Orissa High Court
M/S. Orissa Plasto Pipe Pvt. Ltd vs State Of Odisha Represented By The on 28 November, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
STREV No.65 of 2014
M/s. Orissa Plasto Pipe Pvt. Ltd. .... Petitioner
Mr. U.C. Behura, Advocate
-versus-
State of Odisha represented by the .... Opposite Party
Commissioner of Sales Tax, Odisha
Mr. Sunil Mishra, Additional Standing Counsel
CORAM:
THE CHIEF JUSTICE
JUSTICE M.S. RAMAN
ORDER
Order No. 28.11.2022
04. 1. Admit.
2. The following question of law is framed for consideration:
Whether under the facts and circumstances of the case,
the Tribunal was justified in confirming the levy of
entry tax where goods were manufactured in one local
area and sold within the local area?
3. In the present case, the factual background is that the Petitioner-
Assessee manufactures PVC pipes using PVC resin as raw
material. For the period 1st April 2005 to 31st December 2007, the
Sales Tax Officer (STO) passed an assessment order on 2nd June
2008 under Section 9-C of the Odisha Entry Tax Act (OET Act) on
the basis of an audit visit report (AVR) which appeared to indicate
that the Petitioner had not paid entry tax on the sale of its finished
product under Section 26 of the OET Act. It was found that the
Petitioner had sold scheduled goods to the tune of Rs.73,50,466/-
inside the State of Odisha, on which, ET @ 1% had not been
collected. On this basis, the STO assessed the Petitioner to tax for a
sum of Rs.2, 20, 513/- inclusive of penalty under Section 9-C (5)
of the OET Act.
4. Before the first appellate authority, the Petitioner contended that
goods were sold within the local area i.e., Cuttack Municipal area
and therefore, there was no occasion to collect entry tax. However,
the Deputy Commissioner of Sales Tax (DCST) upheld the order
of assessment of the STO. Thereafter, the Petitioner went before
the Odisha Sales Tax Tribunal, Cuttack (Tribunal) with S.A. No.99
(ET)/2012-13. By the impugned order dated 31st December 2013,
the Tribunal dismissed the appeal on the basis of Section 26 of the
OET Act relying on the judgment of this Court in OJC No.3395 of
2000 (M/s Indian Metals & Ferro Alloys Corporation of Orissa v.
State of Orissa).
5. Section 26 of the OET Act only envisages collection of entry tax
equal to the tax payable on the value of the finished products under
Section 3 of the Act from the buying dealer either directly or
through an intermediary "only if the scheduled goods sold are
intended for entry into any local area of the State for the purposes
of consumption, use or sale". Section 26 does not envisage the
situation prevalent here i.e., manufacture taking place in a local
area and consumption within the local area. Consequently, Section
26 of the OET Act can have no application in the circumstances of
the present case.
6. Learned counsel for the Department then seeks to contend that
there is no document produced to show that the Assessee had in
fact manufactured the goods in question in a local area and it had
also been sold within the local area. However, this was not put in
issue at all at any stage of the case before the Tribunal. If the
Department was seeking to levy entry tax, then on the above basis,
the Assessee ought to have been put on notice that he should
produce proof that he had actually manufactured the goods in the
local area.
7. Consequently, the Court is not in agreement with the conclusion
reached by the Tribunal in the present case. The question framed is
accordingly answered in the negative, i.e. in favour of the
Petitioner-Assessee and against the Department. The impugned
order of the Tribunal and the corresponding orders of the DCST
and STO are hereby set aside.
8. The revision petition is allowed in the above terms with no order
as to costs.
9. Issue urgent certified copy of this order as per rules.
(Dr. S. Muralidhar)
Chief Justice
(M.S. Raman)
Judge
S.K. Guin
