Orissa High Court
Larsen & Toubro Limited vs State Of Odisha And Others on 18 August, 2021
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No. 413 of 2008
Larsen & Toubro Limited .... Petitioner
Mr. Satyajit Mohanty, Advocate
-versus-
State of Odisha and Others .... Opposite Parties
Mr. Sunil Mishra, Additional Standing Counsel
for the Commercial Taxes Department
CORAM:
THE CHIEF JUSTICE
JUSTICE B.P. ROUTRAY
ORDER
Order No. 18.08.2021
Dr. S. Muralidhar, CJ
16. 1. This is the second round of litigation concerning the Petitioner's
assessment under the Orissa Sales Tax Act, 1947 (OST Act) for
the period 2004-2005.
2. In the first round of litigation the Petitioner had filed writ
petition i.e. W.P.(C) No.94 of 2007 and 2774 of 2007. A common
judgment was passed in both the writ petitions setting aside the
assessment on the short ground that the law on works contract has
undergone change and that unless there is a specific rule framed
under Section 29 of the OST Act for assessment of works contract
under the OST Act, there should be no assessment of liability of
sales tax on works contract in terms of Section 5(2)(AA)(i) of the
OST Act. Accordingly, the said writ petition was disposed of with
the following directions:
"18. It is well settled principle that in matters of
taxation either the Statute or the Rules framed under
the Statute must cover the entire filed. Taxation by
way of administrative instructions which are not
backed by any authority or law is unreasonable and
is contrary to Articles 265 of the Constitution of
India. Therefore, the impugned Circulars are set
aside as also the impugned orders of assessment.
The assessee's liability to pay tax remains but in
order to assess that State has to act in accordance
with the statutory prescription by framing Rules
under its rule making power under Section 29 of the
Act and the assessing authority can pass fresh orders
of assessment on the basis of such statutory rules."
3. It transpires that within a month of the said judgment on 20th
November, 2007 the following impugned notice was issued to the
Petitioner by the Sales Tax Officer, Bhadrak Circle, Bhadrak:
"Sub: Production of books of accounts for the period
2004-05 under O.S.T. Act for reassessment as per
judgment of the Hon'ble High Court of Orissa,
Cuttack.
The Hon'ble High Court of Orissa, Cuttack in
W.P.(C) No.94 of 2007 and No.2774 of 2007 has
directed to reassess the case. You are therefore
required to appear in person or through authorized
agent with accounts and documents for 2004-05 in
my Office at Bhadrak on dt. 30.11.2007 at about 11
AM for reassessment, failing which action will be
taken as per provisions of law."
4. Since the above notice was issued even without rules being
framed as directed by this Court, the Petitioner has filed the
present petition in which we directed notice to be issued to the
Opposite Parties. This Court on 5th February, 2008 directed that no
further steps shall be taken against the Petitioner pursuant to the
aforementioned letter dated 20th November, 2007. Thereafter the
petition was adjourned on several occasions awaiting framing of
Rules by the Opposite Parties.
5. The following order was passed by this Court on 10th
November, 2009:
"Heard learned counsel for the petitioner and
learned counsel for the State.
Learned State Counsel is directed to obtain
instruction from the Finance Department in terms
of our earlier dated 8.10.2009 regarding the
decision taken in pursuance of the letter dated
22.5.2008 on the next date, failing which this Court
will be constrained to direct for personal
appearance of the Secretary to Government in
Finance Department, as despite several
adjournments of this case, he failed to provide
instruction to the State Counsel.
Put up this matter on 24th November, 2009. Interim
order passed earlier shall continue till the next
date."
6. Today, when the matter was called out, Mr. Sunil Mishra,
learned Additional Standing Counsel for the Opposite Party
produced a copy of the notification dated 6th February, 2010 issued
by the Finance Department, Government of Odisha publishing the
Orissa Sales Tax (Amendment) Rules, 2010. It purports to make
Rule 4-B effective retrospectively from 30th July, 1999 and the
remaining rules from 25th February, 2009.
7. Mr. S. Mohanty, learned counsel for the Petitioner states that
since the Rules have been made only subsequent to the impugned
notice the latter is not sustainable in law. Further he reserves the
right of the Petitioner to challenge the aforementioned Rules in
accordance with law.
8. Mr. Mishra, learned Additional Standing Counsel for the
Opposite Parties states that since the Rules have now been made,
the Opposite Parties should be permitted to proceed with the
assessment in terms of the judgment of the Supreme Court.
9. Having heard the submissions of learned counsel for the parties,
the Court is of the view that the impugned notice dated 20th
November, 2007 is unsustainable in law since it could have been
issued only after complying with the specific directions issued in
para 18 of the judgment dated 11th October, 2007. In other words,
without framing the Rules as directed by the Court no fresh notice
of hearing could have been issued.
10. Accordingly, while setting aside the impugned notice dated
20th November, 2007 and permitting the Opposite Parties to issue a
fresh notice of hearing in light of the Rules notified on 6th
February, 2010, the Court permits the Petitioner to raise all
defences it has both in relation to such reassessment as well as
validity of the Rules. It is clarified that it will be open to the
Petitioner to raise the issue of limitation for making such
assessment as well. This Court clarifies that it has not expressed
any opinion on the case of either party on merits.
11. The impugned notification is accordingly set aside and the writ
petition is disposed of in the above terms.
12. An urgent certified copy of this order be issued as per rules.
(Dr. S. Muralidhar)
Chief Justice
(B.P. Routray)
Judge
S.K. Jena/P.A.
