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2016 DIGILAW 1209 (ORI)

Neelachal Ispat Nigam Ltd. v. State of Orissa

2016-12-07

S.N.PRASAD, S.PANDA

body2016
JUDGMENT : S.N.Prasad, J. This writ petition is directed against the order 6.11.2015 passed by the Deputy Commissioner of Commercial Tax, Jajpur Circle, Jajpur Road, Annexure-4 whereby and whereunder the petitioner has been directed to deposit a sum of Rs.42,32,13,642.00 by way of tax demand to be paid under the provisions of the Orissa Entry Tax Act and Rules. 2. The brief fact of the case of the petitioner is that petitioner-company commenced its project activities in the year 2001. Regular returns have been filed under the jurisdiction of the Sales Tax authorities. Liability has been casted upon the petitioner for making default in payment of the entry tax for the period from 1.4.2008 to 31.7.2015, which according to the opposite party-State has not been paid at the appropriate rate. According to the petitioner, the tax has been paid in accordance with the statutory provision, but without considering this aspect of the matter, a notice was served upon the petitioner-company on 29.3.2015, in Form-E32, under the provisions of sub-rule (1) of Rule 15 read with Section 10 of the Odisha Entry Tax Act alleging escapement of assessment of tax for the tax period from 1.4.2008 to 31.7.2015. The petitioner in pursuance to the said notice has appeared before the authorities and tried to satisfy them by stating that no tax under the heading of “Odisha Entry Tax” has been evaded by it for the period in question, but according to the petitioner the authorities without appreciating the defence statement filed by it, has passed order on the same date i.e. on 6.11.2015 putting liability of penalty on the petitioner amounting to Rs.42,32,13,642.00 vide order of assessment dated 16.11.2014, which is impugned in this writ petition. 3. The petitioner has challenged the order of assessment on the grounds (i) The notice stipulates the period from 1.4.2008 to 31.7.2015, on 30.12.2011, 30.3.2012, 6.6.2012, 4.3.2015, 6.5.2015, and 22.9.2015 respectively, but the petitioner is not aware as to whether he was assessed on such dates nor the petitioner was intimated by the jurisdictional sales tax authority relating to finalization of the assessment. Since the petitioner is not in receipt of any correspondence relating to the finalization of assessment, the returns filed seems to have been accepted without noticing any irregularity or infirmity covering the tax period from 01.04.2008 to 31.7.2015. Since the petitioner is not in receipt of any correspondence relating to the finalization of assessment, the returns filed seems to have been accepted without noticing any irregularity or infirmity covering the tax period from 01.04.2008 to 31.7.2015. (ii) The assessing authority has reopened the assessment even prior to 1.7.2012 so as to cover the period from 1.4.2008 to 31.7.2015 without taking into consideration the tax period from 1.4.2008 to 31.7.2015 and prior to 1.7.2012, the assessing authority, on the basis of the information in his possession, may be within a period of five years from the end of year to which the tax period relates, serve a notice on the dealer, however, the said provision as contemplated under Section 10(1) of Odisha Entry Tax Act, 1999 has been amended w.e.f. 1.7.2012 extending the period from five years to seven years, but the authorities have not gone into this aspect of the matter. (iii) The assessment order dated 6.11.2015 has been passed without issuing proper show cause notice and affording reasonable opportunity to file the reply, which has greatly prejudiced the petitioner. (iv) The petitioner has submitted his reply on 6.11.2015 and on the same day the hearing was concluded and hence, the hearing was merely a formality. (v) The relaxation of the second proviso of Rule 3(4) of the Odisha Entry Tax Act read with Rule has not been granted to the petitioner-company. 4. Per contra, learned counsel appearing for the opposite party-State has appeared and submitted that this writ petition is not fit to be entertained at this stage for the reason that the petitioner has got other efficacious and alternative remedy as provided under the statute and since the petitioner is raising factual aspects, this Court may not exercise extra ordinary writ jurisdiction conferred under Article 226 of the Constitution of India. On merit, it has been submitted that there is no infirmity in the impugned order for the reason that the assessing officer has passed order taking into consideration the factual aspects as per which the petitioner is required to pay entry tax on purchase of material under the provisions of Odisha Entry Tax Act from the very day the imported goods entered the local area and the admitted position in this case is that the goods have been imported and brought into the territory of the State of Odisha for the financial year starting from the year 2008 up to July, 2015, but the petitioner has not paid entry tax on the total import of raw material, rather the entry tax has only been paid only on the used materials and as such, the assessing authority after taking into consideration this aspect of the matter has directed to pay the balance entry tax upon the rest of the raw materials which admittedly has been purchased by the petitioner and as such, liable to pay entry tax under the provisions of the Odisha Entry Tax Act. Since the petitioner is ready to pay right from the assessment year 2008 till July, 2015, a notice was issued to the petitioner on 23.9.2015 asking to reply regarding escapement of assessment of tax for the tax period from 1.4.2008 to 31.7.2015, but the petitioner could not be able to furnish satisfactory reply regarding the balance raw materials upon which the entry tax has not been paid. Hence, the assessing authority being not satisfied with the reply has passed order putting liability upon the petitioner to pay a sum of Rs. 14,10,71,214.00 towards Odisha Entry Tax for the tax period from 1.4.2008 to 31.7.2015 and penalty for an amount of Rs.28,21,42,428.00, i.e. twice the amount of tax assessed imposed under Section 10(2) of the Odisha Entry Tax Act and accordingly, the dealer, the petitioner herein, has been directed to pay a sum of Rs.42,32,13,642.00 as per the terms and conditions of the demand notice. 5. Learned counsel representing the opposite party-State has further submitted that there is no violation of the second proviso to Rule 3(4) since the petitioner being the buying manufacturer has not given declaration under Form 16E and as such, not entitled to get any relaxation in view of the said provision. 5. Learned counsel representing the opposite party-State has further submitted that there is no violation of the second proviso to Rule 3(4) since the petitioner being the buying manufacturer has not given declaration under Form 16E and as such, not entitled to get any relaxation in view of the said provision. It has been submitted by him that there is no requirement under law that when the tax is assessed and after finalization of assessment, a communication is being made to the assessee. He further submits that the petitioner has been asked to give reply vide notice dated 23.9.2015 and in terms of that notice, he has made reply on 6.11.2015, but the assessing authority taking into consideration the fact that there is difference in between the used raw materials imported from outside the territory of the State of Odisha and the total imported raw materials, has passed an order keeping the fact in mind that the detail is on record. Moreover, the petitioner after issuance of notice having been received on 23.9.2015 has availed time on three occasions and it is only thereafter the authorized representative of the petitioner-company had appeared before the assessing authority in his office on 6.11.2015 and submitted a written submission and requested to intimate the reasons for initiating the proceeding under Section 10 of the Odisha Entry Tax Act, 1999 for the tax period from 01.04.2008 to 31.7.2015 and immediately thereafter the authorized representative of the petitioner-company was clarified with the reasons for initiation of the proceeding, which has already been communicated along with the notice in Form-E32 on 23.9.2015. It has been submitted that the order of the assessing authority reflects that opportunity of hearing was given and merely on the ground that on the same day the assessing authority has passed the order, it cannot be said that the principles of natural justice has been violated. 6. Heard the learned counsel for the parties and perused the materials available on record. 7. Before appreciating the argument advanced on behalf of the parties, it is relevant to have a discussion regarding the relevant provisions of law, which have got bearing with the issue involved in this case. 8. 6. Heard the learned counsel for the parties and perused the materials available on record. 7. Before appreciating the argument advanced on behalf of the parties, it is relevant to have a discussion regarding the relevant provisions of law, which have got bearing with the issue involved in this case. 8. In the State of Odisha, an Act has come in the name of “Orissa Act 11 of 1999” providing provision for the levy and collection of tax on the entry of goods into the local areas of the State of Odisha for consumption, use or sale therein and matters incidental thereto and connected therewith. The said Act has come into force by virtue of a notification issued by the State Government after getting assent of His Excellency the Governor of Odisha published Orissa Gazettee in Extraordinary No.1408 dated 27.9.1999 and the purpose behind enactment of the said Act is to provide for the levy of a tax on entry of goods into the local area for consumption, use or sale therein as enjoyed under Entry 52 of the List II of the Seventh Schedule to the Constitution of India with the objective to levy tax on every dealer in Schedule goods or any person who brings or causes to be brought into a local area the scheduled goods at such rates as may be prescribed by Government not exceeding twelve percentum of the purchase value of such goods. 9. Section 3 of the Act, 1999 contains a provision to levy tax. Section 7 contains a provision requiring every registered dealer and every dealer who is liable to get himself registered under the Act shall furnish every month to the Commissioner, a return in such form, by such date as may be prescribed and shall furnish along with such return satisfactory proof of payment of tax payment by him under the Act subject to certain conditions. Section 7(10) provides that 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 the correctness of calculation, application of correct rate of tax and interest, claim of deductions, if any, under this Act and full payment of tax and interest payable by the dealer for such period. Sub-Section (11) of Section 7 contains a provision that if any mistake is detected as a result of scrutiny made under sub-section (10), the assessing authority shall serve a notice in the prescribed form on the dealer to make payment of the extra amount of tax along with the interest as per the provisions of the Act, by the date specified in the said notice. Section 9 provides the provision for self-assessment to be done by the registered dealer or a dealer liable to be registered under the Act. Section 9A contains provision for provisional assessment while Section 9C contains provision for audit assessment. Section 10 contains provision for reassessment in certain cases. In a situation when the authority has got reason to believe that any dealer has escaped assessment of tax or where value of all or any of the scheduled goods has been under assessed, or any deduction has been allowed wrongly, the assessing authority, on the basis of information in possession, may, within a period of seven years from the end of the year to which the tax period relates, serve a notice on the dealer in such form and in such manner as may be prescribed and after making such enquiry as he considers necessary and after giving the dealer a reasonable opportunity of being heard, proceed to assess the dealer accordingly. 10. The State has formulated the Odisha Entry Tax Rules, 1999. Rule 3 which stipulates rate of tax, Upon which learned counsel for the petitioner has given much emphasis and as such, the same is quoted hereunder: “3. Rate of Tax-The tax payable by a dealer or any other person under the Act shall subject to the Explanation hereunder be at the following rates: (1) x x x (2) Subject to the provisions of sub-rule (4) the goods specified in part II of the Schedule to the Act shall be exigible to the tax at the rate of 2% of the purchase value. (3) Subject to the provisions of sub-rule (4), the goods specified in Part I of the Schedule to the Act shall be exigible to the tax at the rate of 1% of the purchase value. (3) Subject to the provisions of sub-rule (4), the goods specified in Part I of the Schedule to the Act shall be exigible to the tax at the rate of 1% of the purchase value. (4) Goods specified in Part I and II of the Schedule to the Act shall be exigible to tax at a concessional rate of fifty percentum of the rate to which such goods are exigible under sub-rule (3) and sub-rule (2) respectively of this rule, when such goods are brought- (a) for use as raw material by the manufacturer on first entry into a local area of the State from outside the State; or (b) for use as raw material by a manufacturer on first entry into a local area from another local area; or (c) by a registered dealer into any local area and then sold to a manufacturer for use as raw material; Provided that the tax payable under the Act is collected by a manufacture in case of (b) and by such registered dealer in case of (c) and so separately in the cash memo or credit memo or be issued to such manufacturer and a declaration in Form E-15 from buying manufacturer is furnished: Provided further that goods specified in Part I and Part II of the Schedule to the Act when used as raw material directly in manufacture of goods to be exported out of the territory of India shall not be exigible to tax where a declaration in Form E16 from the buying manufacturer is furnished: Provided also that if the buying manufacturer contravenes the provisions of this sub-rule, he shall pay the difference in tax or the tax, as the case may be, had he not been entitled to concessional rate of tax or not to pay any tax under the said sub-rule. Explanation-For the purpose of this sub-rule the word ‘manufacturer’ shall mean and shall always be deemed to have meant a manufacturer, who is registered under the Act. Explanation-For the purpose of this sub-rule the word ‘manufacturer’ shall mean and shall always be deemed to have meant a manufacturer, who is registered under the Act. (5) Notwithstanding anything contained in this rule, no tax shall be levied under these rules in respect of such goods purchased by a dealer for which the details are furnished in Form E1 along with the return under sub-rule (1) of Rule 10 to prove that such goods have already been subjected to entry tax or that the entry tax has already been paid under the Act for such goods. Explanation- (a) Goods common to Part I and Part II of the Schedule to the Act shall be taxed at the rate specified in sub-rule (2) (b) Where the amount of tax collected by a dealer is higher than the tax payable, the dealer shall be liable to pay the amount of tax so collected.” 11. Rule 3 of the Rules, 1999 provides that the tax payable by a dealer or any other person under the Act shall be at the following rates subject to the provisions of sub-rule (4). Sub-rule (4) provides that goods specified in Part I and Part II of the Schedule to the Act shall be exigible to tax at a concessional rate of fifty percentum of the rate to which such goods are exgible under sub-rule (3) and sub-rule (2) of the Rules respectively of this rule, when such goods are brought- (a) for use as raw material by the manufacturer on first entry into a local area of the State from outside the State; or (b) for use as raw material by a manufacturer on first entry into a local area from another local area; or (c) by a registered dealer into any local area and then sold to a manufacturer for use as raw material; Provided that the tax payable under the Act is collected by a manufacture in case of (b) and by such registered dealer in case of (c) and so separately in the cash memo or credit memo or be issued to such manufacturer and a declaration in Form E-15 from buying manufacturer is furnished. Provided further that goods specified in Part I and Part II of the Schedule to the Act when used as raw material directly in manufacture of goods to be exported out of the territory of India shall not be exigible to tax where a declaration in FormE16 from the buying manufacturer is furnished. It is also not in dispute that the petitioner-company has imported the raw materials for the purpose for levying it in the manufacturing process i.e. the manufacturing of Pig Iron, Billets, LAM Coke, Crud tar. It is also not in dispute that the petitioner-company has imported raw materials for the purpose for levying it in the manufacturing process i.e. the manufacturing of Pig Iron, Billets, LAM Coke, Crud tar. It is also not in dispute that the petitioner-company had purchased raw materials and consumable both from outside and inside the State of Odisha. The petitioner also effects import of raw materials, i.e. Cooking coal from outside the country. The dealer effects sale of its produces both inside and outside the State of Odisha and the dealer also effects export of finished products, i.e. Pig Iron. The petitioner company has submitted return and on a scrutiny as per the provisions of the Statute for the period from 01.04.2008 to 31.7.2015, it was detected that the company has not paid Odisha Entry Tax on the value of the total coal imported from outside the country soon after entry of the same into the local area. The authority after coming to this conclusion has issued notice to the petitioner for explaining the reasons. The authorized representative of the petitioner-company has taken time thrice and ultimately appeared before the assessing authority on 6.11.2015 and submitted a written submission and also he was heard on that date and order was passed on that date by the assessing authority giving liability of entry tax along with penalty to the tune of Rs.42,32,13,642.00, which is impugned in this writ petition. 12. 12. So far as the ground taken by the petitioner that the company was assessed as per the provisions of Section 9(1) of the Act and as such, it is not known to them as to whether assessment has been finalized or not or in other words, whether the authorities have accepted the self assessment made by the petitioner-company under Section 9(1) has been accepted or not is concerned, we are of the considered view that Section 9 contains a provision for self assessment, which requires the dealer to be assessed in the manner provided for each tax period or periods during which the dealer is so liable and if the registered dealer furnishes the return in respect of any tax period within the prescribed time and the return so furnished is found to be in order, it shall be accepted as self assessed subject to adjustment of any arithmetical error apparent on the face of the said return. Section 10 of the Act provides for reassessment in certain cases when the authority is of the reason to believe that the dealer has escaped assessment of tax and as such communication regarding acceptance of the assessment made under the provisions of Section 9 of the Act is not required to be communicated to the petitioner and the communication can only go in a situation when on scrutiny it will be found that the same is not in order or there is arithmetical error. Under the Taxation Rule the assessee is required to furnish self assessment and the authority is required to assess the same and there is no provision provided under the Act to communicate in case of acceptance of the assessment. Although under the provision of Orissa Value Added Act under Section 38 read with Section 7(10) each and every return in relation to any tax period furnished by a registered dealer shall be subject to scrutiny by the assessing authority to verify the correctness of the calculation, application of correct rate of tax and interest etc. Although under the provision of Orissa Value Added Act under Section 38 read with Section 7(10) each and every return in relation to any tax period furnished by a registered dealer shall be subject to scrutiny by the assessing authority to verify the correctness of the calculation, application of correct rate of tax and interest etc. and in case of any mistake, detected in course of scrutiny, the assessing authority shall serve a notice in the prescribed form as we find even from the provision of section 7 or subsection (11) and as such, if the authorities have not issued any notice under Section 7(11), then the assessment made by the registered dealer under the provisions of Section 9 will be said to be accepted. 13. The 3rd ground taken by the petitioner is that the order impugned has been passed mechanically and without consideration of the second proviso to Rule 3(4) of the Rules. We have quoted the provision of Rule 3(4) of the Rules, 1999 which contains a provision that the goods as specified in Part I and Part II of the Schedule to the Act shall be exigible to tax at a concessional rate of fifty percentum of the rate to which such goods are exigible when such goods are brought (a) for use as raw material by manufacturer on first entry into a local area of the State from outside the State; or (b) for use as a raw material by a manufacturer on first entry into a local area from another local area; or (c) by a registered dealer into any local area and when sold to a manufacturer for use as raw material. We are concerned here with the second proviso, which stipulates a provision of relaxation in making payment of tax liability where declaration in Form E16 from the buying manufacturer is furnished. The contention of the petitioner is that while passing the order, the assessing authority has not appreciated the second proviso to Rule 3(4) of the Rules, 1999, but we are not in agreement with the said contention for the reason that the petitioner nowhere, has stated as to whether it has given declaration in Form E16 so as to avail the benefit as provided under the second proviso to Rule 3(4) of the Rules, 1999, which is the condition stipulated in the said statutory provision. 14. 14. Learned counsel for the petitioner at this juncture has argued that this provision needs interpretation by this Court. But it is the settled proposition of law that when there is no ambiguity in the statutory provision, it is not the duty of the Court to interfere or add any word in the legislation and it is also that if a statute is provided with a provision, the thing has to be done in that way only. In that regard, the judgment rendered by the apex Court in Babu Verghese and others v. Bar Council of Kerala and others , (1993) 3 SCC 422 wherein their Lordships of the Court has been pleaded to hold as under : “31. It is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all. “ 15. The aforesaid principle is the settled proposition of law right from the judgments of the Hon’ble Apex Court reported in the cases of Rao Shiv Bahadur Singh v. State of U.P., AIR 1954 SC 322 , Deep Chand v. State of Rajasthan, AIR 1961 SC 1527 , and State of U.P. v. Singhara Singh, AIR 1964 SC 358 . Even as on date, the same is a good law since it has been followed even in the case of Zuari Cement Ltd. v. Regional Director, E.S.I. Corporation and another, (2015) 7 SCC 690 wherein paragraph 15 it has been held as follows : “15. Where there is want of jurisdiction, the order passed by the Court/ tribunal is a nullity or non-est. What is relevant is whether the Court had the power to grant the relief asked for. ESI Court did not have the jurisdiction to consider the question of grant of exemption, order passed by the ESI Court granting exemption and consequently setting aside the demand notices is non-est. The High Court, in our view, rightly set aside the order of ESI Court and the impugned judgment does not suffer from any infirmity warranting interference.“ 16. ESI Court did not have the jurisdiction to consider the question of grant of exemption, order passed by the ESI Court granting exemption and consequently setting aside the demand notices is non-est. The High Court, in our view, rightly set aside the order of ESI Court and the impugned judgment does not suffer from any infirmity warranting interference.“ 16. In view of the aforesaid settled proposition of law, we are of the considered view the second proviso to Rule 3(4) of the Rules, 1990 stipulates a specific condition for getting relaxation subject to the condition of submission of a declaration in Form E16 and as such, the ground taken by the petitioner is of no force. 17. So far as the ground taken by the petitioner that the notice dated 23.9.2015 covers the tax period from 01.04.2008 to 31.7.2015 and prior to 1.7.2012, the assessing authority may within the period of five years from the end of the year to which the tax period relates serve a notice on the dealer, however, the said provision has been amended extending the period from 5 years to 7 years and as such, the authority at best could have reopened the assessment covering the tax period from 01.04.2008 to 31.7.2015 because amendment effected by the legislature is not retrospective. We have examined the provisions of law and from its perusal, it is evident that prior to 1.7.2012 reassessment for the period of five years was provided under the statute, but after 1.7.2012 the period of five years has been extended to seven years. Though there is no dispute about the legal proposition, but the petitioner has not raised this point before the assessing officer for scrutinizing this aspect of the matter regarding the period of assessment, when the return has been filed etc. and as such, we thought it proper to leave this issue to be adjudicated by the appellate authority if the petitioner will raise this point before the said authority at the time of availing the alternative remedy of appeal. 18. and as such, we thought it proper to leave this issue to be adjudicated by the appellate authority if the petitioner will raise this point before the said authority at the time of availing the alternative remedy of appeal. 18. So far as the merit of the case is concerned, we are not touching the same since it is purely an arithmetical calculation based upon the quantity and after answering the grounds taken by the authorities, which hits the very jurisdiction of the assessing authority we have answered the same as above, But so far as the calculation part is concerned, since the petitioner has got alternative remedy of appeal and as such thought it proper not to go into the arithmetical calculation since it depends upon the factual aspect and if we will pass any order on merit regarding the factual calculation, the petitioner will be deprived of availing the alternative remedies of appeal and hence, this part is left upon to the petitioner to raise before the appellate authority taking into consideration the settled proposition of law when the controversy requires determination of question of fact, after going into the merits of the contentions raised by the rival parties, which can be considered by the appellate authority in exercise of the appellate power while considering the correctness of the demand, this Court in exercise of power under the judicial review is only required to see whether the decision making process is proper or not and not to decide the correctness of the demand in the nature of an appeal. 19. In the circumstances, this Court refrains from entering into the merit of the dispute which involves determination of the question of facts involving liability upon the petitioner-company. However, it will be open to the petitioner to approach the appellate forum under the relevant provisions of the Act and Rules, if it so wishes. 20. It goes without saying that if the petitioner will approach the appellate forum, the said forum will decide the factual aspect without being prejudiced with the order passed by this Court in this writ petition. 21. With the aforesaid observation and direction, the writ petition stands disposed of.