Orissa High Court
M/S. Sarat Kumar Sahu vs State Of Odisha on 29 June, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV No. 9 of 2011
M/s. Sarat Kumar Sahu .... Petitioner
Mr. Basudev Panda, Senior Advocate
-versus-
State of Odisha, represented by the ... Opposite Party
Commissioner of Sales Tax
Mr. S.S. Padhy, Addl. Standing Counsel
CORAM:
THE CHIEF JUSTICE
JUSTICE R.K. PATTANAIK
ORDER
Order No. 29.06.2022
05. 1. While admitting the present revision on 9th October, 2015 the
following questions of law were framed by this Court for
consideration:
"(i) As to whether in the facts and circumstances
of the case, claim of the petitioner towards labour
and services as indicated in the books of account
as well as in the returns could have been rejected
and without rejecting the books of account could
the Assessing Officer has resorted to an estimate of
the extent to which deductions for labour and
services ought to be extended?
(ii) As to whether the principles in the amended
Rule-4(b) could have been utilized by the Tribunal
for arriving at a conclusion adverse to the interest
of the Petitioner ?
2. The background facts are that the Petitioner, who is a registered
dealer carried on execution of works contract under the Steel
Authority of India Limited, Rourkela Steel Plant, during the year
in question i.e. 1993-94. The Assessee shown to have received
from SAIL Rs.73,79,952.60 against execution of the works
contract.
3. The Sales Tax Officer (STO) by the assessment order dated 28th
February, 1995 noted that the dealer had failed to produce the
labour register showing involvement of the labour in execution of
the works. Consequently, the STO completed the assessment by
resorting to the best judgment assessment by allowing 30%
towards labour and 2% towards service charges. This resulted in a
tax demand of Rs.87,869/-. When the matter went on appeal before
the Assistant Commissioner of Sales Tax (ACST), he held that
42% towards labour and service charges should be allowed as
deduction and accordingly, the assessment order of the STO was
modified and the tax demand was reduced from Rs.87,869/- to
Rs.31,879/-.
4. The State then went on appeal before the Tribunal which has
restored the order of the STO and set aside the order of the ACST.
The Tribunal held that the allowing of 42% towards labour and
service charges by the ACST was not supported by reasons. The
Tribunal found that if the mandate of Rule 4(b) of the OST Rules
is adhered to, the deduction towards labour and service charges as
prescribed would be 35% whereas the STO had allowed only 32%
i.e. at a lower percentage. The Tribunal concurred with the view of
the STO and accordingly, quashed the order of the ACST.
5. Mr. Basudeb Panda, learned Senior Counsel for the Petitioner
submits that without rejecting the books of account of the
Assessee, the STO could not have resorted to best judgment
assessment.
6. Having perused the assessment order of the STO, the Court
finds that there is a valid reason for the STO to have not allowed
the entire labour and service charges as claimed but only a
percentage thereof. This was because the Assessee failed to
produce the labour registers. Further allowing of deduction at 42%
towards labour and service charges of the ACST, indeed is not
supported by any reasons. Question (i) is answered accordingly.
7. As regards question (ii), it is seen that the Tribunal has noted
that if Rule 4(b) of the OST Rules were to be applied, the
deduction allowable was at 35%. In that view of the matter, the
order of the Tribunal is modified by allowing deduction towards
labour and service charges at 35%. Question (ii) is answered
accordingly.
8. The revision petition is disposed of in the above terms.
(Dr. S. Muralidhar)
Chief Justice
(R.K. Pattanaik)
Judge
S.K. Jena/Secy.
