Orissa High Court
Orissa Transformers Pvt. Ltd vs State Of Odisha And Others on 31 March, 2021
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.1301 of 2021
Orissa Transformers Pvt. Ltd. .... Petitioner
Mr. Soumendra Pattnaik, Advocate
-versus-
State of Odisha and Others .... Opposite Parties
Mr. M.S. Sahoo, Additional Government Advocate
Mr. Sumit Lal, Advocate for Opposite Party No.2
CORAM:
THE CHIEF JUSTICE
JUSTICE B. P. ROUTRAY
ORDER
Order No. 31.03.2021
W.P.(C) Nos.1301 of 2021 and W.P.(C) No.1114 of 2021
05. 1. There are two writ petitions arising out of the similar set of facts
with the same Petitioner have been disposed of by this common
order.
2. The background of filing of the present petitions is that the
Petitioner is a company manufacturing transformers of different
specifications
2. The said re-computation orders were passed by the Deputy
Commissioner of Sales Tax, Opposite Party No.l, purportedly
under Section 12 of the Orissa Sales Tax Act (OST Act) based on
a judgment dated 28th October, 2016 of the Supreme Court India in
Commissioner of Commercial Taxes v. Bajaj Auto Ltd. AIR 2016
SC 5014.
3. The background to those writ petitions is that on 27th February,
2006 an order of assessment was passed by the Sales Tax officer,
Sambalpur I Circle, Sambalpur computing the tax demand by
holding that surcharge under the OST Act was payable before
setting off the entry tax payable. A clarification of the same effect
was issued by the State Government on 31st January, 2001. This
clarification was challenged by this very Petitioner in a batch of
writ petitions which was taken up by this Court and decided on 5th
January, 2007 in Bajaj Auto Ltd. v. State of Odisha, 2007 (I) OLR
415. A Division Bench of this Court on interpreting the provisions
of the OST Act read with the relevant provisions of the Orissa
Entry Tax Act (OET Act) and the Orissa Entry Tax Rules (OET
Rules) came to the conclusion that the letter of clarification issued
by the State Government was misconceived, has no legal sanctity
and that the modality adopted by the taxing authority in computing
surcharge on the gross tax assessed instead of tax payable after
reduction to the extent of the entry tax paid, was not in accordance
with the provisions of the OST Act, OET Act and OET Rules.
4. The aforementioned judgment of this Court was challenged by
the Commissioner of Commercial Taxes before the Supreme
Court. In a judgment delivered on 28th October, 2016 in Bajaj Auto
Ltd., (supra), the Supreme Court reversed the judgment of this
Court and held that "the amount of surcharge under Section 5A of
the OST Act is to be levied before deducting the amount of entry
tax paid by a dealer".
5. Based on the earlier judgment dated 5th January 2007 of this
Court, further orders were passed by this Court in writ petitions
filed by the Petitioner for subsequent AYs. Those orders were for
some reason not separately challenged by the Commissioner of
Commercial Taxes.
6. Mr. B.P. Mohanty, learned counsel for the Petitioner submitted
that without each of the aforementioned orders of this Court for the
subsequent AYs being separately challenged and set aside by the
Supreme Court, those orders, notwithstanding their inconsistency
with the judgment of the Supreme Court, must be given effect to,
and no re-computation of tax can be permitted in respect of those
AYs.
7. This Court is unable to agree with the above submission. The
very basis of the subsequent orders of this Court for the AYs in
question, in favour of the assessee, was the judgment dated 5th
January 2007 of this Court. In other words, there was no other
basis for accepting the plea of the assessee for the AYs in question.
That very basis of the orders passed by this Court has been
rendered non-existent by the judgment of the Supreme Court in
Bajaj Auto Ltd. (supra) setting aside the order dated 5th January,
2007 of this Court. The aforementioned declaration of the law by
the Supreme Court is binding on all the authorities in terms of
Article 141 of the Constitution. Consequently, the impugned
orders that have been passed, re-computing the tax payable to such
effect to the judgment of the Supreme Court, which the authorities
were bound to do, and cannot be termed illegal.
8. It is then submitted by Mr. Mohanty that the re-computation
orders are barred by limitation as they have been passed well
before and the period within which an assessment could be
reopened under the OST Act.
9. As far as the limitation is concerned, considering that the
decision of the Supreme Court was rendered on 28th October,
2016, the re-computation orders having passed is of very ..............
thereafter, in December 2017 and in the absence of any specific
period of limitation prescribed for re-computation, it cannot be
said that the said orders are time barred.
10. However, as regards the levy of interest, since the legal
position got clarified by the Supreme Court only on 28th October
2016, the Petitioner is justified in contending, on the strength of
the judgment of the Supreme Court in Food Corporation of India
v. State of Haryana, (2000) 119 STC 7 (SC), that such interest is
payable only for the period subsequent to the judgment of the
Supreme Court and not prior thereto. Consequently, the impugned
demand notices are modified only to the extent that the interest on
the differential tax amount will be payable by the Petitioner for the
period subsequent to the judgment of the Supreme Court i.e. 28th
October 2016, till the date of payment.
11. The Deputy Commissioner of Sales Tax (Opposite Party No.1)
will now issue fresh demand notices on the basis of the above
modification not later than 19th April, 2021. It is further made it
clear that it will not be open to the Petitioner to again challenge the
said demand notices as long as they are inconformity with the
directions issued hereinbefore by this Court.
12. The writ petitions are disposed of in the above terms.
(Dr. S. Muralidhar)
Chief Justice
(B.P. Routray)
Judge
S.K. Jena/P.A.
