Jharkhand High Court
Steel Authority Of India Limited vs The State Of Bihar (Now Jharkhand) & Ors on 27 April, 2026
Author: Rajesh Shankar
Bench: Rajesh Shankar
2026:JHHC:12261-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Tax Case No.08 of 2001
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Steel Authority of India Limited
………. Petitioner.
-Versus-
The State of Bihar (now Jharkhand) & Ors.
………. Respondents.
—–
CORAM : HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJESH SHANKAR
-----
For the Petitioner : Mr. Sumeet Gadodia, Advocate
Mr. Ranjeet Kushwaha, Advocate
For the State : Mr. Ashutosh Anand, A.A.G.-III
-----
Order No.49 Date: 27.04.2026
1. The learned counsel for the parties were heard in this matter on
21st April, 2026. However, since the arguments could not
conclude, the matter was listed today at 2:15 p.m. for further
hearing subject to any overnight part-heard matter.
2. Accordingly, even today, we have heard the learned counsel for
the parties and we proceed to dispose of this matter finally.
3. This is a matter where the Commercial Taxes Tribunal, Bihar,
Patna (hereafter to be referred as ‘the Tribunal’) has referred the
following six questions of law for the determination of this Court
under Section 48(3) of the Bihar Finance Act, 1981:-
i. Whether in the facts and circumstances of this case assumption
of jurisdiction against the applicant under Section 46(4) of the
Bihar Finance Act, 1981 read with Section 9(2) of the Central
Sales Tax Act, 1956 was unwarranted and initiated on account
of non-discovery of illegalities or improprieties in the
assessment from the record of assessment, at the time of
assumption of such jurisdiction and initiation of proceeding
against the applicant.
ii. Whether the notice under Section 46(4) dated 15.2.95, on the
applicant, was void in law on account of vagueness and non-
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allegation of any illegality and impropriety and vitiated on
account of prejudgment and bias.
iii. Whether in the facts and circumstances of the case, the
initiation and conduct of proceeding under Section 46(4) against
the applicant was vitiated on account of mala fide and bias from
the start to the finish which has rendered the order passed on
16.6.96 modified on the fringe by two revision dt. 3.8.96 and
11.10.96 null and void.
iv. Whether in the facts and circumstances of the case the Tribunal
has erred in holding that sales outside the state by stockyards
and branches under T.B.S.S. were inter-state sales from Bihar.
v. Whether in the facts and circumstances of this case and the law
contained in the judgment of the Hon’ble Supreme Court in 102
S.T.C.373 (B.H.E.L’S case) and 105 S.T.C.152 (Ashok Leland’s
Case), the Tribunal has erred in rejecting the petition of the
applicant for making the states in which branches or stockyards
of the applicant had paid local sales tax on the same
transactions as parties in this case and hearing them on the
nature of transactions.
vi. Whether in the facts and circumstances of the case the Tribunal
has erred in the interest of justice and fairness, in omitting to
direct that opportunity should be provided to applicant to obtain
‘C’ forms from the purchasers from branches and stockyards
under T.B.S.S. in view of facts that the transaction with them
were now held to be inter-state sales.
4. Mr. Sumeet Gadodia, the learned counsel for the Steel Authority
of India Limited (SAIL), however, clarified that the SAIL was
confining itself seeking a determination on questions of law
nos.(i), (iv), (v) and (vi).
5. Accordingly, we heard the learned counsel for the parties on the
said four questions. The facts and circumstances in which this
reference arises are set out briefly hereafter.
6. By an assessment order dated 31st March, 1992, the Deputy
Commissioner of Commercial Taxes, Bokaro Circle, Bokaro Steel
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City, agreed with SAIL’s contention that the transfer of the
manufactured goods valued at Rs.14,24,08,53,555/- constituted
a stock transfer of goods and not an inter-State sale. For reaching
this conclusion, the Deputy Commissioner of Commercial Taxes
relied inter alia on stockyard dispatch statement, inter-unit stock
transfer, consignment note, invoices and Form ‘F’.
7. After expiry of almost three years from the date of the
assessment order dated 31st March, 1992, by a notice dated 15th
February, 1995, the Joint Commissioner of Commercial Taxes
(Administration), Dhanbad Division, by purporting to exercise the
revisional powers under Section 46(4) of the Bihar Finance Act
read with Section 9 of the Central Sales Act, 1956 called upon
SAIL to explain the above referred transaction, in the context of
various deficiencies including certain blank/missing Forms ‘C’ and
‘F’.
8. The SAIL appeared before the revisional authority in pursuance
of a notice dated 15th February, 1995, but objected to the very
initiation of the suo moto revisional proceeding, inter alia, on the
ground that there was neither any power nor any occasion for
initiating the same. The SAIL alleged that this was nothing but a
fishing enquiry which was not permitted under the provisions and
the scheme of the Bihar Finance Act.
9. By order dated 16th February, 1996, however, the revisional
authority partly disagreed with SAIL’s contention that the
transaction constituted only a stock transfer and not an inter-
State sale and determined the tax liability at Rs. 99,68,50,917.34.
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With respect to the CST sales among the strength of Form ‘C’,
however, the matter was remanded to the assessing officer, and
therefore, this part of the order is not the subject matter of
adjudication before this Court.
10. The SAIL challenged the revisional authority’s order dated 16th
February, 1996, before the Commercial Taxes Tribunal, Bihar,
Patna, by instituting a Revision Case No.D.N.-129/1996. The
Tribunal, by its order dated 11th December, 1997, dismissed the
revision, primarily relying upon the decision of the Hon’ble
Supreme Court in Ashok Leyland Limited vs Union of India
& Ors., (1997) 9 SCC 10 (hereafter referred to as Ashok
Leyland-I). SAIL’s plea for impleading the other States as parties
was also rejected, again, primarily relying on Ashok Leyland-I.
11. The SAIL, then filed Reference Case No.D.N.-9/1998 before the
Commercial Taxes Tribunal, Bihar, Patna, seeking reference of
certain questions, which, in their opinion, were required to be
determined by the High Court. This was under Section 48(1) of
the Bihar Finance Act. By order dated 31st July, 2000. However,
the Tribunal dismissed this reference application.
12. The SAIL, therefore, preferred Tax Case No.19 of 2000 (R) before
this Court, seeking directions to the Tribunal for referring the
questions to this Court for its determination. By order dated 16 th
October, 2000, this Court directed the Tribunal to refer the
questions of law, now set out in paragraph 3 of this order, for the
determination of this Court. In compliance with this Court’s order
dated 16th October, 2000, the Tribunal, by its order dated 9th
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April, 2001, referred the above questions to this Court for
determination.
13. Mr. Gadodia, the learned counsel for the SAIL, at the outset
submitted that the Hon’ble Supreme Court had overruled its view
in Ashok Leyland-I case in the matter of Ashok Leyland Limited
vs. State of Tamil Nadu & Another, (2004) 3 SCC 1
(hereafter referred to as Ashok Leyland-II) on the scope of
revisional jurisdiction.
14. Mr Gadodia submitted that the revisional powers could not have
been exercised at all, given the observations of the Hon’ble
Supreme Court in the case of Ashok Leyland-II, that the reference
to the provisions of the CST Act was an instance of legislation by
reference and not by incorporation. He submitted that, at the
highest, the assessment order could have been reopened and re-
assessment undertaken by the same assessing authority if the
same had been obtained by commission of fraud, collusion,
misrepresentation, or suppression of material facts, or by giving
or furnishing false particulars. He submitted that none of such
factors was present in this case and, therefore, the very exercise
of revisional powers by the Joint Commissioner was void ab initio
and the proceedings based upon such initiation ought to have
been quashed and set aside.
15. Mr. Gadodia submitted that the Hon’ble Supreme Court’s decision
in Ashok Leyland-II, while overruling the view in Ashok Leyland-
I, only declared the law as it always was and, therefore, the
exercise of suo moto revisional jurisdiction by the Joint
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Commissioner could not be sustained. He submitted that the
provisions of Section 6(A) of the Central Sales Tax Act, 1956,
were amended, and after Section 6(A)(2), sub-section (3) was
inserted to provide for re-assessment by the assessing authority
or revision in accordance with the provisions of the general sales
tax law of the State on certain grounds. He submitted that such
an amendment/insertion was not retrospective.
16. Mr. Gadodia submitted that even otherwise, on facts, the
documents on record were sufficient to conclude that the
transaction in question was only a stock transfer and not an inter-
State sale exigible to any taxes. He, however, fairly pointed out
that in one of the Forms ‘F’, the particulars were left blank and,
therefore, the legal fiction about conclusivity would not apply to
that particular transaction covered by that form. However, he
maintained that the other Forms ‘F’ was complete and therefore,
the legal fiction should have operated in its entirety, and the
conclusion drawn therefrom was not even permissible to be
rebutted except perhaps under a narrow window carved out by
the Hon’ble Supreme Court.
17. Mr. Ashutosh Anand, the learned counsel for the respondents,
submitted that the exercise of revisional powers, being consistent
with the view taken in Ashok Leyland-I, could not be styled as an
exercise without jurisdiction on the date on which it was initiated.
He submitted that in any event, even the Ashok Leyland-II
decision permits the re-opening of the assessment by the same
assessing authority or by the revisional authority where the
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assessment order has been obtained by commission of a fraud,
collusion, misrepresentation or suppression of material facts or
giving or furnishing false particulars. He submitted that in the
present case, all these vices were attracted, and the original
assessment order was made without scrutinising the documents,
including the Forms ‘C’ and ‘F’ furnished by the SAIL.
18. Mr Ashutosh Anand submitted that in this case, several forms
contained blanks, but they were not even noticed by the original
assessing authority. He submitted that this was not a case of
mere change of opinion by the assessing authority, but that, after
noticing the glaring omissions, the revisional authority was forced
to intervene and carry out the re-assessment.
19. Mr Ashutosh Anand submitted that since the decision in Ashok
Leyland-II was delivered much later, the Tribunal had no occasion
to consider the same. The Tribunal also did not disturb the
findings about serious omissions in the forms and other material.
20. Based on the above, Mr Ashutosh Anand submitted that the
questions referred should be answered against SAIL and in favour
of the revenue.
21. The rival contentions now fall for our determination.
22. In the facts of this case, it is true that the revisional authority,
while exercising suo moto powers of revision, went by the law
laid down in the Ashok Leyland-I.
23. However, in Ashok Leyland-II, the Hon’ble Supreme Court has
substantially overruled the view taken in Ashok Leyland-I, inter
alia, by explaining the scope of the provisions contained in
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Section 6(A)(2) of the CST Act. The Hon’ble Supreme Court has
held that Section 6(A)(2) of the said Act created a legal fiction
that imparts conclusivity to an assessment order, if made after
due consideration of Form ‘F’ submitted by the assessee.
24. However, the Hon’ble Supreme Court, in Paragraph 79 of Ashok
Leyland-II, clarified that although such orders are conclusive for
all purposes, they can be reopened on a limited set of grounds,
such as fraud, collusion, misrepresentation, etc.
25. The Hon’ble Supreme Court at paragraphs 111, 112 and 113 of
the Ashok Leyland-II case made the following observations,
which are also quite relevant:-
“111. We, therefore, are of the opinion that the observations
made by this Court in Ashok Leyland to the effect that an
order passed under sub-section (2) of Section 6-A can be
the subject-matter of reopening of a proceeding under
Section16 of the State Act were not correct.
112. However, we may hasten to add that the same would
not mean that even wherein such an order has been
obtained by commission of fraud, collusion,
misrepresentation or suppression of material facts or giving
or furnishing false particulars, the order being vitiated in law
would not (sic) come within the purview of the
aforementioned principle.
113. An order of assessment is albeit passed under the State
Act. But once it is held that the concerned State Act as also
the Central Act is not applicable, as a consequence whereof
sales tax would be payable under another State Act, it is
doubtful as to whether the power to reopen the proceedings
under the State Act or the Central Act would be attracted.
There does not exist any power in the statute to rectify a
mistake. In that view of the matter, mere change in the
opinion of the assessing authority or to have a relook at the
matter would not confer any jurisdiction upon him to get the
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2026:JHHC:12261-DBproceedings reopened. Discovery of a new material although
may be a ground but that itself may not be a ground for
reopening the proceedings unless and until it is found that
by reason of such discovery, a jurisdictional error has been
committed. In other words, when an order passed in terms
of sub-section (2) of Section 6-A is found to be illegal or void
ab initio or otherwise voidable, the assessing authority
derives jurisdiction to direct reopening of the proceedings
and not otherwise.”
26. Thus, from the above, it does appear that the view in Ashok
Leyland-I was substantially overruled by the Hon’ble Supreme
Court in Ashok Leyland-II. However, the Hon’ble Supreme Court
clarified that the same would not mean that even where an
assessment order has been obtained by commission of fraud,
collusion, misrepresentation or suppression of material facts or
furnishing of false particulars, the assessment cannot be
reopened.
27. Mr Gadodia’s contention that even the limited window left open
by the Hon’ble Supreme Court would apply to the assessing
authority re-opening the assessment and not to a revisional
authority seeking to revise the assessment order, or Mr Ashutosh
Anand’s contention to the contrary, need not be decided at this
stage, considering the order that we finally propose to make in
this matter.
28. Considering the above circumstance, we think that the interest of
justice would be best met if the Tribunal’s impugned order dated
11th December, 1997, is set aside to the extent that it concerns
the issues arising out of Form ‘F’ before the Tribunal.
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29. Mr. Gadodia’s contention that upon remand, the issue arising out
of Form ‘C’ has already been decided in favour of the assessee is
also kept open for consideration by the Tribunal in accordance
with law. As indicated earlier, the SAIL’s limited challenge in this
reference was in relation to the transactions covered under Form
‘F’ only.
30. The arguments based on the effect of the insertion of Section
6(A)(3) in the CST Act by the Finance Act, 2010, are also kept
open for the decision of the Tribunal in the first instance.
31. One of the main reasons for remanding this matter is that Mr
Gadodia argued that the material on record was sufficient to
conclude that there was no question of fraud, collusion,
misrepresentation, suppression of material facts, or the
furnishing of false particulars, and that Mr Ashutosh Anand
sought to contend to the contrary. Such issues are best decided
by the Tribunal in the first instance, which is the final fact-finding
authority. Therefore, we felt that it would not be appropriate for
this Court to make a truncated decision on points of law and then
remand the matter to the Tribunal to apply that law to the
material on record. The Tribunal’s comprehensive decision, both
on points of law and on facts, given the overruling of Ashok
Leyland-I by Ashok Leyland-II, would best serve the interests of
justice.
32. Accordingly, we set aside the Tribunal’s impugned order to the
extent the same was challenged before us, remand the matter to
the Tribunal for fresh consideration of Revision Case
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No.D.N.129/1996 by considering the rival contentions in the
context of the decision of the Hon’ble Supreme Court in the case
of Ashok Leyland-II and the impact of the amendment brought
about to Section 6(A) of the CST Act by the Finance Act, 2010.
All rival contentions on such issues, as well as the application of
the legal position to the material on record, are kept open for the
Tribunal to decide in the first instance.
33. Since this is an old matter, we request the Tribunal to dispose of
it as expeditiously as possible, in any event, within four months
of the parties filing an authenticated copy of this order before the
Tribunal. The parties, through their counsel, are directed to
appear before the Tribunal on 14th May, 2026, at 11:30 a.m. and
file an authenticated copy of this order.
34. Learned counsel for the parties assure this Court that they will
co-operate with the Tribunal in the early disposal of the matter.
35. The Registry is directed to remit the records and proceedings in
this matter to the Tribunal before 12th May, 2026, so that the
record is available to the Tribunal at the earliest.
36. This case is disposed of in the above terms without any orders
for costs. All concerned are to act on an authenticated copy of
this order.
(M. S. Sonak, C.J.)
(Rajesh Shankar, J.)
27th April, 2026
Sanjay/Rohit
Uploaded on 29.04.2026
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