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2023 (3) TMI 796
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....7 W.P.(C) No. 19725 of 2017 W.P.(C) No. 19727 of 2017 W.P.(C) No. 19728 of 2017 W.P.(C) No. 19729 of 2017 W.P.(C) No. 19737 of 2017 W.P.(C) No. 19738 of 2017 W.P.(C) No. 19739 of 2017 W.P.(C) No. 19974 of 2017 W.P.(C) No. 19975 of 2017 W.P.(C) No.20256 of 2017 W.P.(C) No. 34659 of 2022 and others M/s. Shree Bharat Motors Ltd. and Another M/s. Praxair India, M/s. Nestle India Ltd., M/s. Essel Mining & Industries Ltd., M/s. Koshala Enterprises Pvt. Ltd. M/s. Indera Motors, M/s. Amarnath Enterprises, M/s. Kiran Sanitary and Machinery, M/s. Seetal Automobiles, M/s. Utkal Polyweave Industries Pvt. Ltd., M/s. Bharat Motors, M/s. JMG Automobiles M/s. Super Sales Automobiles Pvt. Ltd., M/s. City Motors Pvt. Ltd., M/s. Consortium Automobiles Pvt. Ltd., M/s. Super Sales Motors Pvt. Ltd., M/s. Utkal Automobiles Pvt. Ltd., M/s. R.K. Marbels M/s. Utkal Auto, M/s. Sunny Motors, M/s. Orbit Motos Pvt.Ltd., M/s. Sky Automobiles M/s. Swati Marbels, Versus The Sales Tax Officer, Bhubaneswar-I Circle, Bhubaneswar and Others State & Others, Commissioner of Sales Tax, Commissioner of Commercial Taxes & Another, State of Odisha Sales Tax Officer, Bhubaneswar-II Advocates appeared in the case: ....
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....inless Ltd. Vrs. State of Haryana, (2017) 12 SCC 1. 1.2. Therefore, the petitioner has prayed for the following reliefs: "i) issue a writ of certiorari or a writ in the nature of certiorari, or such other appropriate order/writ/direction quashing the order dated 11.11.2016 passed by the opposite party No.2, under Annexure-6; ii) issue a writ of certiorari or a writ in the nature of certiorari, or such other appropriate order/writ/direction quashing the notices in E-24 dated 26.05.2017 under Annexure-9 series; iii) issue a writ of certiorari or a writ in the nature of certiorari, or such other appropriate order/writ/direction quashing the notices in E-8 dated 26.05.2017 under Annexure-8 series; iv) issue a writ of certiorari or a writ in the nature of certiorari, or such other appropriate order/writ/direction quashing the order dated 24.06.2017 under Annexure-11; v) issue a writ of certiorari or a writ in the nature of certiorari, or such other appropriate order/writ/direction quashing the Circular dated 23.06.2017 under Annexure- 10; vi) issue a writ of mandamus or a writ in the nature of mandamus, or such other appropriate o....
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....ry requirements of Article 304(b) of the Constitution of India. The argument in that behalf has also to be overruled. 43. The argument that because the entire State is divided into local authorities under the Act and hence the legislation is outside Entry 52 of List II of the Constitution of India cannot also be accepted since it is a compensatory tax and since what is taxed or intended to be taxed is only entry of goods into a local area for consumption, sale or use within that area, the whole of the State has necessarily to be brought within the purview of the Act to the extent it is part of a local area as defined in the Act. Therefore, nothing turns on the argument that all parts of the State are brought within the definition by making it a part of one local area or another. The legislation cannot be successfully challenged as a colourable piece of legislation. 44. 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 Oriss....
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....t and immediate effect' of the impugned law on trade and commerce under Article 301 as propounded in Atiabari Tea Co. Ltd. Vrs. State of Assam, AIR 1961 SC 232 and the working test enunciated in Automobile Transport (Rajasthan) Ltd. Vrs. State of Rajasthan, AIR 1962 SC 1406 for deciding whether a tax is compensatory or not vide para 19 of the report, will continue to apply and the test of 'some connection' indicated in para 8 of the judgment in Bhagatram Rejeevkumar Vrs. Commissioner of Sales Tax, M.P. 1995 Supp (1) SCC 673 and followed in the case of State of Bihar Vrs. Bihar Chamber of Commerce, (supra) is, in our opinion, not good law. Accordingly, the constitutional validity of various local enactments which are the subject matters of pending appeals, special leave petitions and writ petitions will now be listed for being disposed of in the light of this judgment." 2.3. Thereafter, the two-Judge Bench of the Hon'ble Apex Court observed in Jindal Stainless Ltd. (3) Vrs. State of Haryana, (2006) 7 SCC 271 thus: "5. Since relevant data do not appear to have been placed before the High Courts, we permit the parties to place them in the writ petitions concerned within tw....
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....on, is not the subject matter of issue in these seven writ petitions. However, this plea is open for the State in the other fresh writ petitions which are not being dealt here. We are only determining the issue whether the impugned levy imposed by way of Odisha Entry Tax Act was compensatory in nature and, therefore we consider whether the impugned enactment facially or patently indicates the quantifiable data on the basis of which the compensatory tax is sought to be levied and whether the Act facially indicates the benefits which is quantifiable or measurable and the proportionality of the quantifiable benefits but we have not found any such thing in the Act. They do not show that payment of entry tax is reimbursement/recompense for the quantifiable and measurable benefits to be provided to its payers. Providing facilities to the citizens or others would not definitely come under the activities like movement of trade, commerce and intercourse for the free flow of trade and commerce. 19. Therefore, the State has failed to show that the Orissa Entry Tax is reimbursement/recompense for the quantifiable and measurable benefits provided to trades people and the provision for ....
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....ursement/recompense for the quantifiable and measurable benefits provided to its payers. Therefore, if we do not consider Article 304 Clause (a) or (b) certainly the Orissa Entry Tax would tantamount to infringement of Article 301. 30. The State has taken the plea that the Orissa Entry Tax Act has been enacted under Clause (a) of Article 304 of the Constitution. Therefore, as discussed above, no tax can be imposed on those goods imported from outside the State which are not manufactured or produced in the State of Orissa. However, we do not find any discrimination in the provisions of the Act between the goods imported from outside the State and those manufactured or produced in the State of Orissa and are brought into the local area within a State. In this regard, the definition of 'entry of goods' given in Clause (d) of Section 2 is relevant which shows that there is no discrimination between the goods produced or manufactured within the State of Orissa or imported from outside and are brought within the local area. The rate of tax imposed under the Act or the Rules are also applicable uniformly on the goods imported from outside or goods manufactured within the State wh....
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....lications: In this batch of interlocutory applications, the Department has furnished to this Court names of traders in List-A and names of manufacturers in List-B, excepting M/s. Bhushan Steel and Strips Limited, M/s. Bhushan Energy, M/s. Vedanta Alumina Limited and M/s. Reliance Industries Limited, whose cases we have dealt with separately, who are required to pay Entry tax upto 30th September, 2009. Both these lists are covered by Paragraph (30) of the impugned judgement. The lists read thus: *** Having regard to the outstanding amounts in List-A and List-B, mentioned hereinabove, we are of the view that each of the assessees will, without prejudice to its rights, deposit with the Department one-third of the outstanding amount indicated in List-A and List-B as on 30th September, 2009, before 31st March, 2010. Each of such assessees will also continue to deposit with the Department the outstanding amount on the basis of the current liabilities, which has accrued after 30th September, 2009, at the rate of 33 1/3rd% of the amount due in the monthly Returns which each of the assessees has been filing with the Department. It needs to be clarified th....
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....owever, will remain on the file of this Court, they will not be dismissed, but they will remain confined only to the question of constitutional validity of the impugned law and in each of such cases, it is made clear that there is no stay on recovery." 2.9. During the pendency of aforesaid matters before the Hon'ble Supreme Court, further writ petitions were filed challenging the vires of the OET Act and this Court following aforesaid interim Order dated 03.02.2010 passed by the Hon'ble Supreme Court used to dispose of the writ petition(s). One of such cases being M/s. Annapurna Agency Vrs. State of Odisha, W.P.(C) No.5555 of 2010, following Order was passed on 06.05.2010: "Heard learned counsel for the petitioner and learned counsel for the Revenue. It is stated by the learned counsel for the petitioner that the dispute relating to paragraph 30 of the judgment dated 18.02.2008 rendered by this Court in the case of M/s. Reliance Industries Ltd., Vrs. State of Orissa and Others reported in (2008) 16 VST 85 (Orissa), which is similar to the case of the present petitioner, is now pending adjudication before the apex Court in SLP(C) No. 14454-14778 of 2008. ....
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....Bench. *** 10. Applying the tests laid down in the aforestated two cases i.e. Keshav Mills Co. Ltd., AIR 1965 SC 1636 = (1965) 2 SCR 908 and Central Board of Dawoodi Bohra Community, (2005) 2 SCC 673 = 2005 SCC (Cri) 546 = 2005 SCC (L&S) 246, we find that on a number of aspects a larger Bench of this Court needs to revisit the interpretation of Part XIII of the Constitution including the various tests propounded in the judgments of the Constitution Bench of this Court in the aforestated two cases, namely, Atiabari Tea Co., AIR 1961 SC 232 = (1961) 1 SCR 809 and Automobile Transport (Rajasthan) Ltd., AIR 1962 SC 1406 = (1963) 1 SCR 491. 11. Some of these aspects which need consideration by a larger Bench of this Court may be briefly enumerated. Interplay/interrelationship between Article 304(a) and Article 304(b). The significance of the word "and" between Articles 304(a) and 304(b). The significance of the non obstante clause in Article 304. The balancing of freedom of trade and commerce in Article 301 vis-à-vis the States' authority to levy taxes under Article 245 and Article 246 of the Constitution read with the appropriate legislative entries in....
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....gher rate than that borne by goods produced in the State. A discriminatory tax against outside goods is not a tax simpliciter but is a barrier to trade and commerce. Article 304 itself makes a distinction between tax and restriction. That apart, taxing powers of the Union and States are separate and mutually exclusive. It is rather strange that power to tax given to States, say, for instance, under Entry 54 of List II to pass a law imposing tax on sale of goods should depend upon the goodwill of the Union Executive." 14. For the aforestated reasons, let this batch of cases be put before the Hon'ble the Chief Justice of India for constituting a suitable larger Bench for reconsideration of the judgments of this Court in Atiabari Tea Co., AIR 1961 SC 232 = (1961) 1 SCR 809 and Automobile Transport (Rajasthan) Ltd., AIR 1962 SC 1406 : (1963) 1 SCR 491." 2.11. While the matter stood thus, this Court heard another batch of matters raising question as to whether scheduled goods imported from outside the territory of India is exigible to Odisha entry tax and delivered Judgment dated 09.10.2012 in the case of Tata Steel Ltd. Vrs. State of Odisha, etc., etc., 2013 (I) ILR-CUT 256....
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....Article 304(b) or the proviso there under is satisfied. 5. The compensatory tax theory evolved in Automobile Transport case and subsequently modified in Jindal's case has no juristic basis and is therefore rejected. 6. Decisions of this Court in Atiabari, Automobile Transport and Jindal cases (supra) and all other judgments that follow these pronouncements are to the extent of such reliance over ruled. 7. A tax on entry of goods into a local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing State. 8. Article 304(a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation. Therefore, incentives, set-offs etc. granted to a specified class of dealers for a limited period of time in a non-hostile fashion with a view to developing economically backward areas would not violate Article 304(a). The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters. 9. States are well within their right to design their fiscal legislations to ensure that the ta....
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....ay 33% of the tax. We find that in many other cases coming from other States, interim stay was given subject to deposit of 50% of the tax amount. We, therefore, modify the aforesaid interim orders by directing the appellants to pay 50% of the demand Arrears in this manner shall be calculated and paid within a period of two weeks. The aforesaid order of stay, subject to payment of 50%, shall remain in operation for a period of four weeks as aforesaid." 2.15. Further Judgment being State of Kerala and Others Vrs. Fr. William Fernandez, etc., etc., (2018) 57 GSTR 6 (SC) = (2021) 11 SCC 705 has been delivered by Division Bench of the Hon'ble Supreme Court with the following observation: "143. Learned counsel appearing for the State of Orissa has opposed the prayer of the petitioner seeking liberty to raise the issue. It is contended that petitioners have not raised the relevant issues nor pleaded in support of the plea of discrimination under Article 304(a). The parameters under which entry tax can violate the Article 304(a) has now been conclusively laid down by Nine Judges Bench in Jindal Stainless Ltd.(supra). We are thus of the view that liberty be given to petitioners ....
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....n that essence of Entry 52 is octroi which can be levied only by local authorities and State has no legislative competence to impose entry tax under Entry 52 List II is fallacious. (viii) A plant imported in knocked out condition is fully covered with the definition of machinery and equipment under Part II of Schedule of the Orissa Act, 1999. 145. In view of our foregoing discussion and conclusion, we decide all the appeals in this batch of appeals in following manner: (i) All the appeals filed against the judgments of Orissa High Court are dismissed. The Transfer case is also dismissed. (ii) All the appeals filed against the judgment of Patna High Court are dismissed. (iii) The civil appeal filed against the judgment of Jharkhand High Court stands allowed. (iv) The appeals filed by the State of Kerala are allowed. The judgment of the Division Bench holding that no entry tax was leviable on the vehicle imported from territories outside the country is set aside, restoring the judgment of the learned Single Judge. (v) Writ Petition 574 of 2003, Parisons Agrotech Pvt. Ltd. Vrs. State of Kerala & Ors. is dismissed. ....
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..... After careful consideration, the Chief Secretary has been pleased to constitute a Committee with following members, namely:- (i) Principal Secretary to Government, Finance Department ... Chairman (ii) Commissioner of Commercial Taxes, Odisha ... Member (iii) Special Secretary to Government (CT-I Branch), Finance Department ... Member (iv) Additional Secretary (CT-I Branch), Finance Department ... Member Convener 2. The Committee shall, while examining their grievances, take a decision either on case to case basis or on the basis of guidelines to be decided by the Government. 3. The Joint Commissioner of Commercial Taxes (Law) and Deputy Commissioner of Commercial Taxes (Revenue), O/o. CCT, Odisha and officers of C.T.-I Branch, Finance Department shall assist the Committee. ORDER The order be published in the Extraordinary issue of the Odisha Gazette for general information of public. N. K. RAUTRAY Additional Secretary to Government" 2.18. Report submitted by the Committee as has been referred to by this Court in Order dated 24th April, 2019 in the matter of S.S. Steeloy Pvt. Ltd. Vrs. Commis....
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....eon shall be cited as precedence in other cases under the Odisha Entry Tax Act, 1999 or any other Tax Act." Pursuant to the above recommendations, all these matters require consideration. Therefore, the matters are admitted. The petitioners will pay the tax amount as directed by the Hon'ble Supreme Court as well as interest from the date of the judgment of the Hon'ble Supreme, i.e., with effect from 28.03.2017, on or before 31st of July, 2019. The matters shall be listed on 7th August, 2019. In the meantime, it would be open to each of the petitioners to come for further time in case of any financial constraint on their part to comply with the direction as made above. The tax component already paid pursuant to order of the Hon'ble Supreme Court, shall be adjusted from the tax due and the interest will be calculated only on the balance amount from the date of judgment of the Hon'ble Supreme Court and the same shall be paid. Interest for the period from 2010 to 2017 will be decided at final hearing stage. Learned counsel for the petitioners will inform the learned counsel for the Revenue regarding the amount deposited by producing....
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....king is given that they will pay installments, the same will not be given effect to. 7. We make it clear that before taking into coercive action, the Commissioner will issue notice to the parties concerned and pass orders only after giving opportunity of hearing to the parties concerned. ***" 2.20. With the above backdrop, this Court heard the Senior Advocates, the Advocates appearing for the parties and Senior Counsel engaged by and the Additional Standing Counsel for the Commercial Tax Organisation and it is conceded at the bar that there is no dispute left for adjudication in the instant cases with regard to liability of entry tax and discharge of liability along with interest after passing the Order dated 28.03.2017 by the Hon'ble Supreme Court in State of Odisha Vrs. Reliance Industries Ltd. and Others, SLP(C) No.14454-14778/2008. 2.21. The disputed question to be adjudicated at present in the aforenoted writ petitions is confined to the issue as culled out in S.S. Steeloy Pvt. Ltd. (supra) vide Order dated 24.12.2019. The issue: 3. Whether, pursuant to direction of this Court the Committee having recommended not to enforce penalty for non-payment....
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....y with mandate provided under sub-sections (10) and (11) of Section 7, at this distance of time should not be allowed to invoke provisions of Section 7(5). (f) The view expressed in J.K. Synthetics Limited Vrs. Commercial Taxes Officer, (1994) 4 SCC 276 and Steel Authority of India Ltd. Vrs. Commissioner of Central Tax, (2019) 6 SCC 693 to the effect that though it is a part of adjective law, in absence of substantive provision empowering charging of interest, the circumstances envisaged under Section 7(5) of the OET Act does not authorize the Taxing Authority to raise demand for payment of interest in the present scenario. (g) Till the Hon'ble Supreme Court passed Order dated 28.03.2017 in the case of State of Odisha Vrs. Reliance Industries Ltd. and Others, SLP(C) No.14454-14778/2008 allowing the appeals, in view of its interim Order dated 03.02.2010 passed in interlocutory applications filed by the State of Odisha, the deposit(s) of 1/3rd of the tax due disclosed in the return(s) being considered "not tax" prior to pronouncement of Order on 28th March, 2017, the petitioner is liable to discharge only balance tax payable, but not interest. (h) Even for ....
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....as a condition precedent paid the amount admitted in the returns. The returns were filed, and taxes are paid to the extent admitted therein. The portion of levy which is declared by this Court as not authorized vide Reliance Industries Ltd., (2008) 16 VST 85 (Ori) could not be said to be admitted tax. Such turnovers falling within the ambit of paragraph 30 of said Judgment were disclosed in the returns as was directed by the Supreme Court and this Court. In absence of any authority to collect and deposit amount of 2/3rd, the petitioner could not have been said to have defaulted in payment of admitted tax. The amount of entry tax sought to be levied with interest has never fallen due. Since the Hon'ble Supreme Court had directed that the part payment made would be treated as "deposits" not "tax", the petitioner-dealer had not collected entry tax amount from its customers. There being no tangible material to show by the opposite parties that at any point of time the petitioner had passed on the burden of entry tax on to the customers. 4.1. Therefore, in sum and substance the argument at the bar boils down to one and only point that the interest is not leviable on the balance unpai....
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....Reliance Industries Ltd., (2008) 16 VST 85 (Ori) stands operative and therefore, no liability can be said to have subsisted till the effective order has been passed in the case of State of Odisha Vrs. Reliance Industries Ltd. on 28th March, 2017 by Division Bench of the Supreme Court after legal position is propounded by the larger Bench. 4.6. Sri Rudra Prasad Kar, Advocate urged that it is the State of Odisha litigated before the Supreme Court and might have succeeded, but that would not give it a justifiable reason to contend that the dealer has chosen to proceed with the litigation for which it would be saddled with levy of interest. To buttress his argument Sri Surya Prasad Mishra, learned senior counsel assisted by Sri Rudra Prasad Kar, learned counsel for the petitioner relied on the following paragraph of Shree Chamundi Mopeds Ltd. Vrs. Church of South India Trust Assn., (1992) 3 SCC 1: "10. In the instant case, the proceedings before the Board under Sections 15 and 16 of the Act had been terminated by order of the Board dated April 26, 1990 whereby the Board, upon consideration of the facts and material before it, found that the appellant-company had become econ....
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....y 7, 1991 and it cannot be said that after February 21, 1991, the said appeal stood revived and was pending before the Appellate Authority. In that view of the matter, it cannot be said that any proceedings under the Act were pending before the Board or the Appellate Authority on the date of the passing of the order dated August 14, 1991 by the learned Single Judge of the Karnataka High Court for winding up of the company or on November 6, 1991 when the Division Bench passed the order dismissing O.S.A. No. 16 of 1991 filed by the appellant-company against the order of the learned Single Judge dated August 14, 1991. Section 22(1) of the Act could not, therefore, be invoked and there was no impediment in the High Court dealing with the winding up petition filed by the respondents. This is the only question that has been canvassed in Civil Appeal No. 126 of 1992, directed against the order for winding up of the appellant- company. The said appeal, therefore, fails and is liable to be dismissed." 4.7. Justifying "sufficient cause" for not paying full "tax due" as per return(s), Sri Surya Prasad Mishra and Sri Jagabandhu Sahoo, Senior Advocates submitted that in Calcutta Jute Manufac....
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....hus, there was finding with regard to leviability of entry tax on the scheduled goods not manufactured/produced within the State of Odisha in paragraph 30 ibid. After the Hon'ble Supreme Court of India passed order on 28.03.2017, the petitioner has paid the balance amount of entry tax. 4.9. It is submitted that this Court also protected the interest of the petitioner-dealer by directing to constitute Committee and also passed order directing the petitioner(s) to approach the Commissioner of Sales Tax for smooth payment of balance tax by granting instalments. Such sufficiency in cause being genuine, there cannot be any demand of interest. 4.10. Sri Bijay Krushna Mahanti, learned Senior Advocate added by saying that the Taxing Authority was supposed to exercise the power under Section 7(5) of the OET Act read with Rule 10(6)(b) of the OET Rules in the manner prescribed, but not otherwise as enunciated by this Court in Toyo Engineering (supra). Having overstepped the modality clarified in said Judgment of this Court, the demand for interest on balance entry tax between 2010 and 2017 would become vitiated for want of jurisdiction and authority. 4.11. Sri Sidharth Ray, learned ....
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....n. When the returns are not accepted, assessment under Section 9C or 10 is undertaken. On failure to pay amount of tax due as per return and "without sufficient cause", interest is chargeable. As Hon'ble Supreme Court passed interim order in the context of challenge qua paragraph 30 of Reliance Industries Ltd., (2008) 16 VST 85 (Ori). Ultimately the appeals of the State of Odisha being allowed, the liability to pay entry tax revived and the turnover as is disclosed in the returns is available to be exigible under the OET Act. 5.1. Sri Rakesh Dwivedi, learned Senior Advocate taking this Court to provisions of Section 7 and requirement of filing self-assessed returns and scrutiny thereof, submitted that notwithstanding interim orders of the Hon'ble Supreme Court nothing prevented the parties from discharging their respective tax liability. The interim orders of the Hon'ble Supreme Court while the validity of the OET Act was under consideration particularly so the Appeals preferred by the State of Odisha with regard to observation of this Court that "the State has no jurisdiction to impose tax on such goods imported from outside and are not manufactured within the State of Orissa."....
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....per the return, exercise of power under Section 7(5) is concomitant and therefore, there could not have been any imputation against levy of interest @ 2% or 1% per month as envisaged ibid. 5.4. In furtherance, it is also advanced that on the principles of "restitution" and "unjust enrichment" as propounded in Indian Council for Enviro-Legal Action Vrs. Union of India, (2011) 8 SCC 161, that with restitution so long as the deprivation of the other has not been fully compensated for, injustice to that extent remains, and this court being vested with wide powers to grant restitution can sustain the demand for levy of interest. 5.5. Sri Rakesh Dwivedi, learned senior counsel for the Commercial Tax Organisation pressed into service Kerala State Electricity Board Vrs. M.R.F. Ltd., (1996) 1 SCC 597, to contend that in absence of any interim order granting stay of operation of the impugned judgment, the judgment of the High Court was binding between the parties despite pendency of the appeal. 5.6. Notwithstanding grant of interim order, in Nava Bharat Ferro Alloys Ltd. Vrs. Transmission Corpn. of A.P. Ltd., (2011) 1 SCC 216 the Court held as follows: "28. Superadded to al....
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....wing from the statutory provisions for "assessment of tax" on account of non- payment of tax as per returns; (ii) Interest has been sought to be levied on the tax remained unpaid during 2010-17 by the Taxing Authority invoking provisions of sub-section (5) in view of scrutiny of return(s) as being empowered under sub-sections (10) and (11) of Section 7 of the OET Act after declaration of law by Nine-Judge Constitution Bench of the Hon'ble Supreme Court of India and as a consequence thereof the Orders passed by the Division Bench of said Court. (iii) The sum and substance of the argument of learned counsel is that since the State of Odisha in I.A. Nos. 327-651 in SLP(C) Nos.14454-14778/2008 has approached the Supreme Court in appeals and the Order dated 30.10.2009 granting stay of operation of portion of paragraph 30 of Judgment in Reliance Industries Ltd., (2008) 16 VST 85 (Ori) stood modified vide Order dated 03.02.2010, the non-payment of tax cannot be construed to have fallen within the expression "without sufficient cause" employed in Section 7(5) of the OET Act. (iv) The manner for invocation of jurisdiction under Section 7(5) of the OET Act read wit....
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....tter, whether this be a person, or a thing. Thus the probate of a will fixes the status of the document as a will; so a decree establishing or dissolving a marriage is a judgment in rem, because it fixes the status of the person. A judgment or forfeiture against specified articles of goods for violation of the revenue laws is a judgment in rem. In such case the judgment is conclusive against all the world, and, if the expression 'strictly in rem' may be applied to any class of cases, it should be confined to such as these. Chief Justice Marshall [Mankin Vrs. Chandler, 16 F Cas 625 at p.626 (CCDV 1823)] says: 'I have always understood that where a process is to be served on the thing itself, and where the mere possession of the thing itself, by the service of a process and making proclamation, authorizes the Court to decide upon it without notice to any individual whatever, it is a proceeding in rem, to which all the world are parties. The claimant if a party, whether he speaks or is silent, whether he asserts his claim or abandons it. But usage has distinguished as proceedings in rem a class of cases in which, while the seizure of the thing will be in aid of jurisdiction, ....
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....led is by comity of nations admitted to recognition by other courts. As observed by Cheshire in his "Private International Law", Sixth Edition at page 109: 'In Roman law an action in rem was one brought in order to vindicate a jus in rem, i.e., a right such as ownership available against all persons, but the only action in rem known to English law is that which lies in an Admiralty court against a particular res, namely, a ship or some other res, such as cargo, associated with the ship.' Dealing with judgments in rem and judgments in personam, Cheshire observed at page 653, 'It (judgment in rem) has been defined as a judgment of a court of competent jurisdiction determining the status of a person or thing (as distinct from the particular interest in it of a party to the litigation); and such a judgment is conclusive evidence for and against all persons whether parties, privies or strangers of the matter actually decided. *** A judgment in rem settles the destiny of the res itself 'and binds all persons claiming an interest in the property inconsistent with the judgment even though pronounced in their absence'; a judgment in personam, although it may conce....
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....ayable by him under this Act: Provided that a dealer who files quarterly return under VAT Act may furnish return under this Act every quarter paying the full amount of such tax as payable for the preceding quarter. Explanation.- A return not accompanied by proof of full payment of the tax due in respect of a tax period shall not be deemed to be a return for the purpose of this section. (5) Where a dealer required to file return under this section fails without sufficient cause to pay the amount of tax due as per the return for any tax period or fails to furnish return, such dealer shall be liable to pay interest in respect of- (i) the tax, which he fails to pay according to the return; or (ii) the tax payable for the period for which he has failed to furnish return, at the rate of one percentum per month from the date the return for the period was due to the date of its payment or the date of order of assessment, whichever is earlier. *** (10) Each and every return in relation to any tax period furnished by a dealer under this section, shall be subject to scrutiny by the assessing authority to verify t....
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.... E-15 and E-16 along with the return. (4) (a) Every dealer required to pay interest under sub- section (5) of Section 7 of the Act in respect of any tax period, shall pay such interest at the time of making payment of tax payable in respect of such tax period. (b) The dealer shall furnish a statement showing details of calculation of the amount of interest payable as referred to in clause (a) and furnish such statement along with receipted challan or e-challan or crossed demand draft or banker's cheque evidencing payment of such interest. (5) (a) Where a dealer fails to make payment of the tax due and interest thereon along with the return or revised return furnished for any tax period, a notice in Form E22 requiring such dealer to show cause within fourteen days from the date of receipt of the notice, shall be served upon him. (b) Where the dealer fails to respond to such notice or explain the default in payment of tax or interest or both to the satisfaction of the authority issuing the notice under clause (a), penalty shall be imposed under sub-section (6) of Section 7 and the order shall be issued in Form E23. (c) Where a dealer fails....
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....at hand, it is the consistent pleading of the petitioners that as this Court observed at paragraph 30 of Reliance Industries Ltd., (2008) 16 VST 85 (Ori) that the State of Odisha is not competent to levy entry tax on the goods brought from outside and not manufactured or produced within the State, the dealers are not required to pay entry tax. However, on the basis of interim Order dated 03.02.2010 passed in I.A. Nos. 327-651 in SLP(C) Nos.14454-14778/2008 of the State of Odisha by the Supreme Court they were required to "deposit" 1/3rd of tax due as disclosed in the returns. The Hon'ble Court made it clear that such payment is treated to be "deposit", but not "tax". 10.1. In the teeth of the declaration of law in paragraph 30 of Reliance Industries Ltd., (2008) 16 VST 85 (Ori), the State is not authorized to collect tax in view of Article 265 of the Constitution of India. Especially when the petitioners are directed to make deposit of certain amount which is not made towards discharge of "tax" liability till the Appeals filed at the behest of State of Odisha are finalized by the Hon'ble Supreme Court, it could not be stated that the disclosure of tax liability in the return and....
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....re to the benefit of none. Therefore, the petitioner is required to determine its own liability as per self-assessed return(s) already filed. Levy of interest under Section 7(5) of the OET Act: 11. Sub-section (5) of Section 7 has been pressed into service for levy of interest on the balance tax payable by the dealer. Whereas sub-section (1) of Section 7 used the term "tax payable", sub- section (5) stipulates that failure to pay the amount of "tax due" as per the return without sufficient cause attracts levy of interest. The intention of Legislature has been made more transparent on reading of sub-rule (4) of Rule 10 of the OET Rules. In unambiguous terms said sub-rule spells out that every dealer required to pay interest under sub-section (5) of Section 7 of the Act in respect of any tax period, shall pay such interest at the time of making payment of tax payable in respect of such tax period. 11.1. It is a part of scheme of the OET Act that tax becomes due the moment the dealer effects either purchases or brings scheduled goods into the local area for consumption, use or sale therein, which are subject to taxation and the obligation to pay the tax arises. Although the t....
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....urns, no sooner did the Hon'ble Supreme Court pronounce the Judgment, than the dealers started paying the balance amount of tax liability. At the time of furnishing return there was no default in terms of conceptual understanding of "tax due". But later on passing of Order dated 28.03.2017 by the Supreme Court allowing SLP(C) No.14454-14778/2008 of State of Odisha, tax has become due. 12. Analysis of Section 7(5) of the OET Act read with Rule 10 of the OET Rules transpires that interest is payable on tax due as discussed above, and the same is subject to fulfilment of condition that on failure to pay the amount of tax due as per the return "without sufficient cause". 12.1. It is in the context of the transactions which fell within ken of paragraph 30 of the Judgment rendered by this Court in Reliance Industries Ltd., (2008) 16 VST 85 (Ori) that the petitioner(s) did not pay full amount of tax from 2010-17, which is in conformity with the terms of interim Order dated 30.10.2009 as modified vide Order dated 03.02.2010 by the Supreme Court. Such interim orders have been passed in the interlocutory applications being I.A. Nos. 327-651 in SLP(C) Nos.14454-14778/2008 moved by the S....
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....be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 12.5. In Sarawati Das Vrs. Pravat Kumar Sahoo, 93 (2002) CLT 441 (Ori) it has been observed that the words 'sufficient cause' has to be interpreted in the given facts and circumstances of each case and Courts have to adjudge on the touch stone of pragmatic parameter and it can never be an iron tight jacket. Once it is found that the summons was duly served, it is for the litigant to appear in Court and prosecute the lis. Failure to do so, would not construe as 'sufficient cause'. Such an interpretation will be unjust and would be a boon to unscrupulous litigants. Non- appearance of a party and non-engagement of an advocate by her will not be construed that the party were prevented by 'sufficient cause' from appearing when the appeal was called for hearing. 12.6. In State of West Bengal Vrs. Administrator, AIR 1972 SC 749 it has been observed by the Supreme Court that the expression 'sufficient cause' cannot be construed too liberally, merely because the party in default is the Government. It can....
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....e court must bear in mind the object of doing substantial justice to all the parties concerned and that the technicalities of the law should not prevent the court from doing substantial justice and doing away the illegality perpetuated on the basis of the judgment impugned before it. Sufficient cause is thus the cause for which the party could not be blamed. Therefore, the petitioner must approach the court with a reasonable defence. There cannot be a straitjacket formula of universal application. Vide Raimal Vrs. Rewa Coalfields Ltd., AIR 1962 SC 361; Lonard Grampanchayat Vrs. Ramgiri Gosavi, AIR 1968 SC 222; Surinder Singh Sibia Vrs. Vijay Kumar Sood, (1992) 1 SCC 70; Orinental Aroma Chemical Industries Ltd. Vrs. Gujarat Industrial Development Corporation, (2010) 5 SCC 459; Parimal Vrs. Veena, (2011) 3 SCC 545; Sudarshan Sareen Vrs. National Small Industries Corporation Ltd., 2013 SCC OnLine Del 4412; State of Bihar Vrs. Kameshwar Prasad Singh, (2000) 9 SCC 94; Madanlal Vrs. Shyamlal, (2002) 1 SCC 535; Davinder Pal Sehgal Vrs. Partap Steel Rolling Mills (P) Ltd., (2002) 3 SCC 156; Ram Nath Sao Vrs. Gobardhan Sao, (2002) 3 SCC 195, Kaushalya Devi Vrs. Prem Chand, (2005) 10 SCC 127....
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....ce Industries Ltd., (2008) 16 VST 85 (Ori). The Assessing Authorities by issuing notice in Form E-24 straightway appeared to have scrutinized returns after matters have been disposed of by the Hon'ble Supreme Court of India. Neither the Apex Court nor this Court restrained the Revenue from proceeding with the assessment as per law and raise the demand. The orders of the Courts were to deposit the tax along with return. Pursuant to such direction the petitioner deposited the amount of tax. The Hon'ble Court clarified while passing the interim order that the amount so deposited were to be treated as "deposit" not "tax". Till the date when the order dated 28.03.2017 is passed by the Supreme Court of India the said amount deposited could not be appropriated by the State of Odisha as "tax". 12.12. Though pursuant to the orders, the returns furnished by the petitioner(s) disclosed turnover relating to the context of paragraph 30 of Judgment in Reliance Industries Ltd., (2008) 16 VST 85 (Ori), and deposited 1/3rd amount of tax due as directed, the petitioner(s) cannot be said to have not paid the admitted tax. As earlier held that on account of partial payment made along with returns, ....
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....e." 13.2. In identical situation in the case of Food Corporation of India Vrs. State of Haryana, (2000) 119 STC 1 (SC) it has been observed as follows: "*** From the above extract of the demand notice issued to the appellant, it is clear that a fresh demand was made pursuant to the judgment of this Court which according to us is the right step to be taken consequent to the declaration of law made by this Court. The further question, therefore, is whether on the demands now made by the respondents on the appellant, can the State also claim interest? We have noticed that the power of the State to collect interest arises under Section 59 of the Act. The said section authorises the State to collect interest on belated payment of tax demanded but this payment of interest can be levied on such belated payment of tax which is legally payable for which a valid demand is condition precedent. As has been noticed by us, the demand notice of the year 1982 which was issued during the period when the State had no authority to levy sales tax cannot be said to be a valid demand based on which interest could be claimed. A valid demand for the assessment year 1975-76 could have been made....
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....onouncement of Order dated 28.03.2017, it has deposited balance tax and this Court in the Order dated 24.04.2019 in S.S. Steeloy Pvt. Ltd. Vrs. Commissioner of Commercial Taxes, Odisha and Others, W.P.(C) No. 21007 of 2017 and batch of matters has directed to deposit the balance tax along with interest accrued on or after 28.03.2017. In the said cases, by the very same order limited the lis of these matters as to whether interest from 2010 to 2017 could be charged. 14.2. Interest is compensatory in character. Since by virtue of order of the Court entire amount of tax due was not discharged, such order should prejudice none. In the present case the petitioner(s) withheld 2/3rd of the tax due as disclosed in the return(s). The Hon'ble Supreme Court while passing Order dated 03.02.2010 clarified that if State of Odisha loses, it would refund the amount deposited by the dealers along with interest. However, there was no proposition with regard to eventual losing of the petitioner(s). Nonetheless, the fact remains that the petitioner(s) could not succeed in the ultimate before the Supreme Court. Thus, there is warrant for an order from this Court granting compensation on the amount w....
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.... In our opinion, while granting an order of stay under Order 41 Rule 5 of the CPC, the appellate court does have jurisdiction to put the party seeking stay order on such terms as would reasonably compensate the party successful at the end of the appeal in so far as those proceedings are concerned.' 19. Though the said observation was made in the context of interim order being considered under Order 41 Rule 5 CPC, it would be more appropriate in a writ proceedings in as much as, not only the interim prayer but the very writ petition will be entertained in the discretionary jurisdiction unlike the statutory appeal under Section 96 read with Order 41 of CPC. In such circumstance, though it is not necessary that a condition is to be imposed in every case for grant of interim order, if the Court in a given case imposes the condition, the same is to be treated as being with a purpose and not as an empty formality. *** 23. As noticed above, the appellant in any event would have the right to determine the loss suffered and recover the same in accordance with law as the process to re-tender, was at the '......cost and risk' of the private respondent as stated in t....
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....considerations. While exercising these powers, the courts have in appropriate cases imposed conditions for payment of interest on the conditional amounts directed to be paid from the date of payment provided the assessee has got a decision in his favour. Reference may be made to Kuil Fireworks Industries v. Collector of Central Excise, 1997 (95) ELT 3 (SC), wherein the court has granted interest on the amount which has been subsequently found not due from the dealer from the date of deposit till the date of refund. This exercise of power by courts cannot be faulted in view of the rigorous provision contained in the Act. Therefore, considering the facts and circumstances of the case and keeping in mind the decisions cited by the parties, we are of the opinion that when conditional amount is directed to be paid out of a disputed amount, a condition may be imposed awarding interest from the date of such payment till a favourable decision is given to a dealer, i.e., in case such payment or part of it is found refundable. For equitable and justiceable consideration, similar direction should also be given that in case of failure of the dealer in appeal or further proceeding, he would be ....
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....ove, it is not by invoking the provisions of the Act, the deposit was directed to be made by the High Court, hence, any direction made while making an order under Articles 226 and 227, to deposit any sum of money will be governed by the conditions imposed in the order directing such deposit. On the contrary if any such condition as to the interest had not been made by the High Court while directing the deposit of the amount then it could be said that the refund which may become payable will be governed by the provisions of the State Act. In the instant case, since the very order which directed the deposit itself has directed the refund with 18% interest, we have no doubt in holding the said order as to mean that the refund should be made with interest at the rate of 18% from the date on which the amount was deposited pursuant to the order of the High Court dated 15.3.1995." 14.8. The Hon'ble Supreme Court of India in the case of Commissioner, Commercial and Sales Taxes and Others Vrs. Orient Paper Mills and Another, (2004) 9 SCC 181 = (2004) 135 STC 19 (SC) observed as follows: "10. In our considered view, taking note of the usual rate of interest which is granted in ca....
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....o be noted here that the inordinate delay of up to 17 years in making refunds was a special circumstance when this Court was persuaded to accept grant of interest at the rate of 9 per cent per annum in Sandvik Asia Ltd., (2006) 2 SCC 508. Even while doing so, the observations made by this Court in Paragraph 48 of the decision are quite clear that "the award of interest in refund and amount must be as per the statutory provisions of law and whenever a specific provision has been made under the statute such provision has to govern the field." The subsequent decision of the bench of three Judges in Gujarat Fluoro Chemicals, (2014) 1 SCC 126 noticed that the grant of interest at the rate of 9 per cent was in the facts of the case in Sandvik Asia Ltd. (supra)." 14.10. Applying the aforesaid principles for grant of interest at a rate fixed as compensation, this Court is of the considered opinion that since by virtue of interim orders of the Supreme Court of India and the orders in writ petition(s) by this Court following such interim orders, the State of Odisha was deprived of recovering 2/3rd of tax due relating to September, 2009 to February, 2017, the petitioner(s) is required to c....
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....24 and demand notice in Form E-8 under annexure-3 series are quashed. Liberty is given to the assessing authority to proceed against the petitioner in accordance with law, if he is of the opinion that the tax due on the return as furnished by the petitioner is not paid by it due to wrong/excessive claim of deduction(s) in the return." 15.1. This Court takes note of the principle as enunciated in the case of Chowhan Machinery Mart Vrs. State of Odisha, (2009) 19 VST 178 (Ori). Paragraphs 22-24 of said reported Judgment read thus: "22. So far as the second question is concerned, the law is well- settled that the Judgment of the High Court is binding on all concerned parties. The honourable Supreme Court in East India Commercial Co. Ltd., AIR 1962 SC 1893 held that: '*** The law declared by the highest Court in the State is binding on authorities or Tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. ***' 23. The Honourable Apex Court in the case of Union of India Vrs. Kamlakshi Finance Corporation Ltd., AIR 1992 SC 711, in paragraph 6 has observed a....
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....t or order of any Court or Tribunal, which has become final and binding, then, notwithstanding anything contained in this Act, the Assessing Authority may proceed to reassess the tax payable by the dealer in accordance with such judgment or order, at any time within a period of three years from the date of the judgment or order." 15.3. However, taking cognizance of the chequered career of the OET Act, 1999 since 2002, when the Judgment in Indian Metals & Ferro Alloys Corporation of Orissa (supra) was delivered, it is but mete and proper to issue direction to the petitioner(s) to pay off the balance tax due as per returns furnished by way of "self- assessment" as defined in Section 2(47) of the Odisha Value Added Tax Act read with Section 2(q) of the OET Act. 16. As is clearly enunciated in Shree Chamundi Mopeds Ltd. (supra) that stay of operation of an order only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence, on the date of pronouncement of exposition of law on the subject-matter as to exigibility of entry tax on the scheduled goods bei....
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....stalment(s) on being approached by the petitioner(s). 17.2. To strike a balance between deprivation of the State of Odisha to utilize 2/3rd of the amount of tax since September, 2009 till March, 2017 at the relevant point of time and non-payment of full amount of tax liability disclosed in the return(s) during this period by the petitioner, the aforesaid unpaid entry tax, for the period during which interim Order dated 30.10.2009 as modified vide Order dated 03.02.2010 passed by the Supreme Court of India in I.A. Nos. 327-651 filed by the State of Odisha in its appeals being SLP(C) Nos.14454-14778/2008 was operational, is directed to be deposited along with simple interest @ 9% per annum based on the principles enunciated in Tata Refractories Ltd. Vrs. Sales Tax Officer, (2003) 129 STC 506 (SC) = (2003) 1 SCC 65; Commissioner, Commercial and Sales Taxes and Others Vrs. Orient Paper Mills and Another, (2004) 9 SCC 181 = (2004) 135 STC 19 (SC); Odisha Forest Development Corporation Ltd. Vrs. Anupam Traders and Others, 2019 SCC OnLine SC 1524; Union of India Vrs. Willowood India Pvt. Ltd., (2022) 9 SCC 341; IDL Industries Ltd. Vrs. State of Odisha, (2004) 134 STC 62 (Ori). 17.3.....