Orissa High Court
State Of Odisha vs D.N. Industries on 27 March, 2023
ORISSA HIGH COURT: CUTTACK
STREV No.82 of 2017
In the matter of an application under Section 19
of the Odisha Entry Tax Act, 1999.
---------------
State of Odisha
represented by
the Commissioner of Sales Tax
Odisha, Cuttack ... Petitioner
-VERSUS-
D.N. Industries
Plot No.466, At: Lingipur
Sisupalgarh, Bhubaneswar
District: Khurda ... Opposite Party
For petitioner : M/s. Madhab Lal Agarwal,
Standing Counsel (Commercial Taxes)
Sunil Mishra,
Additional Standing Counsel (Commercial Taxes)
For opposite party : M/s. Rudra Prasad Kar, Bhabani Prasad Mohanty,
Aditya Narayan Ray, Shyam Prasad Bhuyan,
Sriman Arpit Mohanty, Advocates
P R E S E N T:
THE HONOURABLE DR. JUSTICE B.R. SARANGI
AND
THE HONOURABLE MR. JUSTICE MURAHARI SRI RAMAN
Date of Hearing and Judgment : 27.03.2023
MURAHARI SRI RAMAN, J.-- Challenge has been laid to Order dated 27th
June, 2017 passed in Second Appeal bearing No.146(ET)/2014-15 by
the learned Odisha Sales Tax Tribunal, Cuttack dismissing the appeal
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filed at the behest of the State of Odisha, represented by the
Commissioner of Sales Tax, Odisha, directed against Order dated
31.03.2014 of the Deputy Commissioner of Sales Tax (Appeal),
Bhubaneswar Range, Bhubaneswar in the Appeal Case
No.108111311000068 whereby the demand raised in the assessment
framed under Section 10 of the Odisha Entry Tax Act, 1999 for the
tax periods from 01.04.2007 to 31.12.2010 by the Sales Tax Officer,
Bhubaneswar-I Circle, Bhubaneswar vide Order dated 16.06.2011
has been reduced to NIL.
Facts of the case:
2. The opposite party-dealer is engaged in manufacture and sale of
melamine utensils and brings raw materials from outside the State and
sells finished items within the State of Odisha. Since there was non-
participation of the opposite party-dealer, notwithstanding response to
the notice in Form E32 prescribed vide Rule 15D of the Odisha Entry
Tax Rules, 1999 (referred to as "OET Rules") for assessment under
Section 10 of the Odisha Entry Tax Act, 1999 (for brevity hereinafter
referred to as "OET Act") against which adjournments were granted,
the Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar
("Assessing Authority", for short) proceeded to conclude the
proceeding ex parte whereby entry tax has been levied on the sale of
finished goods as per Section 26 taking into consideration the figures
disclosed in the returns and the turnover suppressed as alleged in the
Tax Evasion Report submitted by the Deputy Commissioner of Sales
Tax, Vigilance, Bhubaneswar Division, Bhubaneswar. Accordingly,
demand of tax to the tune of Rs.1,12,503/- was raised. Besides tax,
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penalty of Rs.2,25,006/- under Section 10(2) has been imposed. Total
demand thereby was raised to the extent of Rs.3,37,509/-.
2.1. The opposite party-dealer carried the matter before the Deputy
Commissioner of Sales Tax (Appeal), Bhubaneswar Range under
Section 16 of the OET Act where the said Appellate Authority
appreciating the competing entries held that the finished goods in
question, i.e., "melamine utensils" do not fall within any of the
entries namely, Entry Nos.23, 76, 79 and 91 of Part-I of Schedule
appended to the said Act so as to attract levy of entry tax in terms of
charging provisions contained in Section 3 read with Section 26 of
the OET Act. Accordingly, the appeal filed by the opposite party-
assessee was allowed and the demand was nullified.
2.2. Aggrieved, the State of Odisha-Commissioner of Sales Tax, Odisha
proceeded to Sales Tax Tribunal, Odisha, Cuttack invoking
provisions of Section 17 in second appeal, which came to be
dismissed by the said Tribunal affirming the view expressed by the
Appellate Authority that there being no mention of the commodity,
namely "melamine utensils" in none of the entries in the Schedule of
goods declared to be subject to entry tax, the sale of said goods does
not warrant levy of entry tax in terms of Section 3 read with Section
26 of the OET Act.
2.3. Still dissatisfied, the Commissioner of Sales Tax representing the
State of Odisha approached by way of filing STREV petition before
this Court under Section 19 of the OET Act raising following
questions of law:
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"I. Whether on the facts and in the circumstances of the case
'melamine utensils, i.e., plates, bowls, spoons and dinner sets,
etc. are exigible to tax @ 1% under Part-I of Schedule to the
OET Act and thereby the Tribunal having not decided the issue
in proper perspective, fell in error?
II. Whether on the facts and in the circumstances of the case, the
Tribunal committed error in misclassifying 'melamine utensils'
as non-scheduled goods under the OET Act, 1999?
III. Whether on the facts and in the circumstances of the case,
order of the Tribunal is unreasonable and perverse?"
Arguments advanced by respective parties:
3. Sri Sunil Mishra, learned Additional Standing Counsel taking this
Court to the Entry Nos.23, 76, 79 and 91 of Part-I and Entry No.35 of
Part-II of Schedule would submit that the learned Tribunal, being
final fact-finding authority, ought to have examined whether
"melamine utensils" fit into any of the items enumerated in the said
entries bearing in mind the wider meaning of such items instead of
repelling the contention of the learned Standing Counsel that the
Revenue had taken different stand at different stage. Sri Mishra in
furtherance to his argument, urged that though learned Tribunal
referred to words "kitchen ware/utensils" accompanied by "rice
cooker, pressure cooker" in Entry 87 of Part-I of Schedule, could
have treated the same to be genus and "melamine utensils" species on
the principle of noscitur a socii. However, misplacing the ratio of the
decision of this Court rendered in the case of Hindustan Lever Ltd.
Vrs. Sales Tax Officer, W.P.(C) No.11400 of 2005, vide Order dated
21st January, 2010, the learned Tribunal fell in grave error in
affirming the Appellate Order. Sri Sunil Mishra having said that
classification of commodity and application of rate of tax being
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question(s) of law can be raised at any stage, legal position of which
is no more res integra vide State of Odisha Vrs. DK Construction,
2017 (I) ILR-CUT 615 = (2017) 100 VST 24 (Ori), asserted that the
learned Odisha Sales Tax Tribunal taking note of entry "All kinds of
kitchen appliances" as finds place at serial No.35 of Part-II, Schedule
to the OET Act should not have avoided to decide the appropriate rate
of tax vis-à-vis classification of goods. Therefore, he urged to remand
the matter to the Assessing Authority for proper adjudication of the
fact inasmuch as the opposite party-assessee had had no reasonable
opportunity to place required documents/records.
4. On the contrary, opposing the contentions of learned Additional
Standing Counsel, Sri Rudra Prasad Kar, learned Advocate appearing
for the opposite party-dealer referred to the following passage from
the Appellate Order:
"There cannot be any dispute that the dealer has effected sales of
'Melamine Utensils'. Entry 23, Entry 76, Entry 79 and Entry 91 of
Part-I of the Schedule to OET Act, 1999 refers to 'Plastic goods',
'Stainless Steel Utensils', 'Articles made of China Clay or Porcelene
Wire' and 'Glassware and Crockery' respectively. Concise Oxford
English Dictionary defines 'Crockery' as 'plates, dishes, cups, or
similar items made of earthenware or china', 'Porcelene' as a 'white
vitrified translucent ceramic', 'Melamine as a crystalline compound
made by heating Cyanamide' and 'Utensil as a tool or container
especially for household use'. A plain reading with the dictionary
meaning of each of these Entries reveals that the items 'Melamine
Utensils' manufactured by the instant dealer do not come within the
meaning of any of these items. In Entry Tax Act, tax can be levied on
the goods mentioned in the Schedule (M/s. Hindustan Lever Limited
Vrs. Sales Tax Officer and another, vide Writ Petition (C) No.11400
of 2005 decided on 21.01.2010). As there is no specific mention of
'Melamine Utensils' in the entries in the Schedule under OET Act the
Ld. Assessing Authority has fallen into error by levying tax on
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'Melamine Utensils' under the Entry Tax Act. The Ld. Advocate is
justified in contending that levy of entry tax on Melamine Utensils
manufactured and sold by the dealer-petitioner is not scheduled
goods under the Act. The learned Assessing Authority has, thus, erred
in treating the items 'melamine utensils' as scheduled goods and
subjecting the same to be liable for taxed @1%."
4.1. He contended that such clear and loud reasoning of the Appellate
Authority needs no elaboration. If the argument of Sri Sunil Mishra is
accepted, then the Assessing Authority would levy tax @ 2% treating
"melamine utensils" to fall within sweep of Entry No.35 of Part-II of
Schedule. Such a course is impermissible in law inasmuch as the
Court may not be competent to create third case for the party.
4.2. Amplifying his argument, Sri Rudra Prasad Kar vehemently urged
that no fault can be attributable to the learned Tribunal as it has
correctly affirmed the view of the Appellate Authority and said
Tribunal is right in saying that the Revenue has taken different stance
at different times. The learned Standing Counsel appearing in the
second appeal attempted to confuse and misguide the Tribunal. The
Standing Counsel sought to argue the point which was never before
the Tribunal by way of grounds of appeal. Copy of grounds of second
appeal as filed by the Commissioner of Sales Tax before the Sales
Tax Tribunal reads thus:
"1. That the order of 1st Appellate Authority, i.e., learned DCST
appears to be unjust and improper.
2. That we should always stick to the generic name of the articles,
because any name can be allotted to any goods. So goods are
usually considered from commercial parlance. The name of a
person and a human being cannot be a two individual species.
Similarly malarine (sic. melamine) utensils and other utensils
cannot be treated no separate goods.
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3. That utensils of any nature treated as utensils for all purpose.
So it is undoubtedly a scheduled goods.
4. That the order of learned DCST may be set aside and that the
STO may be restored.
5. That further grounds if any will be urged at the time of
hearing."
4.3. Aforesaid being grounds of second appeal, the learned counsel for the
opposite party-dealer, therefore, submitted that much stress on behalf
of Revenue has been laid on the term "utensils" which appears at
Entry 87 of Part-I of Schedule. Sri Kar submitted that the term
"utensils" being preceded by the words and symbol "rice cooker,
pressure cooker and kitchen ware /", there can be no manner of doubt
in understanding the meaning in restrictive sense on the principles of
ejusdem generis. The interpretation sought to be put forth by the
counsel for the Revenue on the basis of grounds of appeal that
"melamine utensils" could be understood as "utensils of any nature
treated as utensils for all purpose" so as to be comprehended within
scope of Entry 87 of Part-I, Schedule is fallacious.
4.4. As the Appellate Authority having delved deep into the material fact
and arrived at just conclusion, there was no scope for the Tribunal to
show any indulgence in connection with the plea set up by the
Commissioner of Sales Tax. Therefore, Sri Rudra Prasad Kar,
learned counsel for the opposite party has suggested for dismissal of
the revision petition.
Consideration and analysis:
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5. For appreciating the point at issue the following entries are extracted
herein below:
Schedule
Part-I
(subject to tax @ 1%)
23 Polythene, High Density Poly Ethylene (HDPE), Poly
Propylene (PP) including wovensack, plastic goods, moulded
luggage excluding plastic or moulded furniture
76 Stainless steel utensils
79 Articles made of China clay or Porcelene wire
87 Rice cooker, pressure cooker and kitchen ware/utensils
91 Glassware and crockery
Part-II
(subject to tax @ 2%)
35 All kinds of kitchen appliances including mixer grinder, food
processor, juicer, sandwich toaster, OTG (oven toaster
griller), 33 electric oven, microwave and tandoori oven,
electric egg beater/blender, cooking range, electric kettle.
6. It is apparent from the above entries that "melamine utensils" can at
no stretch of imagination be stated to have fallen within the ambit of
Entry Nos.76, 79 and 91 of Part-I. In Commissioner, Commercial
Taxes Vrs. Om House Hold Appliances Pvt. Ltd., 2018 SCC OnLine
All 3161 the Allahabad High Court while deciding whether
"melamine tray" is crockery, observed with regard to "melamine" as
follows:
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"15. So far as melamine is concerned it is a white crystalline
compound made by heating cyanamide and used in making
plastics.
16. Further a plastic used chiefly for laminated coatings, made by
copolymerizing melamine with formaldehyde.
17. From the bare perusal of the aforesaid details and description
of crockery and melamine admittedly prima facie it appears
that both the items are different altogether as well as their use
is entirely different by their user."
7. Considering the term "melamine" in the above perspective, there is
no ambiguity in mind that "melamine" being "used in making
plastics", it itself cannot be said to be "plastic". Therefore,
considering that "melamine" may be one of the ingredients for
manufacture of "plastic", it cannot be said to be "plastic" simpliciter
and thereby melamine utensils may not strictly fall within the
connotation of "plastic goods", the Revenue has abandoned such
contention. It may be noteworthy that the learned Odisha Sales Tax
Tribunal has made the following observation:
"5. *** The revenue has come before this Tribunal on the sole
point, i.e., taxability of the said goods under the OET Act. In
support of the goods of appeal the revenue come up with the
submission that melamine utensils are to be treated as plastic
goods coming under Entry 23 of Part-I of Schedule appended
to the OET Act. *** In the fresh argument the revenue did
not contend it to be a plastic goods coming under Entry 23 of
Part-I of the Schedule."
8. Notwithstanding the fact that neither the Assessing Authority nor the
Appellate Authority did proceed to consider whether the subject-
goods would fall within ambit of Entry 35 of Part-II of Schedule, the
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learned Tribunal painstakingly took to such investigation. It could
find that:
"As mentioned in the Entry 35 of Par-II of the Schedule we find it to
refer to all kitchen appliances. Melamine utensils cannot fit into the
said entry as there is no specific mention of dinner set as evident from
the Annexure-2 to the written note.".
8.1. At this juncture referring to the written note of submission filed on
behalf of the opposite party-State of Odisha before the Tribunal, it
transpired as follows:
"That the learned Assessing Officer taking a lenient view has taxed
the said goods @ 1% by viewing the same to fall under Part-I of the
Schedule. The dealer admittedly sold utensils which falls under Entry
87 of Part-I, as the dealer denies to be made liable under Entry 87 of
Part-I having sold melamine utensils of dinner sets (as stated in
course of hearing), therefore, the same shall have to come under the
purview of genus Entry 35 of Part-II of Schedule liable to be taxed @
2% inasmuch as it is a settled law that exemption of reduced rate is
granted to an assessee on production of evidences and claims
thereof. When the dealer denies the same, higher rate of tax is to be
made application on the facts and in the circumstances of the case. In
view of the above submission and judicial pronouncements it may be
held that 'melamine utensils' are scheduled goods liable to tax under
the OET Act."
8.2. It is not open to the party to moot a ground not taken up before the
Appellate Assistant Commissioner nor was such an appeal
maintainable before the Tribunal on a point which was not the
subject-matter of the appeal before the first appellate authority.
Furthermore, when the grounds of second appeal as agitated by the
Revenue (extracted in the foregoing paragraphs) do not show that at
any point of time such a ground was taken. It has been laid down in
State of Orissa Vrs. Lakhoo Varjang, (1961) 12 STC 162 (Ori) that
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the appellate jurisdiction of a Tribunal is only against the appellate
order of the first appellate authority and not against the original order
of assessment passed by the Sales Tax Officer when the first
appellate authority did not go into the question of liability of the
assessee to be assessed because that question was never raised before
him, the Tribunal does not inhere jurisdiction to allow additional
grounds to be taken or evidence to be led in respect of a matter that
had been concluded between the parties even at the first appellate
stage.
8.3. The word "appliances" being word of day-to-day use, its popular or
commercial parlance meaning has to be adopted as against its
scientific or technical meaning because of the well-settled principle
of interpretation that in taxing statutes, words of everyday use must
be construed not in the scientific or technical sense but as understood
in common parlance. However, the word "appliance" as used in
Entry 35 of Part-II of Schedule is to be construed in the sense it is
accompanied by other items.
8.4. Further investigation into the matter revealed that in CST Vrs. HM
Industries, (1980) 46 STC 99 (All) it has been made clear that sewai
ki machine is used as a means to an end; it is a device which gives the
desired result by producing sewai by mechanical method. It is
therefore an appliance. Sewai ki machine made of iron (machine for
producing vermicelli) is understood in common parlance as kitchen
appliance. Kitchen is a room where food is cooked, and it is in this
sense that it is normally understood. An article may not be of direct
use yet its use may be such without which it may not be possible to
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run the kitchen. Thus, the item in question cannot be attributed the
meaning of "all kinds of kitchen appliance" as enumerated in Entry
35 of Part-II of the Schedule.
8.5. Considering the items reflected in Entry 35 of Part-II of Schedule do
not conceive of "dinner sets", as stated in the written note of the
Standing Counsel before the Tribunal.
9. Having failed in his valiant attempt to persuade this Court to drive
that "melamine utensils" do fall within the wider understanding in
trade parlance with regard to items specified in Entry 23, 76 and 79 of
Part-I, Sri Sunil Mishra, learned Additional Standing Counsel has
made suave shift towards raising the contention that at any rate the
subject-goods would fall within the ken of Entry 87 of Part-I of
Schedule. This aspect of his contention poses contradictory
proposition. At paragraph 4 of the petition dated 08.12.2016 filed by
the State Representative through Additional Standing Counsel before
the Tribunal which is made Annexure-4 to the revision petition, it has
been stated thus:
"That the first appellate authority should have inspected the finished
product before coming to conclusion that 'melamine utensil' is not
scheduled goods. No evidence is available on the appellate record to
show that 'melamine utensil' are not 'plastic goods' falling within the
scope of Entry 23 of Part-I of Schedule to the OET Act. The first
appellate authority failed to examine and/or verify as to whether
'melamine utensil' would fit into any other entries available under the
statute."
9.1. However, the reason best known to the counsel appearing for the
Revenue before the Tribunal at the time of hearing changed his stand
to Entry 35 of Part-II and Entry 87 of Part-I of Schedule to the OET
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Act. Nevertheless, the Revenue again changed its contention before
this Court while filing revision petition by posing question of law
vide Paragraph 20. To reiterate it may be necessary to quote the said
question:
"Whether on the facts and in the circumstances of the case
'melamine utensils, i.e., plates, bowls, spoons and dinner sets, etc.
are exigible to tax @ 1% under Part-I of Schedule to the OET Act
and thereby the Tribunal having not decided the issue in proper
perspective, fell in error?"
9.2. Under such context, the Revenue has called upon this Court to decide
whether "plates, bowls, spoons and dinner sets" would fall within the
expression "rice cooker, pressure cooker and kitchen ware/utensils".
It is commonly known that plates, bowls and dinner sets do not
answer the description like "rice cooker" and "pressure cooker". The
learned Additional Standing Counsel pressed into service the
meaning of the term "utensils" as propounded by Karnataka High
Court in the case of Stovekraft Pvt. Ltd. Vrs. State of Karnataka,
(2006) 147 STC 329 (Kar). This Court takes note of the meaning of
"utensils" as also the context of construction of wider and narrower
meaning attributable to a particular item in an entry as has been
observed in the said reported Judgment:
"13. *** Utensil means any article useful or necessary in a house-
hold commonly used in a kitchen. In other words, an
implement, tool or vessel fit for use and serving useful purpose.
As the entry stands, the words used are 'all utensils'
'including'. The word 'all' and 'including' has special
significance. The word 'includes' is often used in
interpretation clauses in order to enlarge the meaning of the
words or phrases occurring in the body of the statute. When it
is so used, these words and phrases must be construed as
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comprehending not only such things as they signify according
to their nature and import, but also things which the
interpretation clause declares that they shall include. The
words used in an inclusive definition denote extension and
cannot be treated as restricted in any sense. When we are
dealing with an inclusive definition it would be inappropriate
to put a restrictive interpretation upon the terms of wider
limitation. As the word 'utensil' is not defined under the Act,
but in entry No. 5 the word used is 'all utensils' 'including', it
is inappropriate to put a restrictive meaning to the word
'utensil' as understood in common parlance. The word
'utensil' is a term of wider denotation.
14. It is to be remembered the word used in law imposing a tax
should be construed in the same way in which they are
understood in ordinary parlance in the area in which the law
is imposed. If the expression is capable of a wider meaning as
well as a narrower meaning the question whether the wider
or narrower meaning should be given depends on the context
and the background of the case. The terms and concepts
appearing in the taxing statutes require to be understood the
way in which they have been defined in the statute and in the
absence of such definitions in the statutes, they should be
understood in their popular meaning and as understood in
commercial or common parlance. The intention of the
legislation which is paramount not only requires to be taken
note of, but also the purpose for which the Legislature intends
to levy tax at the reduced rate of tax."
9.3. The entry as reflected in the statute of Karnataka State does not seem
to be akin to the items under consideration in Entry 87 of Part-I of
Schedule to the OET Act as the Karnataka High Court was in seisin
of the entry "all utensils including pressure cookers and pans other
than utensils made up of precious metals". In the said Judgment the
said Court held that:
"If we go by the dictionary meaning, a tool or an implement serving
a useful purpose, especially for domestic, that is used in a kitchen is a
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utensil. All utensils are not vessels. But all vessels are utensils
However, the word "utensil" include a vessel and all other tools and
implements which are of use for domestic purpose and in a kitchen. If
the legislative intent is kept in mind and the meaning of the word
"utensil" as gathered from the aforesaid definition is taken into
consideration and the way the entry is worded namely "all utensils"
"including" and when what is excluded from this definition is
expressly stated it is clear that a stove whether it is a LPG stove or
kerosene wick stove would fall within the word "all utensils" and
falls within Entry No. 5 of third schedule to the Act."
The Supreme Court in the case of Annapurna Biscuit Manufacturing
Co. Vrs. Commissioner of Sales Tax, Uttar Pradesh,
Lucknow, (1981) 48 STC 254 (SC) has held that the words used in a
law imposing a tax should be construed in the same way in which
they are understood in ordinary parlance in the area in which the law
is in force. If an expression is capable of a wider meaning as well as a
narrower meaning the question whether the wider or the narrower
meaning should be given depends on the context and the background
of the case.
9.4. Entry 87 of Part-I of Schedule used the symbol "/" which is preceded
by "kitchen ware" and succeeded by "utensils". It is well established
principle of construction that an effort must be made to give effect to
all parts of statute and unless absolutely necessary, no part thereof
shall be rendered surplusage or redundant. The intention is clear that
symbol "/" in Entry 87 of Part-I signifies that the OET Act wanted to
restrict the levy of tax to such "kitchen ware" which are similar in
nature and use as "utensils" and such utensils must be of similarity
with goods as that of "rice cooker" and "pressure cooker". Therefore,
drawing distinction between entries in the OET Act and entries under
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the Karnataka statute, it may not be inept to say that Stovekraft Pvt.
Ltd. (supra) does not come in aid of the contention of the Revenue.
9.5. Analysing the items contained in Entry 87 of Part-I in a different
angle takes this Court to refer to the doctrine of ejusdem generis. The
Latin expression "ejusdem generis" which means "of the same kind
or nature" is a principle of construction, meaning thereby when
general words in a statutory text are flanked by restricted words, the
meaning of the general words are taken to be restricted by
implication with the meaning of the restricted words. This is a
principle which arises "from the linguistic implication by which
words having literally a wide meaning (when taken in isolation) are
treated as reduced in scope by the verbal context". This principle is
presumed to apply unless there is some contrary indication.
Reference may be had to Maharashtra University of Health Sciences
Vrs. Satchikitsa Prasarak Mandal, (2010) 3 SCC 786. Ejusdem
generis principle is a facet of the principle of noscitur a sociis. The
Latin maxim noscitur a sociis contemplates that a stututory term is
recognised by its associated words. The Latin word 'sociis' means
'society'. In other words, a thing is known by its companions. It is an
extended and attenuated version of the ejusdem generis rule. The
words are to be understood to have been used in their cognate sense.
Therefore, when general words are juxtaposed with specific words,
general words cannot be read in isolation. Their colour and their
contents are to be derived from their context. But, like all other
linguistic canons of construction, the ejusdem generis principle
applies only when a contrary intention does not appear. The ejusdem
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generis rule strives to reconcile the incompatibility between specific
and general words. This doctrine applies when:
(i) the statute contains an enumeration of specific words;
(ii) the subjects of the enumeration constitute a class or category;
(iii) that class or category is not exhausted by the enumeration;
(iv) the general term follows the enumeration; and
(v) there is no indication of a different legislative intent.
In this respect regard may be had to Amar Chandra Chakraborty Vrs.
Collector of Excise, (1972) 2 SCC 422; Soudamini Sivadas Vrs. State
of Kerala, (2015) 77 VST 1 (Ker).
9.6. When the words "kitchen ware/utensils" are juxtaposed with "rice
cooker, pressure cooker", melamine goods in question such as plates,
bowls, spoons and dinner sets do not come within the fold of items
enumerated in Entry 87 of Part-I of Schedule.
10. At any rate the Revenue in the questions of law has not made its
stance pin pointed and firm. Therefore, this Court does not warrant it
expedient to interfere with the finding/observation made by the
learned Odisha Sales Tax Tribunal.
10.1. The learned Odisha Sales Tax Tribunal has rendered its finding as
follows:
"So the different stands taken by the revenue at different times land
us in utter confusion. Even rate of tax @2% has been raised i.e. more
than what the ld. STO has assessed though the grounds of appeal
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point 4 speaks about restoring the order of the ld. STO i.e., taxing it
at 1% under the OET Act. So the contention in the write up differs
from the grounds of appeal and no addl. ground is taken.
Entry Sl. 87 mentioned supra very much suggests the utensils to be
related to rice cooker, pressure cooker and kitchen range. It is also
contended by the revenue to be dinner set, admittedly used on the
dining table and not used for cooking purposes in the kitchen. As
mentioned in the Entry 35 of Part II of the Schedule we find it to refer
to all kitchen appliances. Melamine Utensils cannot fit into the said
entry as there is no specific mention of dinner set as evident from the
Annexure-2 to the written note. In the fresh argument the revenue did
not contend it to be a plastic goods coming under Entry 23 of Part I
of the Schedule.
In this context while considering the taxability under the OET Act we
follow the decision of the Hon'ble High Court of Orissa pronounced
in case of M/s Hindustan Lever Ltd. Vrs. Sales Tax Officer and
Another, Writ Petition (C) No.11400 of 2005 decided on 21.01.2010.
Accordingly, in Entry Tax Act, tax can be levied on the goods
mentioned in the Schedule. As there is no mention of 'washing soap'
in the entry in the Schedule under the Orissa Entry Tax Act, the
assessing authority has fallen into error by taking the generic entry
'soap and detergent' from the Orissa Sales Tax Act and levying
under the Entry Tax Act.
Moreover Entry 76, Part-I of the Schedule to Entry Tax speaks
'stainless steel utensils'. No where it is mentioned about utensils of
all kinds or of all preparations.
So in following the decision of the Hon'ble High Court of Orissa in
case of M/s. Hindustan Lever Ltd. mentioned supra we cannot say the
observation of the leaned DCST on taxability of melamine utensils
under the OET Act to be wrong."
10.2. The stand of the Revenue, examined in the light of aforesaid finding
of the learned Tribunal, is apparently contrary to what has been
returned by the Assessing Authority. The Assessment Order without
any ambiguity has recorded as follows:
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"The dealer in the instant case is engaged in manufacturing and
sales of melamine utensils. ***"
10.3. Whether "dinner set" made of melamine fell within the scope of any
of the entries in the Schedule to the OET Act was never under
consideration before the taxing authorities. It is the "melamine
utensils" which was subject-matter of examination by the authorities.
Even the grounds of second appeal filed by the Revenue did not
suggest the same. Instead of making prevaricating statements, the
Standing Counsel for the Revenue before the Tribunal should not
have confused by taking new plea for adjudication as to whether
plates, bowls, spoons and dinner sets would be exigible to rate of tax
@ 1% without specifying the particular entry in which "melamine
utensils" would fall.
10.4. The charging provision, i.e., Section 3, dealing with levy of tax, in
sub-section (1) thereof, spelt out as follows:
(1) There shall be levied and collected a tax on entry of the
scheduled goods into a local area for consumption, use or
sale therein at such rate not exceeding twelve percentum of
the purchase value of such goods from such date as may be
specified by the State Government and different dates and
different rates may be specified for different goods and local
areas subject to such conditions as may be prescribed.
Provided that the State Government may direct that in such
circumstances and under such conditions and for such period
as may be prescribed, a dealer shall pay in lieu of tax
payable under this Act a sum fixed in the prescribed manner,
and in such a case the tax shall be deemed to have been
compounded."
10.5. The aforesaid charging provision is required to be read along with
provisions contained in another charging being Section 26 which is
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meant for fixing liability on the manufacturers. Section 26(1) reads as
follows:
"Manufacturers to collect and pay tax.--
(1) Notwithstanding anything contained in this Act, every
manufacturer of scheduled goods who is registered under the
VAT Act shall in respect of sale of its finished products effected
by it to a buying dealer or person, either directly or through an
intermediary, shall collect by way of tax an amount equal to
the tax payable on the value of such finished products under
Section 3 of this Act by the buying dealer or person in
prescribed manner and shall pay the tax so collected into the
Government Treasury:
Provided that the tax so payable by a manufacturer under this
sub-section during a year shall be reduced by the amount of
tax paid under this Act on the raw materials which directly go
into the composition of the finished products during that year
in the prescribed manner:
Provided further that where a buying dealer, under the Rules
providing for the rates of tax required to be specified with
reference to Section 3, is entitled to pay tax at a concessional
rate or not to pay any tax, as the case may be, in respect of
such finished products, the manufacturer shall, on a
declaration furnished by the buying dealer in the prescribed
form, collect the tax at such concessional rate or shall not
collect any tax, as the case may be.
Explanation.--
For the purposes of this section, 'manufacturer' shall include a
person who is engaged in mining and sells goods produced or
extracted therefrom."
10.6. It has been enunciated in the Judgment dated 13th November, 2002 of
this Court in the matters of Indian Metals & Ferro Alloys
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Corporation of Orissa Vrs. State of Odisha & Others, OJC
3995/2000, etc. etc. that:
"In the result, while declining to strike down the Orissa Entry Tax
Act, 1999 as ultra vires, we direct that--
(1) Unless the basic ingredients, i.e., Entry of scheduled goods for
the purpose of Consumption, Use or Sale into a local area of
the State are satisfied, the provisions of the Orissa Entry Tax
Act, 1999 shall not be attracted;
(2) The goods which enter into a local area/areas only for the
purpose of transit will not be subject to Entry Tax; and
(3) Every manufacturer of scheduled goods under Section 26 shall
collect by way of Entry Tax amount 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 purpose of
Consumption, Use or Sale."
10.7. In Hindustan Lever Ltd. Vrs. Sales Tax Officer, W.P.(C) No.11400 of
2005, vide Order dated 21st January, 2010 it is laid down by this
Court as follows:
"In Entry Tax Act, tax can be levied on the goods mentioned in the
Schedule."
10.8. As the item "melamine utensils" does not fit into any of the entries as
suggested by Sri Sunil Mishra, learned Additional Standing Counsel,
the Tribunal is apt to hold the same to be non-scheduled goods, and
therefore, entry tax is not exigible on the finished goods sold by the
opposite party-dealer. Hence, the revision preferred by the Revenue
under Section 19 of the OET Act fails.
Conclusion:
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11. Since "plates, bowls, spoons and dinner sets" were never came for
adjudication before the Assessing Authority nor the First Appellate
Authority, for the first time before the Tribunal the Revenue could not
have raised such a plea. Having not taken firm stand before the fact-
finding authorities, the question of law No.I as posed by the Revenue
does not fall for consideration.
11.1. So far as question of law No.II is concerned, the Tribunal has rightly
not interfered with the appellate order inasmuch as at different times
different stand was taken by the Revenue. This Court finds that no
specific ground has been pleaded at the second appellate stage by the
Commissioner of Sales Tax. Reading of ground No.3 of the second
appeal vide Annexure-3 to the revision petition indicates that the
Revenue seeks to impress that "utensils of any nature" is to be treated
as "utensils for all purpose" so as to embrace within the sweep of
Entry 87 of Part-I of Schedule. Close scrutiny of said entry ex facie
makes it clear that said word being accompanied by the words "rice
cooker, pressure cooker and kitchen ware", it is to be understood in
the same sense in which accompanied words connote. No document
is cited by the learned Additional Standing Counsel to show that
ground No.3 has been amended or sought to be deleted for taking a
different stand before the learned Tribunal. Therefore, this question is
answered in the negative by holding that the Odisha Sales Tax
Tribunal has not committed error in classifying "melamine utensils"
as non-scheduled goods under the OET Act, 1999.
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11.2. In view of aforesaid observation in respect of question Nos. I and II,
no specific answer is required to be given in respect of question
No.III. Said question is answered accordingly.
12. For the reasons stated above, being sans merit, the revision petition is
bound to be dismissed. Accordingly, the STREV petition is
dismissed, but in the circumstances there shall be no order as to costs.
(MURAHARI SRI RAMAN)
JUDGE
DR. B.R. SARANGI, J. I agree.
(DR. B.R. SARANGI)
JUDGE
Orissa High Court, Cuttack
The 27th March, 2023/Laxmikant
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