sale transactions 
earlier are now inter-State sale transactions-If as per Ss. 84 and 85 of 
the Act, any law in force before the appointed day must have effect in the 
absence of its modification or repeal, the benefit under that law must flow H 
633 
634 
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R. 
A notwithstanding that in reality intra-State sale transactions have become 
inter-State sale transactions. 
Section 2(/)-"Law "-Territorial references-Meaning of-Held: The 
territorial references mean the territories within the existing State of Bihar 
B before the appointed day. 
Bihar Finance Act, 1951: 
Section 7(3)(b)-lndustrial Policy-Sales tax-Exemption from-
State of Bihar issued a notification granting exemption from sales tax in 
C respect of purchase of raw materials by new industrial units-Availability 
of benefits to newly created State of Jharkhand-Held: Said notification 
is law within the meaning of S. 2(/) of the Bihar Reorganization Act, 
2000-Hence, it applies to State of Jharkhand also unless it is modified, 
altered or repealed-As a na1ural consequence thereof industrial units are 
D entitled to the benefits a~d incentives granted in the notification-Such 
benefits also available to industrial units located in the State of Jharkhand 
since non-extension of the same would result in arbitrary results inasmuch 
as industrial units that operate in Bihar would get said benefit on purchase 
of raw materials in Jharkhand, but their counterparts in Jharkhand would 
E not be entitled to such benefit. 
Section 7(3)(b)-lndustrial Policy-Sales tax-Exemption from--
State of Bihar issued a notification granting exemption from sales tax in 
respect of purchase of raw materials to new industrial units situated in that 
F State-State of Jharkhand, on its creation, announced its own Industrial 
Policy-Applicability of Notification to State of Jharkhand-Held: There 
is nothing in the Industrial Policy of the State of Jharkhand which alters, 
amends or repudiates the said notification-Hence, said notification is 
applicable to the State of Jharkhand. 
G 
Interpretation of Statutes: 
Legal fiction-Subsidiary Rules-Interpretation of-Held: In 
interpretation of a provision creating a legal fiction court must ascertain 
the purpose for which the fiction is created and having done so, to assume 
H all those facts and consequences which are incidental or inevitable 
COMMR. OF COMMERCIAL TAX v. SWARN REKHA COKES AND COALS PVT. LTD. 
635 
corollaries to giving effect to the legal fiction. 
The Bihar Reorganization Act, 2000 was enacted by Parliament, 
which on and from the appointed day i.e. 15-11-2000 created the new 
State of Jharkhand from the erstwhile State of Bihar. 
The Industrial Policy of 1995 of the then State of Bihar which was 
issued under Section 7(3)(b) of the Bihar Finance Act, 1981 provided 
for exemption of sales tax to new industrial unit

Excerpt shown. Read the full judgment & AI analysis in Lexace.